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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: kris b who wrote (50354)	1/20/2006 1:26:51 AM
From: John Vosilla	Respond to of 110194

"Btw. It is not going to be easy for the banks" Which is why I watch the major financial institutions charts closely as a leading indicator.. They can manipulate LEND but C,BAC,MS, MWD and JPM is a different story..

To: kris b who wrote (50354)	1/20/2006 5:07:40 AM
From: shades	Read Replies (1) \| Respond to of 110194

Can country function without a banking system? According to Bernanke - No. mercurynews.com In his book, Ben Bernanke calls understanding the Depression 'the Holy Grail of macroeconomics.' Some conclusions he has drawn: 1. Beware of outdated orthodoxies such as the gold standard. 2. A stable banking/financial system is critical. 3. The Fed's key objective should be stable prices. (kessler disagrees fundamentally with this one - stable wages - not stable prices should be the goal) 4. Don't try to prick asset bubbles. 5. An inflation target can defend against deflation and inflation. andykessler.com The problem with the classical gold standard is that the whole concept was based on the competitiveness of workers’ wages. When some rich flaneurs (idlers, slackers) in France began buying too many British pots and suits, and the gold flowed out of France, all the lower class French workers had to take a pay cut or get laid off. That wasn’t what they’d signed up for. No one puts up with a cut in wages without a fight. “But gold is flowing out” is a little tough to explain to the common worker. So they revolted and formed unions. Marxism, socialism and anti-productivity political regimes would soon flourish. All for some shiny metal. The wrong thing was held constant. If wages had been held relatively constant and the exchange rate of money into gold allowed to float (like today), then workers would not have been as disaffected. In an uncompetitive country, instead of wages going down, the value of the currency would drop, import prices rise, and the blame laid on the foreigners for increasing prices. The flip side would have worked well for England. With a rising currency from a floating exchange rate, products like textiles would have gotten cheaper in both England and foreign markets, but not quite as cheap. So what? The market would still grow. National wealth would be created from a rising currency and money supply could grow at its natural Real Bills rate, rather than be affected by too much gold. Rather than lowering wages and disenfranchising their customers, the British should have been working on ways to increase the wealth of all these other countries, because they were the end markets for the goods. And the more gold they collected, the smaller the markets became for their products. Pretty stupid.