>>the answer is, it is hard to say. if it were up to the market, then we would get deflation, as private sector credit is contracting, which would normally serve to contract the money supply.<<
absolutely - we hit the debt ceiling, imho. society simply can't take on more interest bearing debt.
>>the other side of the coin is printer Bernanke and the deficit spenders in the administration. the question is really, how far are they prepared to go to avert the deflation.<<
maybe the bankers want deflation now. yes, baghdad ben portrayed himself as helicopter ben, but was that a ruse to grease the debt bubble to ever higher levels?
when has baghdad ben ever done anything outside the self interest of his private bank owners? my answer is simply *never*.
the question then becomes, what do the bankers want - inflation or deflation? that is most likely what baghdad ben will do, imho.
>>in theory, the government can force inflation on the economy.<<
this is false under our current system. the government simply doesn't control the nation's money - they gave that POWER to bankers. the federal reserve is PRIVATE BANK owned and operated by PRIVATE BANKERS.
the PRIVATE BANKERS will decide monetary policy - almost certainly in their self interest. the recent QE was 100% about bailing out the owners of the federal reserve.
>>the question is whether this will be seen as practical, and whether the markets will have time enough to stop these efforts in their tracks (similar to an hyperinflationary spiral that gets out of control, a deflationary spiral of accelerating defaults and debt repayments can acquire dynamics of its own and become very difficult to stop).<<
hyperinflation is very bad for bankers - and they control monetary policy. why? what will a run on a bank do? what happens to lenders? yes, they've offloaded a lot of their loans to the tax payer - but that just means we get screwed as the banks shut down.
>>Bernanke is on record that he will take all steps nevcessary to avert a deflation (a deflation would shift economic power away from the status quo, the preservation of which is his job).<<
baghdad ben has NEVER done his mandate. EVER. his mandate is to keep "credit aggregates" in line with GDP and its potential.
review this chart...
market-ticker.denninger.net
credit growth is parabolic compared to gdp - when his mandate is to keep them about parallel. there is a reason why they NEVER mention "credit aggregates" when speaking about the fed's mandate on TV.
baghdad ben has also come out and said that he won't monetize the debt - so raise taxes and cut expenses. is he lying now or when he said he was helicopter ben? my guess is he will print at will to save his bank owners, but nobody else will be targeted for benefits.
>>However, he continues to run the Fed countercyclically, this is to say, he pulls back whenever markets recover. The Fed's decision to end QE (for now) must be seen in this context. This leaves the ultimate outcome still in doubt.<<
agreed - simply because not enough cards in the deck our out to indicate how the private banking owners of the fed will maximize their wealth. for that is almost assuredly the path they will pursue.
>>as to unemployment, given the massive amount of government intervention in the economy since the crisis, there is every reason to remain very pessimistic on the chances for a genuine economic recovery (i.e. one that is not just an inflationary mirage). in all likelihood unemployment will remain at a high level, although there could be some cyclical improvement from time to time based on the inventory cycle.<<
the debt limit has been hit and the money went to big banks and state governments - not much left for anyone else.
>>it is important to realize that the downturn is not similar to other post war downturns. it is a genuine credit bubble collapse, the likes of which haven't been seen since the 1930's in the US. one could perhaps look at Japan for a contemporary comparison (although there are important differences as well, some good, some bad).<<
absolutely correct. debt ceiling hit.
>>the fact remains, the 'long run' has caught up with us, finally.<<
as it will in any money as debt monetary system - effectively a ponzi scheme where ever more debt is required to make good on old debts until you eventually hit the debt ceiling.
>>all the structurally damaging interventions<<
ravenous looting for the benefit of special interests, anyone?
>>that have been used to avert economic corrections in the past are now coming home to roost. the downturn is of the secular variety, at least one degree of cycle trend in order of magnitude above the 'usual' post WW2 downturn.<<
the big kahuna.
now, how do the big bankers increase their wealth the most?
by collapsing the economy and buying assets at 10 cents on the dollar and then renting their feudal lord assets to their serfs?
or by hyperinflating and collapsing their business model?
remember - geithner, bernanke, dimon, lord blankfein, and their over lords will make the call, NOT government.
the one wrench is the unknown derivative exposure - and that could change the incentives by 180 degrees.
head on a swivel.
swarmusa.com is a grass roots effort to return the money powers as close to the people as possible - and to kick out the criminal banking cartel currently running this country. |
