Japan followed this line of thought, and while US threw stones
at it, I think it was a success - the unemployment was fairly
low after the twin bubbles popped thanks to the growth in
the government sector, despite the fact that the
Nikkei dropped 80% from the top. And the Re bubble was huge -
the land under the Emperor's palace in Tokyo was worth
more than California 20 years ago. Of course, the Jury is still
out on that one, but the country focused on real production
as opposed to speculation. Right now they have nobody to
export their products to, the crisis is global.
In some sense you are right, but for now it appears we have
a huge debt mountain, a signature of Kondratieff winter
rather than inflationary forces. The US would face
the fate of Argentina or Iceland if it were smaller, with
significant stagflation, but
that fate will most certainly produce a huge global crisis,
and it already did. The Jury is still out on hyperinflation,
and US will need to drastically reduce and reform medicare/SS
entitlement and raise taxes, eventually.
Some printing does reduce unemployment from where it otherwise
would be, and is prescribed to get out of the debt crisis.
While US was on gold standard, it got out of crises like
this through engaging in wars, which achieved exactly that -
getting out of the debt crisis through war time
major printing effort. If we can print without wars, great!
Unfortunately, corruption and crony capitalism
that develops around the printing press tends to quench the
positive effects and enhance the negative effects. |
