I think it depends how much savings there is to be reset. In Africa, they make do with flow, and not pool, whereas in the global center, the pool matters as well.
Last I heard USA had no savings - but those asians have lots - so if we reset who gets hurt?
I see on TV people in palm beach - richest city in the world according to some - begging for WATER. Cobaltblue say hoarding gold silly, and water and bullets too, I tend to agree, but I always go buy water when hurricane is coming - I guess they feel gubbment will take care of them no matter what they see about hurricane in Nawlins - dumb people never learn.
Some other poster says Unwinding of derivatives a mechanical thing wether based on river rock or gold and debts WILL BE PAID. Hmm I thought all the fun posting here lately was how banks and governments and such are bigger than the market and break promises all the time? Shall we so quickly forget el mat posting scotsman not gonna get thier pensions maybe and niether in the USA - why someone believe so strongly DEBT WILL BE PAID when evidence all around them it will not kinda quirky eh? Warren say it gonna take years - and Rogers having fun with refco I read.
El Mat claims things about nation states regarding me - unfair criticism I feel - I am like socrates - a citizen of the world - a long time ago I read some academic papers saying by 2050 the concept of nation state would really be in decline as we become more globally connected. I tend to agree with Maurice - we will have no more great imperial empires that do not include virtual societies. I suppose many here spend much more time with thier virtual friends than probably most neighbors on their block.
Information will become valuable - material stuff not so much.
econlog.econlib.org
The Kurzweilian answer is that rapid technological change has made inheritance--apart from "inherited" human capital--less valuable. Which would be more valuable to Bryan's children--all his physical possessions, all his financial assets, or a large investment in their human capital?
Probably 90 percent of his physical possessions will be obsolete by the time his children reach 21. Even Bryan's financial assets probably would not make his children feel particularly wealthy compared with what their human capital will be able to earn in the advanced economy of tomorrow.
I am so confident that the next generation is going to be wealthy by today's standards that I am known for saying that all I ask of my children is that they survive the teenage years without getting seriously injured, pregnant, or addicted to drugs. Beyond that, I am pretty sure that things will take care of themselves.
Rothbard advocated a stateless society.
amazon.com
Rothbard reoriented the thinking of those in our generation who had a serious interest in issues of political philosophy and government. He differed from other advocates of individual rights and limited government in that he combined a rigorously logical understanding of the structure of human rights with an unflinchingly detailed empirical understanding of human history.
He taught us three central lessons:
1. Government -- all governments everywhere -- exists to enable some human beings to control and manipulate other human beings. While an occasional purpose of government is to interfere with others' private lives and control their ideas and/or values, the overarching purpose of government is to enable some people to live at the expense of others via taxation, forced labor, etc.
2. The history of humankind is therefore the record of the struggle between Liberty and Power, between those humans who simply wish to be left alone to live their lives in peace and those who wish to control other human beings. Historians who portray the past as primarily consensus rather than conflict or as the inevitable triumph of impersonal, progressive social forces are lying apologists for tyranny.
3. War is, above all, the means by which government expands its power, not simply by seizing the population and territory of other states but, more importantly, as a means of intensifying and deepening its control of its own populace -- curtailing civil liberties, whipping up nationalist hysteria, increasing the burden of taxation, etc. You cannot favor individual rights, private property, and free markets and also favor war.
I like how in one of your recent posts you say you LOVE monetary policies General and the robbing of the little guy - so much for being altruistic - the silver tongued dragon is exposed! HAR HAR MATEY! hehe
Burb&Boom BurnAndKaput is an economic illiterate, I am told, and let's hope the informer is spot on correct :0)
Who tells you this? What is the extent of their academic study of economic history? He was one of the great researchers along with rothbard of the US depression - he also agrees with rothbard that government controls like wage floors are evils on the little people.
He even did analysis on your FRENCH folks!
econlog.econlib.org
I mentioned that Bernanke knows his economic history. Given his Misesian view of inflation, it is not surprising that he has a Rothbardian take on the Great Depression. I kid you not. Bernanke is part of the wave of modern macroeconomists who finally noticed what Rothbard pointed out to his uncomprehending colleagues forty years ago: Wage floors make unemployment worse, especially in the face of a monetary contraction. Price floors have a similar effect. In Bernanke's own words:
Examples of interventionist measures by the French government included tough agricultural import restrictions and minimum grain prices, intended to support the nominal incomes of farmers (a political powerful group of debtors); government-supported cartelization of industry, as well as import protection, with the goal of increasing prices and profits; and measures to reduce labor supply, including repatriation of foreign workers and the shortening of workweeks. These measures (comparable to New Deal-era actions in the United States) tended to block the downward adjustment of wages and prices. (Bernanke, Ben. 1995. "The Macroeconomics of the Great Depression: A Comparative Approach." Journal of Money, Credit, and Banking 27, pp.24-25)
In case it isn't obvious to you, context makes it clear that he firmly disapproves of policies inhibiting the market's adjustment.
Now General - he may be a pirate like you and we can label him reverse robin hood - but to say he is an illiterate - I don't even know where to begin - the man has amazing academic credentials:
marginalrevolution.com
2. The credit channel for monetary policy; here are the papers, most of all the 1992 piece with Alan Blinder. Bernanke took an old Keynesian idea and gave it empirical rigor. During upturns and downturns, does money or credit play the leading role? Bernanke showed that credit has greater importance. Bernanke's work in particular helped combat the Litterman and Weiss paper of 1983; L&W had showed that once you put the nominal interest rate in a Vector Autoregression (a relatively atheoretical statistic technique), money didn't seem to matter. Bernanke rescued the relevance of money but showed it mattered through the associated channel of credit. This work stands among the most important contributions in macroeconomics in the last twenty years. It also suggests that Bernanke, as Fed chair, will look closely at credit indicators. Here is a Bernanke speech on money and the stock market.
3. Inflation targeting. Very few if any economists will now defend the old Friedmanesque recipe of monetary targeting or a fixed rule for money supply growth. It has become increasingly popular to look toward inflation targeting. New Zealand and Canada led the way in terms of policy when their central banks explicitly adopted a range for inflation targeting; 0-2 percent in the case of New Zealand. Bernanke would like to see the Fed put greater emphasis on price stability. He did not invent this view, but he is the individual who made it politically credible. Right now the major debate in the theory of monetary policy concerns whether inflation targeting should be tight or loose. Bernanke has been a major force on these issues, and he has often been praised for his leadership in this area, even by those who disagree with him. Here is a 1999 Bernanke essay on inflation targeting.
4. Causes of the Great Depression; here is one paper, here is part of his book. Bernanke did a good deal of comparative work and concluded that the Great Depression became great because of deflation, its international transmission, and rigid exchange rate policies. Recall that Sweden, which cut the link from gold and let its currency float, had a much milder depression during the 1930s. This has become part of accepted wisdom; in a policy context it implies Bernanke has a low tolerance for deflation. Here is a Bernanke speech on the Great Depression. Here is an Anna Schwartz review of his book.
5. The global savings glut. Trade and budget deficits are enormous, so why aren't we collapsing? Why do real interest rates remain so low? Bernanke cited the possibility of a global savings glut; here is one explanation of the idea, here is another. The bottom line is this: some Asian countries have high levels of savings, but poor financial institutions. They invest their savings in the United States, and often we invest in back in Asia. In essence they are "outsourcing" their savings to foreign financial institutions. This recycling of Asian savings may help explain what is going on in the global economy. It also suggests that the current U.S. position is at least temporarily sustainable. Here is a relevant Bernanke speech; here is some commentary on the idea.
Now on this last point general, china does not yet have the financial system we do and I understand Japan still has lots of non performing loans on the books - perhaps soon the USA will get some non performing loans - but we clean ours up over here in the west no at the cost of little people and old people.
But we must also look at this mans negatives:
nationalreview.com
It’s likely that the key federal funds interest rate will be at 4.5 percent when Greenspan relinquishes the chairmanship to Bernanke, which means in all likelihood that the Fed’s tightening effort will be close to complete. This takes a certain degree of pressure off Bernanke, but it doesn’t tell us much about how Bernanke will monitor price-level pressures after that. I preferred Hubbard to Bernanke only because I thought Bush’s former CEA chief would be more open to a price-rule approach to monetary policy, whereby the Fed would shadow sensitive forward-looking indicators of excess liquidity and incipient inflation: gold, commodities, the dollar, and the Treasury yield curve (and perhaps the TIPS spread and the real short rate).
While I’m told that Bernanke is open to market indicators, he also seems overtly committed to an explicit target for the core inflation rate, which I view as problematic. Trying to stabilize a backward-looking index of prices by manipulating short rates probably is an impossible task, not to mention an undesirable one. Most core inflation indices lag the Fed’s monetary actions by no less than 18 months, which means that responding to a price index reflective of the stance of monetary policy more than a year prior would be like running through an obstacle course backwards and blindfolded. Doing so wouldn’t prevent a hard landing — it would ensure it.
I also have some concern about Bernanke’s view of the inflation process, which seems to be driven by different measures of “slack” in the economy instead of indicators of excess liquidity, which is explicitly under the control of the Fed. The slack-based approach is embraced by many Reserve Bank presidents and Fed governors, and is also favored in academic circles.
The term “slack” simply means how much the economy is growing below or above its historical average or some measure of its potential. It is a variant of the Phillips curve, which asserts that inflationary pressures are the result of employment levels, wage pressures, capacity utilization rates, and the deviation in output from trend and asset values. I don’t like this model because the empirical linkage between growth and inflation is non-existent, or inverse, while the relationship between unemployment and inflation is significant and positive. The data clearly show that inflation raises unemployment with a lag, precisely the opposite of the original precept of the Phillips curve. Wage pressures and capacity constraints can result from excess liquidity and thus be positively associated with inflation, but on their own they have no power to raise the dollar price level without the accomplice of excess money.
Inflation is a monetary phenomenon, not a cost-push event.
So I we must ask our canadian and new zealand friends about inflation targeting and if it is the better approach?
gold-eagle.com
We believe Bernanke promoted the plan to hand out $2,000 to hurricane victims. It is an indication of more micro-management to come. See China Is Open for Business: Will China’s growth eliminate inflation? (September 21, 2005) |
