The Collapse of Globalism, JR Saul, Book Review
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Re: RE: The Collapse of Globalism, JR Saul, Book Review
You misunderstand the problem though.
In 2000 and 2001, the Treasury and the Federal Reserve were deathly afraid of a meltdown and deflation after the collapse of the technology and stock market bubble. They wanted to avoid, at virtually any cost, a repeat of Japan after the real estate collapsed and 14 years of stagnation and deflation, or even a depression, a real depression, a la 1929. Thus, the government engineered the largest infusion of liquidity in the economy ever in an effort to stave off a debt-induced deflation since there was excess capacity in the economy and too much corporate debt. Thus, the federal government ramped up spending and cut taxes, while the Fed dropped the funds target to 1%, unprecedented in decades. This is the genesis of Bernanke's "the Fed can drop dollar bills out of helicopters" statement. The thinking was that the government knew that corporate spending was going to collapse - which it did - so they had to increase government and consumption spending. So when you say that demand wasn't the problem, well, the government was looking ahead, believing that demand was going to become the problem if they didn't prime the system. And, if you've read any economic history, I believe they were right.
Now, this response has lead to other problems in the economy, of which the criticisms are very valid IMO. The infusion of liquidity lead to an explosion in the money supply, which found its way into the housing market, and has engendered a bubble in housing IMO. It also lead to a bubble in the bond market. My guess is that we're going to have to pay the piper for that at some time. But I've thought that for a few years now. And it looks like, with the consumer now slowing, corporate spending is picking up, just as the Fed wanted. If that's the case, then the economy will do fine. My bet is that its not that simple though, that the effort to drain the system of liquidity, which is what the Fed is now doing, could lead to a recession, perhaps a sharp one, as the imbalances in the economy are brought back into line.
Now, understand that that is a different argument from "We are in a depression" or "The US economy is going to collapse" or "We are going to have a giant deflation because of all the paper money" etc. Those are arguments about the fundamental structure of the US economy. The fundamental structure is fine. However, the imbalances imbued in this cyclical part of the economy worry me.
BitWhys said:
You misunderstand the problem though.
In 2000 and 2001, the Treasury and the Federal Reserve were deathly afraid of a meltdown and deflation after the collapse of the technology and stock market bubble. They wanted to avoid, at virtually any cost, a repeat of Japan after the real estate collapsed and 14 years of stagnation and deflation, or even a depression, a real depression, a la 1929. Thus, the government engineered the largest infusion of liquidity in the economy ever in an effort to stave off a debt-induced deflation since there was excess capacity in the economy and too much corporate debt. Thus, the federal government ramped up spending and cut taxes, while the Fed dropped the funds target to 1%, unprecedented in decades. This is the genesis of Bernanke's "the Fed can drop dollar bills out of helicopters" statement. The thinking was that the government knew that corporate spending was going to collapse - which it did - so they had to increase government and consumption spending. So when you say that demand wasn't the problem, well, the government was looking ahead, believing that demand was going to become the problem if they didn't prime the system. And, if you've read any economic history, I believe they were right.
Now, this response has lead to other problems in the economy, of which the criticisms are very valid IMO. The infusion of liquidity lead to an explosion in the money supply, which found its way into the housing market, and has engendered a bubble in housing IMO. It also lead to a bubble in the bond market. My guess is that we're going to have to pay the piper for that at some time. But I've thought that for a few years now. And it looks like, with the consumer now slowing, corporate spending is picking up, just as the Fed wanted. If that's the case, then the economy will do fine. My bet is that its not that simple though, that the effort to drain the system of liquidity, which is what the Fed is now doing, could lead to a recession, perhaps a sharp one, as the imbalances in the economy are brought back into line.
Now, understand that that is a different argument from "We are in a depression" or "The US economy is going to collapse" or "We are going to have a giant deflation because of all the paper money" etc. Those are arguments about the fundamental structure of the US economy. The fundamental structure is fine. However, the imbalances imbued in this cyclical part of the economy worry me.
Re: RE: The Collapse of Globa
And that is absolutely correct.
The war spending of the Vietnam War, the expansion of the money supply in the 1960s lead to an inflation in the 1970s, which caused the US to abandon its gold conversion rate of $35 an ounce, and ultimately lead to the collapse of the Bretton Woods.
Its amusing to read the accounts behind that, because when France saw what was happening, they demanded the US exchange France's reserves for gold, since only central banks could exchange dollars for gold at the time at the fixed rate. Nixon told them to take a hike.
However, now you are getting into a debate about the nature of money, and its my opinion that guys like Saul - and an assortment of gold bugs - don't understand the true nature of money. And that is money is whatever people accept as money. Reflating the economy in such a manner is Keynesian to the core. That's why Keynes called gold a "barbarous relic" and thus condemning the gold standard.
Look, you're obviously a well read and intelligent person. And its not like all of Saul's criticisms are invalid. However, you should read serious critics of the economy, not Saul. Guys like Joseph Stigliz, Paul Kreskiel, Stephen Roach, James Grant, etc.
BitWhys said:
And that is absolutely correct.
The war spending of the Vietnam War, the expansion of the money supply in the 1960s lead to an inflation in the 1970s, which caused the US to abandon its gold conversion rate of $35 an ounce, and ultimately lead to the collapse of the Bretton Woods.
Its amusing to read the accounts behind that, because when France saw what was happening, they demanded the US exchange France's reserves for gold, since only central banks could exchange dollars for gold at the time at the fixed rate. Nixon told them to take a hike.
However, now you are getting into a debate about the nature of money, and its my opinion that guys like Saul - and an assortment of gold bugs - don't understand the true nature of money. And that is money is whatever people accept as money. Reflating the economy in such a manner is Keynesian to the core. That's why Keynes called gold a "barbarous relic" and thus condemning the gold standard.
Look, you're obviously a well read and intelligent person. And its not like all of Saul's criticisms are invalid. However, you should read serious critics of the economy, not Saul. Guys like Joseph Stigliz, Paul Kreskiel, Stephen Roach, James Grant, etc.
"You misunderstand the problem though. "
I understand the problem and I also understand your need to keep taking shots like that. but that's your problem, not mine.
What you go on to describe is NOT the problem Keynes' theories were developed to deal with, although, like I said the timing might not be all that bad.
of course, you know that. I hope.
T-Bills, petrodollars, Saving-Investment = Trade Balance, Japan making a comeback, yada yada yada...
personally, I'm wondering what the CIA has up its sleeve for Taiwan. not that they'll be alone.
I understand the problem and I also understand your need to keep taking shots like that. but that's your problem, not mine.
What you go on to describe is NOT the problem Keynes' theories were developed to deal with, although, like I said the timing might not be all that bad.
of course, you know that. I hope.
T-Bills, petrodollars, Saving-Investment = Trade Balance, Japan making a comeback, yada yada yada...
personally, I'm wondering what the CIA has up its sleeve for Taiwan. not that they'll be alone.
BitWhys said:
Demand was going to become a problem.
Central banks are supposed to be anticipatory, not reactionary, though they become reactionary because they cannot possibly anticipate all outcomes.
RE: The Collapse of Globa
I agree with Saul's criticism of professions compartmentalizing language.
I agree with Saul's criticism of professions compartmentalizing language.
Toro said:
oh I agree there. Greenspan's interest rates leading up to the bubble pop sure didn't help prevent it, though. Not that there was much to stop it in the long run. Now they're stuck propping rates rates again to feed their habit even with the manufacturing sector going wtf.
Batris and a lot of others underestimate the US economy's robustness. Its cheerleaders, however, tend to seriously overestimate both its ability to change gears and the degree to which its really holding its own, if you catch my drift. They seem to be running out of tricks.
Language, music, movies, capitalism, medicine, and religion, they are all software we believe in to live our lives. Hoodoo voodoo witchcraft tarted up in suits and lab coats.
Globalization wasn't even defined in most dictionaries in the 1970s, but that doesn't stop JRS from saying it was in full economic bloom then.
Globalization wasn't even defined in most dictionaries in the 1970s, but that doesn't stop JRS from saying it was in full economic bloom then.
Re: RE: The Collapse of Globalism, JR Saul, Book Review
The Wealth and Poverty of Nations is another good read. Since you're all jazzed up about globalization at all.
Wealth and Poverty of Nations
dumpthemonarchy said:
The Wealth and Poverty of Nations is another good read. Since you're all jazzed up about globalization at all.
Wealth and Poverty of Nations
I should however put a qualifier on medicine, drugs and surgery do work.
Econ glob kinda bores me. I really don't have much of a problem with the rich getting filthily richer as long as corporations they pay their share of taxes-which they don't, and the rest of the population live decent lives.
There's always an alternative, the right wing's TINA and Brian Mulroney's Charlottetown Accord is a "seamless web" that cannot have one comma altered drives me nuts.
Like the US says it has "ideals" while the rest of the world only has "ideas". Okay, now I've popped a gasket.
Econ glob kinda bores me. I really don't have much of a problem with the rich getting filthily richer as long as corporations they pay their share of taxes-which they don't, and the rest of the population live decent lives.
There's always an alternative, the right wing's TINA and Brian Mulroney's Charlottetown Accord is a "seamless web" that cannot have one comma altered drives me nuts.
Like the US says it has "ideals" while the rest of the world only has "ideas". Okay, now I've popped a gasket.
RE: The Collapse of Globa
The Arms of Krupp was a good book if you like to see the early military industrial complex at work. I read the Stiglitz world bank thing last year, I liked it. I haven't read any Galbraith yet that I can remember but I will, can anyone give me a title. Wealth and Poverty of Nations sounds like a good read too.
The Arms of Krupp was a good book if you like to see the early military industrial complex at work. I read the Stiglitz world bank thing last year, I liked it. I haven't read any Galbraith yet that I can remember but I will, can anyone give me a title. Wealth and Poverty of Nations sounds like a good read too.
RE: The Collapse of Globa
I wasn't thinking about globalization specifically but I need a place to start reading about economics, I should have a better understanding of whats going on in that respect, well most other respects as well.
I wasn't thinking about globalization specifically but I need a place to start reading about economics, I should have a better understanding of whats going on in that respect, well most other respects as well.
Are individuals or nations global? I read an ad in the Economist magazine by the Australian gov't and it said southeast Asia was the "engine room" of the world economy. and Australia was closest so set up your biz here. Funny, I thought, inside the compound, ie, Canada and the US, the media always speaks of an economic "engine". Not an engine room.
I think we, and I think the media acurately reflects this bias, always see things on an individualistic basis, not a national or collective basis. Even the Aussies are different from us on this point.
JK Galbriath said in Money Whence it Came, Where it Went (1975), on page 13 that,
Against the Spanish Armada England had a near
equivalent tonnage of much better
designed man-of-war which were more heavily gunned and better manned. Thus an
altogether superior force.
It is always the doughty little guy against the big bad enemy in the compound. So England seems like it in the compound too. Britain however is not England. This is ust like what I read about England and World War Two, many felt it was England against the world, forgetting about Canada, Australia, New Zealand, India etc that aided immensely in the war effort to 1941.
I think we, and I think the media acurately reflects this bias, always see things on an individualistic basis, not a national or collective basis. Even the Aussies are different from us on this point.
JK Galbriath said in Money Whence it Came, Where it Went (1975), on page 13 that,
Against the Spanish Armada England had a near
equivalent tonnage of much better
designed man-of-war which were more heavily gunned and better manned. Thus an
altogether superior force.
It is always the doughty little guy against the big bad enemy in the compound. So England seems like it in the compound too. Britain however is not England. This is ust like what I read about England and World War Two, many felt it was England against the world, forgetting about Canada, Australia, New Zealand, India etc that aided immensely in the war effort to 1941.