We're About To Get Hit With A Sh**storm: Bernanke Has Lost Control of Velocity *Chart

This is one of the tenant of Laissez Faire.

They want to leave it to the Market to adjust price.

But precisely a Liquidity Trap occurs when there is a break down of the Market.

The rate of Offered savings is, at any quantity higher than the return of investments.

No Market! How could it mend itself.

Waiting that the situation would resorb by price adjustments is like saying that te sick should cure himself and not his doctor.

When I am sick I go to the Doctor. What do you do?
 
Quote from Brandonf:

Everyone acts as if the Great Depression "did not have to happen" when in fact it did. You simply can not have such a long period of excess as we had in the 20's and not eventually feel the pain. It's the same type of thing that I suspect many people experienced on January 1st. If you go lay one on, the next day you will suffer for it. You simply don't escape natural cycles because they suck and you wish you could avoid them.
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Excess needs to be corrected so a recession of some sort was probably unavoidable but that is different from saying that a Depression is necessary. Better policy can help to mitigate and alleviate the situation. To think otherwise is self-flagellation.

Quote from nutmeg:

This is the text book answer and the Depression was the result. Printing money earlier and longer may buy some time, better than the alternative for the moment.
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What textbook are you reading? One from the 1920s? Printing money has been the textbook answer to combat recession ever since Keynes, especially a deflationary one.
 
Shalom....laissez faire....

I see....so to revisit the natural return stack....


No risk....MM yields...tbills first...
Government debt
Municipal debt
Corporate debt
Individual debt
High Credit Listed stock, preferreds first
Medium credit listed stock
Low credit listed stock
Privately held stock...high to low credit
Subcategories....
LT Hard assets
MT hard assets
Consumables


The world has heavily invested in "consumables" which in and of themselves are "consumed"....and a "ponzi" economy cannot last when "consumables are heavily emphasized"....

Thus part of the cure would be to "ponzi" assets that pay returns....a lot less consumables.....

The stack now is from less than 0% to 18% approximately in terms of debt interest rewards.....with a real focus being from 0 to 5%....

Now just review Japan.....and look at what happens to the equity in long term investments if rates were to move upward....

ie What happens to the value of a 30 year bond at 2% par ....when after only two years the common rate adjusts to 7%....or even 10%....thus Japan is stuck to having monetary interest adjustments of .2%....

Needless to say that a whole segment of their population never had a retirement per se.....they were expended....as the US has also decided....the baby boomers are expendible....SS,MM is just not likely to happen as intended....

........................................................................................

Now we are back to why I mentioned two areas of adjustments....

10% consumption tax

New Worldwide Stock Exchange

LT Investment in low interest bonds is a trap....

Whereas equity is an openning.....

.....................................................................

Increasing revenue streams positively affect valuations....and this can happen faster when taxation is largely eliminated....and a trustworthy worldwide stock exchange is established....

Also stock will be the main tool for wealth distribution....

A major point being MMs the only truly acceptable upwardly adjusting debt....but with no upside as can be had in stocks....
 
Quote from Capablanca:


What textbook are you reading? One from the 1920s? Printing money has been the textbook answer to combat recession ever since Keynes, especially a deflationary one. [/B]
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I was referring to the authors comment to let debt default and cos file bk.
 
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