Monday, July 2, 2012

Man Made Disasters

We suffer from central banks that enable irresponsible governments...

Paul Volker or Alan Greenspan, can't remember who, famously said it was the Fed's job to take the punch bowl away once the party gets to rollicking. Now, instead of taking the punch bowl away, central banks spike it with Four Loko and bring in hookers to keep the orgy going.
what we are witnessing now is simply the inflation of a world-wide bubble, which will sooner or later burst with agonizing consequences. Just as before, the cause is bad economic policy and bad central banking, too many rescue packages and too much printing of money.
But aren’t bubbles supposed to be more fun? Where’s the giddy feeling of illusory wealth, this time?
A bubble in government debt, however, is a bubble in the quantity of debt outstanding, too much borrowing against not enough tax revenue, not a bubble in its price. It’s impossible to generate speculative excitement about the coupon payments, because they’re fixed. Inflation can only decline so far before the fear of deflation takes over. (Buy Now, Pay Later)
This is not just a progressive or liberal problem.  Politicians of all stripes have conspired to bring us to this brink of disaster.  Printing money does not create wealth.  It is like shrinking the size of an inch when you've cut the board too short.

For an in-depth explanation, see Jeffrey Snider's Snapshots of Dysfunction in a Fiat Money World

26 comments:

Ducky's here said...

Printing money occurs when the banking system LOANS money.

That ain't happening right now. Frankly, I'm not sure what to call this replenishing of the banking system.

FreeThinke said...

You can't loan money. You can only LEND it. Loan is a noun. Lend is the verb.

Consider your wrist politely slapped –– but only in the interests of protecting the integrity of the language, so please don't let your feathers get ruffed, Ducky. The admonition was kindly meant.

_____________________

As for the engine that drives the economy:

It's running on FUMES.

HELP! "Stop the World. I Want to get Off."

~ FreeThinke

FreeThinke said...

PS: We have a piece on this very subject already in the pipeline.

Please watch for it at


http://freethinkesblog.blogspot.com/?zx=da63e836789862c5


~ FT

conservativesonfire said...

The central banks have run out of ammunition. They are only trying to keep the TBTF banks afloat. It can't last. Maybe we should prick the bubble?

Silverfiddle said...

@ Ducky: Frankly, I'm not sure what to call this replenishing of the banking system.

A crime? A global fraud? Attack of the Oligarchs?

I can think of lots of things to call it, and most of them are unprintable.

FreeThinke said...

Let's just call it a MITTY SHESS, and be done with it. ;-)

~ FT

Silverfiddle said...

Oh, it's much more than a mess. It is criminal.

Ducky's here said...

@FT - You can't loan money. You can only LEND it. Loan is a noun. Lend is the verb.

----
Thanks Grammar Girl. Verbal expression can be a pitfall for us right hemisphere types.

However, the point does stand.

I do lean towards Silverfiddle's position that we should avoid economic explanations and just call these guys freaking grifters who belong in the joint.

Always On Watch said...

Duck,
Verbal expression can be a pitfall for us right hemisphere types.

Really?

Most of the right hemispheres that I teach grammar to are doing just fine with it.

Ducky's here said...

Actually it's pretty well defined AOW, that pure "left handers" (tested by how you sight a rifle, eye dominance) have a tougher time with grammar and spelling then right handers.

Shaw Kenawe said...

No argument from me on this subject, SF.

The banksters and criminals on Wall Street deserve the full measure of the law, which, it is pretty evident, they will not suffer.

It is we who will do so.

Will "take no prisoners" Hart said...

Greenspan, through his idiotic interest rate policy, printing of money, and creation of a bailout culture, did far more to cause the economy to crash than did any other person in Washington- more than Bush, more than Clinton, more than Gramm, more than Raines, more than Frank, more than all of them combined, IMO.

Kid said...

SF, Agreed.
How about this:
Democrat housing policy and Greenspan Fed policy(which includes big bankster greed since they control the Fed) mainly fueled the housing bubble.

Those who bought houses in say the last 10 years paid too much for them.

The system 'crashed' or the bubble burst, same diff, and as a result, everyone's home Value and Equity went down about an average of say 30% (an estimate). The people who should have lost that money were the big banksters who were playing with the monopoly mortgage money (Credit Default Swaps) that are not tied to physical property.

Ben Bernanke and Henry Paulson, essentially printed up between 30 and 40 trillion in the form of trading perfectly good Treasuries for the above mentioned worthless mortgage CDS paper.

The net is that the Transferred 30% of the home equity wealth of Americans from their home equity to the banksters in one quick fell swoop.

Probably the biggest theft in the history of the world.

Will "take no prisoners" Hart said...

And don't forget Geithner.

Leticia said...

We just need to get rid of the whole lot of them, period.

Otherwise, monopoly money will be worth more than the American $1 bill.

Will "take no prisoners" Hart said...

You can specifically thank Mr. Geithener for the Bear-Stearns bailout. If it wasn't for him, it probably wouldn't have happened.

Ducky's here said...

... and don't forget Dick Armey (R-Texass). You don't want the rethug pea brains to feel left out.

KP said...

SF, it is criminal. If you get it, like you do, then it is similar to those moments on a bike before you go down, or in a car when you know you will hit another.

Closer to reality must be in an airplane that is doomed to crash land. You think and brace and hope for the best. In the plane you don't hear about politics; only survival. All the moaning and groaning of the left and the right seems so silly.

My wife and I have rolled up any ideas of me expanding my business as a sole proprietor. In fact, we will contract it and take our chances on her salary rather any new small business optimism. It is humbling, but it is time to hunker down for a very hard landing.

KP said...

@Ducky << pure "left handers" (tested by how you sight a rifle, eye dominance) have a tougher time with grammar and spelling then right handers. >>

True. Even more challenged are left handers forced into right handedness.

Jersey McJones said...

For the life of me, I will never understand why "conservatives" think "progressives" have rigged the Bankocracy we have today.

YOUR GUYS DID IT. YOU VOTED FOR REAGAN AND BUSH AND BUSH.

Long before Obama was a blip on the political radar, those three presidents sunk us into more debt than all of the others all the way back to George Washington.

YOUR GUYS DID IT.

You were apparently so worried about other bullshit issues, that you missed the whole thing about sustaining our national best interests.

You cons demanded your ideological wants, and we've had stagnant upward mobility ever since. And that's BAD.

America was built by UPWARD MOBILITY.

AND UPWARD MOBILITY HAS BEEN DECREASING EVER SINCE YOU CONS RIGGED THE SYSTEM.

Your guys did this. Not mine.

And what reeeeeally bothers me is all this macho patriotism bullshit.

We need to invest in our country right now. Not in fuckin bang-bang toys.

JMJ

jez said...

Nouns can become legitimate verbs. Recently, "telephone" branched out from a lowly noun into an arguably more useful verb; even more recently, we started to "google" for information. In the case of "loan" the great leap occurred in the 16th century. I don't like excessive "verbing" either, but maybe it's time to let this one go. :)

Silverfiddle said...

Jersey:

Do you just come here with a pre-canned statement and paste it in?

Your moronic statement has nothing to do with what I wrote.

Did you read this?

This is not just a progressive or liberal problem. Politicians of all stripes have conspired to bring us to this brink of disaster.

Where did I engage in "macho patriotism?"

You're a liberal loon, Jersey. And by the way, Obama has racked up more debt than all the "cons" combined, with nothing to show for it.

You're a hopium-smoking Obama stooge, and your absurd comments make you a laughting stock here.

Z said...

"Your moronic statement has nothing to do with what I wrote."
OOOKAY then....that's a relief.

Silverfiddle said...

Z: I seriously wonder if he even reads the posts sometimes before shooting off his mouth.

FreeThinke said...

Forget disdain; be of good cheer.
The annual celebration
Of our fabled Declaration
Of Independence and Courage draws near.

Recapture The Spirit of '76
Please don't waste your time
In this season so sublime
Carping while kicking against the pricks.

Instead, merrily raise your glasses
Abandoning frets and bothers
In a toast to Our Founding Fathers
And bless the soldiers who saved our asses.


~ FreeThinke

Z said...

SF, Ducky does the same thing; it seems like he reads the title and makes up the piece to fit whatever criticism he wants to give, or finding the one fact in the thing he can disabuse! Or killing the messenger so the facts get drowned out in the killing.
Since he came to my blog, my mantra with him's been "Ducky, READ THE BLOG, it helps!" :-)