Forum Replies Created
You are so right Krogoth.
The words, River, Sold and down are springing to my mind.
I really think you do have everyones support here Chris.
The control of the money supply has been a hotly debated idea for a long time, to control the money supply like you suggest also ends up requiring some control of production, so the money supply increases to meet the capabilities of production. Money supply only seems to be created fast enough through the fractional reserve system. Your suggestion has some interesting social and political arguments. Try this:
Microsoft document reader is required.
These sort of ideas in the form of superstates were proffered by the National Socialists before and after the war. Not dissimilar to Il duce, but a bit more refined, and very very close to what the EU is now. I am sure it will seem like a good idea until we get it.
Guys, I think you are going from:
Europe cannot afford for America to collapse >> America is stopping Europe from collapsing. It’s a subtle difference.
If AIG only has 300 bill of insurance exposure to European banks, then thats absolutely nothing. They will fix that with a couple of keystrokes.
What would be far more likely is that European nations would change capital reserve requirements completely, ECB borrowing requirements would be dropped and where required alternative insurance would be purchased.
However a collapse of the American financial system, would inevitably do the same to Europe, with euro held US assets being marked down to 0 or close and very low dollar values, the euro banking system would be in big big trouble.
As Chris has pointed out before, if someone drops their dollar holdings (it won’t be the europeans) then the party is over for US and Europe financial systems.
Europe cannot afford for the US to collapse, there is a world of difference between that and bailing them out.
Well, actually I am not, but I am fed up having particular climates promised, by so called experts, and then never being delivered.
In the 70’s I was promised a new ice age, which I was suitably dressed for, at no little expense.
In the 80’s I was warned of the Mediterranean climate that I would shortly be enjoying, so out came the speedos.
In the 90’s I was told that I could expect tornados, so I started eating to gain weight in an attempt not to be blown away.
I have in each decade been promised these changes by the most enlightened minds of our time, and roundly expounded on by the media, I have always been left disappointed. So today, I have decided I am a climate expert(on the UK at least), lets face it, I can’t get worse than a 100% failure rate .
If you live in England, it will slowly rain for more and more of the year. That’s it.
You may come back to this posting in 100 years (if Geoffrey is correct and we all live longer) and see the only person to correctly predict climate change in the UK was me. And while I am a technological layman, a brief glimpse at history, does seem to suggest that we have an impressive track record in this area, a technological JIT solution for many of our previous calamities such as the agricultural revolution etc.
Not too many of us here are economists, and in my opinion that is a damned good thing, those who doubt that should have a look at the coldwar games Rand played.
For me it’s better to come from a non economist/banking/investor slant but to come from a human one.
If anything Krogoth, I do not think you go far enough. I think perhaps America needs an even bigger rethink. But it is hard for Americans to step out of the box after all the decades of indoctrination. I am not suggesting that some other nationality has this ability, everyone nation has it’s own ways of thinking.
You are probably right about America being able to support itself, But will it dare do it? What you are suggesting … well , I hope you are part historian too 🙂
I think want you want, may take a revolution, or an outside force so great, that America has to make these changes.
I am sorry if my post seemed critical, I just felt you could/should go further. I agree with your sentiments entirely.
Thats a very good explanation and commentary GT,
I can’t say for sure, but certainly in the UK, house prices are not included when calculating inflation.
A 5% increase in the price of a house is actually a lot more serious event than a 5% increase on a tin of beans, well for most people at least. So when inflation is being calculated, a huge part of the REAL cost of living for most people is not included. Because we have had this property boom, and it was not considered when calculating inflation, the amount of inflation , which as Chris carefully pointed out is actually about currency we are left with a hugely distorted picture of what our true level of inflation is , the true cost of living and a misguided (although there are other indicators) few of how much money there is.
There is also the issue of asset stripping, in a bubble the item in question tends to raise above it’s normal value. In a race to be involved people offer more money for the item, and it appreciates in value for a short time, before falling again. Now if you owned a house that went up in value , from 100 to 1000 you may wish to take advantage of that money you made, and mortgage the property for say 700. Now the crash finishes and your property returns to its original value of 100. This is very bad for you, you are in debt without an asset to back up that debt. The whole point of fractional reserve banking is to be able to lend money as needed at source. A crucial part of this is being able to accurately match the value of the asset to the liquid funds. That 700 you took and spend is now in an economy when really it should not be, as you do not have an asset worth 700. This, the government in the UK at least does not take into account.