Wolff, chief economist of the FT said that bretton woods is now inevitable.
Should it remain like that more than 1 year?
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Is the US....A Giant Iceland ?
- Thread starter libertad
- Start date
Wolff, chief economist of the FT said that bretton woods is now inevitable.
Should it remain like that more than 1 year?
Look familiar ?
Peculiar Central Bank governance structure
Adding to this is the peculiar governance structure of the Central Bank of Iceland. Uniquely, it does not have one but three governors. One or more of those has generally been a former politician. Consequently, the governance of the Central Bank of Iceland has always been perceived to be closely tied to the central government, raising doubts about its independence. Currently, the chairman of the board of governors is a former long-standing Prime Minister. Central bank governors should of course be absolutely impartial, and having a politician as a governor creates a perception of politicization of central bank decisions.
In addition, such governance structure carries with it unfortunate consequences that become especially visible in the financial crisis. By choosing governors based on their political background rather than economic or financial expertise, the Central Bank may be perceived to be ill-equipped to deal with an economy in crisis.
Peculiar Central Bank governance structure
Adding to this is the peculiar governance structure of the Central Bank of Iceland. Uniquely, it does not have one but three governors. One or more of those has generally been a former politician. Consequently, the governance of the Central Bank of Iceland has always been perceived to be closely tied to the central government, raising doubts about its independence. Currently, the chairman of the board of governors is a former long-standing Prime Minister. Central bank governors should of course be absolutely impartial, and having a politician as a governor creates a perception of politicization of central bank decisions.
In addition, such governance structure carries with it unfortunate consequences that become especially visible in the financial crisis. By choosing governors based on their political background rather than economic or financial expertise, the Central Bank may be perceived to be ill-equipped to deal with an economy in crisis.
Quote from fearless9:
I imagine we are living through a period of "death to democracy" although what follows quite frankly, I have no idea.
f9
You have short cycles, and long cycles. I personally believe that we're seeing the end of a LONG cycle here, in the political arena. You come out of the Middle Ages, in which peasants are, well, peasants, and no one makes any pretensions to the contrary. But because of different factors, you have a growing feeling of personal freedom; people living in towns, earning their freedom, enjoying the new trade with the middle east, becoming merchants...
This goes into an age where philosophy is passed around, the idea of democracy slowly becomes popular. Then you have an era of revolutions, with monarchies being overthrown by people, and popular governments set up in some cases. (Interestingly, the seeds of central banking getting their start here too).
Now we've had this experiment of the US for a while. People have enjoyed the prosperity that came with it (either as a direct result of personal freedom, or coincidental, whichever), and have become complacent. At the same time, population is getting a bit too much. Now we're seeing a backlash towards fascism and socialism.
If the 20th century was a battle between capitalism and communism (or personal freedom. vs. fascism), then the 21st century, I think we'll see fascism and socialism come back in a big way, and the idea of democracy be scrapped for a while. I think people are tired of it, and have forgotten the benefits of it. It will take a shitstorm of epic proportions to make them remember, maybe.
Quote from bali_survivor:
It are those very carry trades that are at the root of this and cause that the "old rules" of lowering / raising interest rates no longer work. Cannot understand why "the powers in charge" were ever so stupid to implement the free currency trade.
Scenario: Japanese house wives borrowing money in Japan at 1% and putting it in the bank in New Zealand at 8%. Big demand for NZ dollar: exchange rate goes up and NZ economy looks like booming. Now "times are getting tough" , lets lower the rate to "stimulate the economy". Some Japanese housewives pull money out => currecny goes down => more pull money out => currecny goes down. "Oh we are now really having a difficult time, imports are soooo expensive, lets stimulate the economy a lot, lets drop the interest rates even more"
Same in the US: who is having the biggest savings and financial GDP? Now if the US dollar goes down and you get 1% or so interest then you are still in real terms negative. Then you might as well have the money under the mattress so better bring it home to China=> no more money available to lend in US.....
Bad......
Well put, but sadly open economies and floating currencies are a apart of the downside of global economy.
Small countries, Iceland, NZ etc have laid their economies, Real estate and capital markets completely open to the savage greed of the large corporations and hedgies and the ongoing effects are disastrous for the locals.
Gradually RE is priced out of the hands of many locals leading to social unrest and what were once reasonably balanced economies are now asymmetrical and very very vulnerable.
Countries like Argentina have kept their currency and therefore their economy fixed, and despite any ideas you may harbour concerning Arg it will be interesting to track the progress of both Brasil and Arg over the next two years.
I rather feel that Brasil has a large element of smoke and mirrors within their economy and it has "sucked in" a great deal of foreign money.
Some has exited already hence the current position of the Real, but a great deal have been trapped and will require substantial loses in order to dislodge it.
And so the world goes on.
regards
f9
Quote from theboxer:
You have short cycles, and long cycles. I personally believe that we're seeing the end of a LONG cycle here, in the political arena. You come out of the Middle Ages, in which peasants are, well, peasants, and no one makes any pretensions to the contrary. But because of different factors, you have a growing feeling of personal freedom; people living in towns, earning their freedom, enjoying the new trade with the middle east, becoming merchants...
This goes into an age where philosophy is passed around, the idea of democracy slowly becomes popular. Then you have an era of revolutions, with monarchies being overthrown by people, and popular governments set up in some cases. (Interestingly, the seeds of central banking getting their start here too).
Now we've had this experiment of the US for a while. People have enjoyed the prosperity that came with it (either as a direct result of personal freedom, or coincidental, whichever), and have become complacent. At the same time, population is getting a bit too much. Now we're seeing a backlash towards fascism and socialism.
If the 20th century was a battle between capitalism and communism (or personal freedom. vs. fascism), then the 21st century, I think we'll see fascism and socialism come back in a big way, and the idea of democracy be scrapped for a while. I think people are tired of it, and have forgotten the benefits of it. It will take a shitstorm of epic proportions to make them remember, maybe.
There is one thing, that makes this not a plausible outcome.
People are too paranoid to give power to a tight group for a long term.
There are many who would want that..but it may means a civil wars.
I am not sure people want a civil wars, too many still have something to lose..maybe in 15 years if fusion energy hasn't turned out to be functional..
Quote from rothschild:
There is one thing, that makes this not a plausible outcome.
People are too paranoid to give power to a tight group for a long term.
There are many who would want that..but it may means a civil wars.
I am not sure people want a civil wars, too many still have something to lose..maybe in 15 years if fusion energy hasn't turned out to be functional..
The question is, do people still have the balls to do a civil war? Or will they just meekly accept their new rulers? I can see evidence that makes either outcome plausible.
Quote from theboxer:
The question is, do people still have the balls to do a civil war? Or will they just meekly accept their new rulers? I can see evidence that makes either outcome plausible.
Stability comes from the middle class, particularly if you can hook them onto credit.
Destroy this and you destroy the middle class along with their hopes.
The difference being that their fears now turn into anger.
regards
f9
Quote from fearless9:
Stability comes from the middle class, particularly if you can hook them onto credit.
Destroy this and you destroy the middle class along with their hopes.
The difference being that their fears now turn into anger.
regards
f9
I agree, but will they have the balls in this day and age, for a revolution, is the question. If yes, things will eventually get renewed the hard way. If not, then 1000 years of getting screwed.
Quote from theboxer:
I agree, but will they have the balls in this day and age, for a revolution, is the question. If yes, things will eventually get renewed the hard way. If not, then 1000 years of getting screwed.
If, by revolution, you mean taking control by force, I don't see it happening with today's average feminized male.
If, by revolution, you mean consumer terrorism where people's buying choices return America to a status of industrialization and primary protectionism, I see it happening but not unless/until we take a nuclear hit followed by weak governmental responses. I do not see it happening if those in power stretch events out over decades... people forget too easily.
Quote from theboxer:
I agree, but will they have the balls in this day and age, for a revolution, is the question. If yes, things will eventually get renewed the hard way. If not, then 1000 years of getting screwed.
Some will change things (peacefully or-and violently), i think the leadership right now is sticking around local governance.
So some cities will be great and some will be hell.