So Kassz007, when can we expect the purchase of your next big ticket item ?
Here´s a humble proposal :
Krugman: The Third Depression
- Thread starter bearice
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So Kassz007, when can we expect the purchase of your next big ticket item ?
Here´s a humble proposal :
Well not exactly because there never was any great amount of money, only leverage at say 100:1 or more.
Yes the carry trade is unwinding, but the outcome of this action is deleverage,
with hardly any repatriation of funds.
Frankly this is the story of the world in this moment as it reduces debit and the lucky/clever people and companies sideline cash.
The TARP funds plus other stimuli should have the economy growing at a steady 4% by now, but when the BS clears the real growth is zero to negative.
And so, since that action did not work, US gov and Fed are going to repeat the same action and pray for a different result this time.
This mess will run on for years and years and at the first hint of genuine inflation the cash holders will begin buying again ... but what will they buy?
It is, hence my massive short position on U.S. equity markets. But there have been plenty of folks over the years who came up with all sorts of explanations as to why something can continue indefinitely, yet it never does, there is always a tipping point or turning point. This time will not be different with Japan, regardless of the timeline.
So then it's just word semantics. The actions and consequences are what they are, regardless of how you choose to label them.
Well, given how Japan has already suffered through 20 years of deflation and here in the U.S. we're just beginning our saga with it, I'll stick with my assessment. See you on the other side...
In terms of direction I see things much the same way, but who knows what will happen next? With Japan, the carry trade may start over? The Japanese may be able to avoid their day of reckoning by seriously addressing their debt problems as they've indicated recently: http://news.bbc.co.uk/2/hi/world/asia_pacific/10372417.stm ?
Japan's government however cannot continue adding debt to its balance sheet as it has done without risking a run on the yen at some future point - this I believe. Having said that, like you, I'm not betting on inflation at this stage, so I'm almost entirely in cash, which includes yen.
I know where your going with this but there's no way to get rid of the Fed. The banks run the financial system; the Fed is nothing more than the puppet.
Real growth in the US probably stopped back in 1996 as the tech bubble created created an illusion of extraordinary growth and a new economy. After that crashed, people's homes became the ATM of choice. Now with that avenue shutdown the Fed needs another bubble because the banks need to find ways to pay their bigwigs large bonuses.
If the austerity plan is carried out and there is no more bubble times, then the market crashes back down to where the tech and housing bubbles found themselves, the 1996 levels on the S&P.
It is kind of pathetic a country relies on the wealth effect for growth.
My inflationary utopia? I don't want inflation either, but it's a hell of a lot better than deflation. By the way, what you're describing in the quoted post is hyper inflation, not inflation. Why you seem to the think hyper-inflation is inevitable is beyond me, especially given the debt levels around the world. There is absolutely zero evidence that hyper-inflation is inevitable. The sole premise for you thinking this is because governments are printing money.
I have no crystal ball, I only deal with facts. The facts remain, that inflation is not at threat at all right now. Deflation, on the other hand, certainly is. And I do know that I would rather have inflation than deflation. Although too much of either option is certainly not a good thing.
Did Krugman forsee the mortgage crisis? Or the quadrupling in the price of gold? If not, I'd say he did worse than the doom and gloom conservatives. I agree with him that increasing economic inequality is a problem, but in the U.S. a significant cause of the increase in such inequality over the past 30 years has been the unprecedented amount of immigration, both legal and otherwise. Our corporate masters have used this vast supply of labor to keep a lid on working and middle class wages. Every liberal in Washington is in favor of increasing immigration and encouraging more illegal immigration with amnesty. So I don't believe them one minute when they cite economic inequality as the reason they have to raise my taxes.