World bourses are falling and bonds are rising because people expects deflation. As Krugman explains
when prices are falling, just sitting on cash becomes an investment with a positive real yield – Japanese bank deposits are a really good deal compared with those in America. And when that happens, the economy may stay depressed because people expect deflation, and deflation may continue because the economy remains depressed.Mentioning Japan as an example of what can be happening to America makes me feel worse. A year ago I bought a few dollar denominated Bonds of the State of Israel and they made 8%. This is looking more and more like a prolongued depression. Maybe I too should get out of the stock exchange.
Reflexion: Who will profit from deflation? The Chinese. America's debt to China will have to be repaid with more valuable dollars. It is unbelievable that the USA is doing this to itself.
17 comments:
US home sales at a 10 yr. low, despite record low interest rates. If people see housing as just a place to live and not an investment then they have less incentive to put their money into it. Just as before housing kept rising because people thought it would appreciate and kept buying more, now they think it is falling and are buying less - a self-fulfilling prophecy. How do you break the cycle and restore a stable market ? I don't know.
K
Madam Koko, soothsayer and heir to Nostradamus: "Double dip, for sure. Or worse."
Anon.
Madam Koko was recently sighted in Nigeria. This is a reliable sinister omen for the economy. I quote a report from Facebook:
"I WENT TO OUR LADY OF APOSTILE IJEBUODE N DEY TOLD US DAT THE SCHOOL WAS A BURIAL GROUND. DEY MADE US BELIEVE DAT MADAM KOKO COMES INSIDE THE HOSTEL EVERYNITE . MADAM KOKO WAS SAID TO BE A LADY DAT WORKS IN HIGH HEELS, HAVE A HEAD BUT ALL DEY SEE IS HER LEGS N SHOE."
Source: http://www.facebook.com/topic.php?uid=2262074529&topic=5097
Thank you for referencing the non-logocentric source documents behind your key heterodox claims, so that other scholars can easily trace the most complete justification for the position you have supported in your more recent writings. I will consider addressing the basic core of your ideas in my upcoming master's thesis on Foucouldian analysis of the norms of academic economics as a form of social control by privileged groups.
In fact this is really the best example I have found of non-Western economic views that are not recognized (hence cryptically-implicitly de-valorized) by the academy because they transgress the restrictions of Western logocentristric thoughtways.
Sure, thanks. Thinking out of the box should be given attention, the box being Western logic developed originally by Greek sofists. Madam Koko does not think with a Western head and her eyes see what we poor terrestrial creatures cannot see. We should be most careful when mentioning Madam Koko as it may causes lunacy. I propose you to avoid mentioning her in your thesis.
Foucault's thought too should be used carefully (pls avoid his "The History of Madness").
Madam Koko say, "The best way to halt the coming Obama hyperinflation is to make the money edible. When you can purchase fewer calories than you can get by eating the banknotes, then rational actors (J,K, B, Rob S and Ivan)will consume them instead of bothering to shop. This will of course rapidly reduce the money supply, or at least bring it into some sort of sustainable equilibrium with its purchasing power.
Excuse me while I take off these high heels. My feet are killing me! Must be these opposable toes."
Anon.
> When you can purchase fewer calories than you can get by eating the banknotes
A new currency made of jello shots would certainly lighten the sorrows we'll be experiencing when the time comes. However I consider this change optional.
"[...] there are 454 bills in a pound of currency. During Fiscal Year 2009, over six billion bills of all denominations were printed in the United States, consuming 21,476 bales of cotton. The total dollar value of these bills was two hundred and nineteen billion dollars, or $21,290.55 per pound of cotton."
Continuing to purify cellulases from bacterial culture may not be realistic in the new US environment. However, feed the cotton to ruminant animals and their native cellulases will do the job quite nicely in the gastrointestinal lumen.
One can eat the resulting beef, but I consider it more efficient to feed it to good egg-laying hens: sometimes a few dozen cells of salmonellae can be painstakingly collected from the egg shell using a scanning-tunneling electron microscope and a pair of very fine-tipped needle nose pliers, and stored. When enough are accumulated over the decades they can be gamma-irradiated and consumed for bonus calories.
What makes you think that the Americans have any intention of repaying? The Chinese and their enablers have already gutted US industry, they have had their reward. Force majuere backed by the Pacific fleet is the way forward.
Ivan,
The unavoidable conclusion is a China vs America war. That would clear up debts, get the economy moving and solidify the country's political structure. The idea is classic Marxism, the cyclical crises of capitalism lead to wars. Hope not.
Deflation has been happening for a while. Look at the American money supply.
http://globaleconomicanalysis.blogspot.com/search?updated-max=2010-08-25T13%3A15%3A00-05%3A00&max-results=3
It's pretty hard to conceive of a serious war against China. There could be a proxy war, certainly, but that's the case at all times with all countries.
Although, some do claim that US pilots engaged Russian ones in Korea, firsthand. No proxy. Maybe even my grandfather, though he flew recon. But Korea was pre-ICBM. Prospects for nuclear war were relatively modest in those days, as they are now in the second-strike MAD era, or were, at least.
I believe Chinese also directly engaged Yanks in Korea. But they were no-accounts nuclearly, at the time - just a Russian satellite as far as potentially being attacked by a nuke state (but that potential was very low).
I hope and pray that there's no war now that my boy is stuck behind enemy lines.
I really don't see it coming. The US is too worn and tired to want one. Even if the capitalists wanted one so they could get rich selling guns, the people won't send their boys as cannon fodder anymore (the only reason the US has been able to prosecute the Iraq and Afghan wars is that we have an all volunteer army and that army is already stretched for volunteers).
The Chinese would have to be nuts to change course now, when what they have been doing has been working so well for them. Near where my son is staying there is a "Best Buy" and a "Wal-Mart" and everything else you would find in a modern shopping mall anywhere on earth - Italian restaurants, jewelry stores, whatever. China is fully a part of the modern world for the 1st time in centuries. Why would you kill the goose that lays the golden eggs? The Japanese became far richer selling Toyotas and Sonys than they ever were as colonial masters.
K
Sanity will prevail in China.
But will it prevail in the USA?
Anon.
There is a need to destroy inventories. People will not buy anything so another outlet has to be found. May be not China, may be North Korea.
I don't believe that - that's the Obama/Keynes "broken windows" theory of economics - according to that theory if you break all the windows in a town you increase the GDP because now someone has to manufacture and install replacement windows. I think that is faulty accounting - resources went into making the original windows which are now lost. People have to divert capital that they would have spent better elsewhere into fixing their windows. There is an example of this in the "cash for clunkers" which was almost as good as a war in destroying useful assets. Since cash for clunkers, the price of used cars has shot up, so poorer people (the ones who buy used cars) have to dedicate more of their income to them and can't buy other things. All these liberal schemes are based on faulty accounting where you completely ignore one side of the balance sheet. In my experience liberals are usually the English major types (or ethnic studies, womyn's studies, etc.) who are terrible at math anyway.
K
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