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View Diary: The Euro Crisis by the numbers (165 comments)

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  •  Chairman Ben is a little smarter than that (8+ / 0-)

    Long before Weimar style inflation takes hold he would simply stop printing currency and start taking money out of circulation. The whole point is that you can manage a currency - that is what the federal reserve does - and that is what makes it worth something when it is no longer tied to a physical asset as ours hasn't been since the depression.

    A counter worry is that the Fed wills trillions into being. . .and it goes nowhere, staying as electrons on a balance sheet. Not spent, not lent. So then you get Japanese (or Great Depression) style Deflation. Which really sucks.  

    An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

    by MichiganChet on Sun Nov 27, 2011 at 08:38:06 AM PST

    [ Parent ]

    •  Are we entering the era of the virtual economy? (11+ / 0-)

      Economics becomes a video game largely untethered to reality. Trillions (Euros, Dollars, Yuan, whatever) move back and forth as bets on credit defaults, foreign exchange movements, directions of commodity prices, and the weather in Patagonia (OK, I made that one up).

      Wealth becomes a means for keeping score of gambling winnings and losses. It is created by skimming as much as possible from society by depressing wages and benefits and taking maximum advantage of public subsidies and bailouts for miscreant, short-sighted corporations, especially in the financial sector. Oh, and don't forget cutting taxes on the already super-wealthy.

      But the result is depressed aggregate demand in the real economy of workers, both private and public--those who actually produce goods and provide services of utility to one another. Depressed demand = depressed production = depressed private investment = contraction in the real economy.

      My worry is essentially the same as yours--that the trillions created by the Fed will be gleefully bet back and forth among the Worldwide Looting Class, who will continue to skim and bet to create digital "wealth" rather than funnel the money back into the real economy populated by real people. In their clubs and gated communities, in their multiple mansions, and on their private islands they will continue to declare themselves the "winners," just before they head down the street to the next RNC or DNC big-bucks fundraiser. What good is a plutocracy if you don't take full advantage of it?

      Meanwhile, the prices of non-CPI items such a food and energy continue to climb in the real economy and the 99.9ers get squeezed from both directions: deflation for wages and public benefits and inflation for basic items needed for survival, such as food, education, medical care, communications, and retail financial services, the profits on which continue to be siphoned off onto the tables at the Big Casino.

      The problem is profoundly structural, but no one in power anywhere seems to be contemplating moving to a new, more equitable and sustainable structure.

      •  This is as a good a description of what's in store (4+ / 0-)
        Recommended by:
        gjohnsit, KJG52, FMArouet, ozsea1

        … for Americans as any — unless we can find a way to dump the current system and move beyond it.

        And as for replacing the system — evolution, revolution, etc. — as astronaut Rusty Schweickart said of doing "number two" in zero gravity: "There ain't no graceful way."

        48forEastAfrica - Donate to Oxfam The Dutch kids' chorus Kinderen voor Kinderen wishes all the world's children freedom from hunger, ignorance, and war.

        by lotlizard on Sun Nov 27, 2011 at 11:56:55 AM PST

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      •  The only 'consolation' is (3+ / 0-)
        Recommended by:
        KJG52, FMArouet, ozsea1

        That assets on a balance sheet, if never made available to the real economy, will ultimately deflate in value. This is exactly what happened in the Great Depression where not only stocks but bonds deflated.

         If you doubt that, look at the chart of the S&P 500 during the past 11 years. It has essentially gone nowhere despite the country being run by the plutocracy.

        And by the way, it is price shocks and volatility that is the problem with energy and food, not necessarily inflation. Which is problematic for the 99% who are not insulated from these shocks and also proof of the shortsightedness of the market as a goodly portion of this volatility is commodity market manipulation

        An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

        by MichiganChet on Sun Nov 27, 2011 at 02:34:44 PM PST

        [ Parent ]

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