frustrated@ECB -- trotsky, 15:08:08 08/02/06 Wed
it shouldn't have any big short term effects, since everybody knows it's coming - but every rate hike, regardless which CB does it, brings the world one step closer to a synchronized stock market melt-down imo.
Hambone@BGO, KGC -- trotsky, 15:00:22 08/02/06 Wed
one could probably argue that they're simply taking a breather after a strong run-up, but i've noticed that they lately tend to move in tandem, both up AND down. in one of the last exchanges i had with frustrated on the old kitco board we discussed the possibility of a merger between those two. this isn't too far-fetched if you think about it. maybe an announcement is imminent?
smythe -- trotsky, 14:48:01 08/02/06 Wed
one must be careful not to confuse our era of State Capitalism with true free market capitalism. labor is a basic resource like any other, in the sense that capital must compete for it.
as for 'democracy' - that's for Old Greeks imo. as James Bovard once put it, 'it's like two wolves and a sheep voting on what's for dinner'.
i for one have arrived at the point where i question the need for government in its entirety. i don't think it can be really improved upon - the historical cycle - from bondage, to revolution, to freedom, to dependency and back into bondage - has played out too often to not become deeply cynical about it. when looking at what Leviathan is actually DOING with the money it forcibly takes from the productive sectors of society, one must conclude (unless one feeds at the State's trough of course) that we would be far better off without it.
one of the most worthwhile analyses/critiques of the State is this classic piece by Murray Rothbard:
The Anatomy of the State
lewrockwell.com
mmontagne@flation debate -- trotsky, 14:27:24 08/02/06 Wed
you have summarized the respective positions well. there are a few additional considerations, such as the current phase of the K-cycle which you haven't mentioned, but by and large what you said is correct. i would also add, a major point made by the deflation camp is that while the Fed could in theory change its modus operandi and monetize just about ANYTHING, and thus FORCE an inflation scenario into coming into being, this is in our view highly unlikely to happen.
the reason is that 1. it takes a long time for the bureaucracy to act. by the time it decides to change its m.o., the nadir of the crisis has probably already passed. and 2., and more importantly, we don't believe the Fed would do something that jeopardizes its power. if it utterly destroys the currency it issues, it loses its power.
the size of the private sector debtberg plus the associated malinvestments is unprecedented. it appears highly unlikely that the private secor could be enticed to continue expanding its indebtedness in a major contraction, especially one that entails a period of strong deflation of financial assets and housing, both of which serve as collateral for a lot of existing debt. therefore, the only recourse for the Keynesian cranks populating the bureaucracy would be to resort to the 'Japan option' - which entails a massive expansion of the State's indebtedness, as well as a flooding of the money markets with 'free' money. we have already seen that this is not sufficient to stop a deflationary spiral - in Japan, bank credit had at one point contracted for 60 months in a row, in spite of the government borrowing and spending like a drunken sailor (and not only keeping existing malinvestments alive, but liberally adding fresh ones on top).
many fellow adherents of the Austrian school think deflation isn't possible in a fiat system, however, i note that Frank Shostak has adopted a somewhat more nuanced view. after all, 'money' that came from thin air CAN easily go back to whence it came. in essence this involves defaults overwhelming the printing presses. not a pleasant thought to be sure, but one that deserves serious consideration. |
