Some bed time reading: -
http://www.mauldineconomics.com/images/ ... 130104.pdf
Ending the Era of Ponzi Finance
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
thanks, i've read half and will read the rest later.
Euler, in your view why have policy makers done everything in their power to prevent deleveraging and almost nothing to try to create a sustainable economic environment for the future?
is it that they are in denial (that their previous policies created a Ponzi scheme), or that they just don't give a damn as long as the day of reckoning doesn't happen on their watch, or a desperate bid to preserve their own wealth created from the Ponzi, or something else?
imho the evidence that the last 20 years were an unsustainable economic model is overwhelming, but most people still think we've just had a recession and that things will simply get back to "normal".
Euler, in your view why have policy makers done everything in their power to prevent deleveraging and almost nothing to try to create a sustainable economic environment for the future?
is it that they are in denial (that their previous policies created a Ponzi scheme), or that they just don't give a damn as long as the day of reckoning doesn't happen on their watch, or a desperate bid to preserve their own wealth created from the Ponzi, or something else?
imho the evidence that the last 20 years were an unsustainable economic model is overwhelming, but most people still think we've just had a recession and that things will simply get back to "normal".
I think the underlying mistake is thinking this crisis started 5 years ago. I would say it was 20 years ago when it started and the foundations were being laid about the late 70's
Principally in Japan who at that time had achived phenominal success in certain areas,partially as a result of a lot of hard work to get the teamwork right and an almost inexhaustible supply of finanace at negligiblre interest rates.
At some point it was realised that that capital was being employed in ways (asset bubbles)that would never pay it off. This sparked a banking crisis and the japanese govt responded with speeding and QE.
A few years later Korea had a similar problem.
In different ways this crisis has worked it's way round the globe until finally hit Britain. It has revealed the huge imbalances that have grown up between different countries, in particular with China, that has resulted in huge amounts of cash wealth and debts sitting in various sovereign funds.
Until the cash starts being recycled into spending and imbalances reduced the world will continue to lurch along.
The good news is I believe rebalencing will occur, it's just a question of how hard or easy that is
Principally in Japan who at that time had achived phenominal success in certain areas,partially as a result of a lot of hard work to get the teamwork right and an almost inexhaustible supply of finanace at negligiblre interest rates.
At some point it was realised that that capital was being employed in ways (asset bubbles)that would never pay it off. This sparked a banking crisis and the japanese govt responded with speeding and QE.
A few years later Korea had a similar problem.
In different ways this crisis has worked it's way round the globe until finally hit Britain. It has revealed the huge imbalances that have grown up between different countries, in particular with China, that has resulted in huge amounts of cash wealth and debts sitting in various sovereign funds.
Until the cash starts being recycled into spending and imbalances reduced the world will continue to lurch along.
The good news is I believe rebalencing will occur, it's just a question of how hard or easy that is
We are going through massively disguised deflation.
Asset prices would be falling but the US, UK and now Japan have decided printing money is the answer. Those Governments hope we will continue to feel good while our asset values remain (partly) in tact. But creating money through excessive leverage or buying your own bonds won't end the problem.
Japan has had two lost decades at zero interest. Now it has decided to inflate its way out.
But just like no economy has ever taxed its way to prosperity, printing money does not add to prosperity. (That is not to say there are not winners and losers when money is printed).
When asset values fall back in a significant and sustained way and we all start saying, oh my goodness I'm going to buy that then normal may, just may, be back. But while assets are pumped up with newly minted money then no thanks.
Asset prices would be falling but the US, UK and now Japan have decided printing money is the answer. Those Governments hope we will continue to feel good while our asset values remain (partly) in tact. But creating money through excessive leverage or buying your own bonds won't end the problem.
Japan has had two lost decades at zero interest. Now it has decided to inflate its way out.
But just like no economy has ever taxed its way to prosperity, printing money does not add to prosperity. (That is not to say there are not winners and losers when money is printed).
When asset values fall back in a significant and sustained way and we all start saying, oh my goodness I'm going to buy that then normal may, just may, be back. But while assets are pumped up with newly minted money then no thanks.