mardi, octobre 25, 2005

Welcome to helicopter Ben

Welcome to Helicopter drop Super Ben, savior of the indebted world.

hope Bernanke will walk its talk and monetize the US fed deficit. THe fed should already have started to crowd out private money creation. If Ben waits for the credit crunch to happen it will be to late to counter it.

There are 3 things to consider now
1 Debt can not increase much more
2 There's no asset bubbles left (housing is the bubble of last resort and the US lags the world housing boom, the housing bubble in the US is the bubble of last resort).
3 Greenspan allowed a boom in private money creation but he let federal money creation fall to a dismall percentage of the total amount of money created. It makes a HUGE different to print federal money or to allow bankers to create private money by lending more. The difference is simple : printing federal money does not need an increase in the debt level It's Ben Bernanke's job to manage this situation.


Printing money and 2 figures inflation is just what we need. We need this to erase 25 years of foolish build up of the debt level (not only federal officially reported debt of 8 trillions, also household debt (12 trillions), and unreported debt (promises of future payments for retirees and medicare recipients 50 trillions). We should never had let this debt build up happen. It happened mostly because tax were reduced for rich people while wages were kept artificially low (through anti labor policies and excessive opening of world trade). I don't think than anyone think that the average american will repay it's debt in present dollars. And it's not even an issue of americans screwing their international lenders. I don't think europeans can and will repay their debt either. I don't africans will repay their's either (they have had problems to repay them for years now). I'm not even sure that japanese can repay the debt they accumulated these last 20 years. In 90% of the countries public and household debt have soared recently. Whereever you look it makes no sense to have these debt burdens burrying us all into the ground. It's much wiser to erase them through inflation, erase much economic inequality in the process, and make our economies more productive and efficient by eliminating much of the energy spent in useless speculation (housing, asset markets).


The wheel of History turns. If some people did not want debt deflation to hit and subsequent high inflation to appear, they should not have let debt levels reach such foolish highs.

5 commentaires:

intelomanontropo a dit…

Je ne comprend pas: Dettes excessive donc Inflation ? Ou déflation ?

Epimethee a dit…

En général, c'est déflation d'abord, parce que faillites en série, réduction forcée des déficits publics ...
Et ensuite inflation, parce que les autorités monétaires finissent par réagir et monétisent les déficits publics.

Techniquement, il est possible de passer directement à la case inflation.
Cela dit, cela n'est jamais arrivé. Et politiquement c'est très difficile de pratiquer ce que Keynes a appelé "l'euthanasie des rentiers", a moins de faire face à une crise massive type années 30

Epimethee a dit…

Bienvenue sur mon nouveau blog, vous êtes le premier à commenter un de mes textes.
youpi.

unlawflcombatnt a dit…

Francois,

Another good post. Keep up the good work. You're right on target about the tax cuts to the rich. It makes no sense at all and is helping to sink the American economy. What's worse, there are no signs that King George will "change the course."

By the way, I can't read the 1st 3 comments because they're in French. Is there some way I can get them translated into English.

Epimethee a dit…

well I try to translate all of them. In fact I do not really translate. I rewrite.
Only one so far is not translated.
It's the one where I explain that moving from gold to paper to electronics had favored a growth in the debt based money relative to its gold-paper or electronic base.

I'm not forgetting your advise to post on other blogs.
I plan to build up some posts and then start to share them in january-february.