The “velocity” of currency has slowed below 1.0 for M1 ,, this means that deficit spending or creation of debt of any kind including printing dollar notes has the opposite effect from what we were all taught where “stimulus” spending (however inefficiently) increases GDP/GNP numbers... There’s no real option but to reign in debt or stimulate the living sh*t out of the real economy ,,, ie. YOU and ME our labor and physical production ,,, the only way I see that working is to implement the FairTax and drastically curtail/rescind stupid gov’t regulations and such,,, RIGHT NOW...
This is why Bernanke is speaking about going back to the original intent of the bailout ,, paying off the toxic loans and cancelling the multiplier effects from them in the process... it’s really the only thing that’ll work (even just a little) other than tax relief which we all know will never be approved by the Rats including the big”O”...
Gold has pulled back a little because inflation isn’t in the cards ,,, wholesale inflation has been negative for a few months now and since gasoline/oil was UP last month you can’t put it all off on energy costs .. DEFLATION looks like a real danger in near future...
Good post. The velocity problem makes the Obama stimulus package a bad idea.
“drastically curtail/rescind stupid gov’t regulations”
DEMOCRATS WILL DO THE OPPOSITE OF THAT.
Stupid idiot Democrats are going to add to taxes for banks by closing a tax break that was specifically designed to help banks take over unhealthy banks.
Idiots! Democrats are making it harder to pay for bank losses. meaning they are undermining the banking system.
This is like cutting a man’s wrist as part of an operation on him.
And why Mises observed that there is no good way out of a busted credit expansion bubble. You can't spend your way out, there isn't enough free cashflow. You can't borrow your way out (the Obama plan), that only fuels the fire. All you can do is let it work itself through and mitigate the worst of the damage along the way.
Unfortunately politicians, having sucked in the people's expectations, are organically unable to leave bad enough alone.
Nice post - what amazes me is that the banks are still not lending to even qualified businesses and consumers - that has got to change or the high job loss numbers are going to continue. Frankly what pisses me off most is some of these squirly mortgage brokers and loan originators from banks knew full well these mortgages were going to be trouble. That each state AG isn’t getting ready to file criminal suites blows me away. I know guys that made huge $s pushing crappy paper and they’re going to skate.