Posted on 07/01/2008 9:27:14 PM PDT by BGHater
The oil price has doubled in the past year because the US Federal Reserve panicked over risks to the over-leveraged financial system and flooded markets with excess liquidity. The world is willing to pay arbitrarily high prices to hedge against inflation, but the cost of inflation hedges drags down the world economy. Last week's spike in commodity prices and swoon in global stock markets points the way to a deep and prolonged fall in economic activity.
Breaking out of the death spiral still is possible. With mixed emotions, I propose a simple solution. In fact, a crash would not be an altogether bad thing for the United States. At least it would exorcise the something-for-nothing culture of the past two decades.
The baby boomers would not be able to retire, to be sure, but in America retirement means watching an additional 40 hours of television per week. For all I care they can keep working. For the world's poorest, though, the consequences would be deadly (see Rice, death, and the dollar,Asia Times Online, April 22, 2008). My proposal draws on the experience of 1979-1984 under similar circumstances, although the parallel is far from complete.
By catastrophic breakdown, I mean a well-defined chain reaction:
(Excerpt) Read more at atimes.com ...
Maybe of interest.
Oooh ... will it be on TV ?
You sure some of this isn’t from The Onion?
I don’t see a proposed massive cut in federal spending anywhere in the proposed solution. Without spending cuts, nothing is solved.
And I’m leery of the “fair tax”, which only guarantees that we will have a federal consumption tax without getting a constitutional amendment abolishing the 16th amendment in return.
Without spending cuts, the phony fair tax is merely a VAT tax proposal coupled with a “temporary” retention of some sort of income tax...which we know would never be eliminated.
Ahh. Retirement for me means 40 less hours at the tender mercies of affirmative action hires.
The truth can now be told, eh? Are you going to write a book?
Always told the truth. It made me an exceedingly popular person. As for writing a book, there's no time. Too much TV to watch.
1. Break up the media/environmental cartels and their attack on the capitalist system through global envirophobia .
2. Return the USA to a production economy, ecourage drilling (don't let them drink our milkshakes) and industrial durable goods production,
3.Return to a free market system and break up the monopolies that have a stranglehold on everything from food to energy.
In other words establish a balanced capitalist economy: production/consumption not just consumption/debt brokerage as it stands now with the rest of the world handling producyion and sucking the US economic milkshake dry
I’m in denial at the prospects of a true economic collapse. The article brings up many good points but I just can’t accept the possibility of economic collapse, to my possible detriment. I may be labeled a doom-and-gloomer but I can’t bring myself to be that doomy and gloomy.
We are in a recession. Unemployment is going to soar. The world economy is has not decoupled and will slow with the US downturn. Banks will fail. Incomes will not keep pace with short-term inflation. The consumer will fall off a cliff and businesses will close. I hope this is as bad as it gets while the liquidity crisis runs its course.
I pray we don’t see anything like the deflation of the great depression. I just can’t handle thinking of that possibility so I just discount it.
The baby boomers would not be able to retire, to be sure, but in America retirement means watching an additional 40 hours of television per week. For all I care they can keep working. For the world’s poorest, though, the consequences would be deadly ...
This statement is so far from reality as to bring his credibility into question. Most retired people I know (I live in southeast Florida so I do have a large sample size to draw from) either volunteer a lot of their time, stay active or explore hobbies. Just look at the local Hospice or other similar places and you see many elderly volunteers.
The only people watching 40 hours of TV are the infirm at senior facilities, but I guess we should force them to work for this guy’s satisfaction.
The only proper point he makes is about raising interest rates. Bernanke and Company missed a golden opportunity this last Fed meeting. A 50 basis point raise would have hammered both the oil longs and the dollar shorts. The market was ripe. Oil had plunged the day before and they missed the possible inflection point.
As for enhancing savings; the whole reason we have low interest rates and high inflation is because we:
A) Lost control of the money supply
B) Have an excess of savings worldwide
Redcuing the money supply will reduce the available money for asset inflation.
The excess of savings worldwide led to the desire by the financial system to create ways to put that money to work, which inevitably led to lowered credit standards. This is a tough nut to solve; you can’t shut off savings flows.
Until we get the financial institutions to stop compensating their bankers, et al, on a small salary, large bonus model that encourages unhealthy risk, because if you don’t make the big bonus you will miss out by being laid off in the next downturn, we will continue this cycle every two years or so.
If financial employees know they are going to have a job five years later when the lending market cools off (or IPO’s, etc on Wall Street) they will start to stick with their lending disciplines.
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