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it is, though.
in the gold standard days a good old gold find would spark economic growth. in the modern era its the good old fashioned running of gov’t deficits (not arguing that gov’ts are intelligent spenders). the creation of new currency has always tended to be growth friendly, in the US we can create new currency readily.
fundamental problem with the euro: who can create new currency again? If you argue that bank lending can, I will volunteer to fire a gigantic bazooka at your person, because it doesn’t create anything, net. It hands currency to someone, to spend on something, but they owe an equivalent amount of currency back to the lender. Hence it creates nothing, but just pays inflation and currency production forward (meaning it deletes currency and inflation at some later date).
If this is invested in something that is productive and increases the velocity of money, this can work out for the long term good (one way or another it can certainly work out for the long term good if the borrower), but by and large it just pays econonmic growth forward.
The creation of currency, on the other hand, doesn’t come with a future debit. Now argue that the US gov’t is “selling our childrens futures” and such, but that would just demonstrate that you somehow manage to correlate the finances of the US govt with your own, when they are not remotely similar.
Thats why we have such a dramatically deflationary backdrop these last few years: the private sector is deleveraging and the inflation that the credit boom payed forward is now being paid back, despite the best efforts of blindfolded, cocained addled commodity speculators (basically a dot commish momentum trade)…
In any case, if the government of the US created some new currency and did so by spending into productive creation (ala a targeted infrastructure stimulus), everybody wins…
But as they are convinced that they will go broke if they deficit spend any more money (every bit as ridiculous as me thinking i better not put out any more because I may run out of wood, sorry to be crass)… we are probably destined for a recession.
The euro IS doomed, it must fall, because, like the gold standard, it cripples the countries that utilize it. Solution to greeces problems with a stand alone currency?
1. people wouldn’t have bought nearly so many of their bonds so
2. they would have had to slowly print money all along or
3. manage their finances better and
4. one way or another some inflation would be the only consequence, and the weak currency would be an advantage to them.
Think they’d draw more tourism if a fine Greek beer cost 1.25 US and you could stay at a fine resort with an excellent spa for $150 US a night? Of course they would.
In a floating exchange rate system the world has a self stabilizing mechanism. In a “gold standard” or Euro-like situation where nobody can create new currency the world is destined for repeated (destructive) bouts of deflation and depression, it is intrinsically de-stabilizing.
Remember when QE was going to cause hyperinflation, and soon? And when QE2 was, for suresies, without any doubt, going to cause hyperinflation, and soon?
How we doing? Oil down by nearly 50% over the last 40 months?
IF it wasn’t for rampant commodity speculation (the momo trade of the day), oil would be 60-65 bucks etc.
There is a amssive, massive, misunderstanding of monetary systems and the causes of inflation and the importance of deficits (essentially not important except in inflationary times) of currency issuers… (and remember, money created today essentially just becomes future/current savings for someone, and is essentially, as such, removed from the active money supply at about the same rate that its created, so its really a question of capacity slack in the economy when discussing inflation…).
But never mind that. The Tea Party will get its recession, win the white house, and, gun to my head, then run some huge deficits and stimulus and right the ship….
I actually am starting to wonder if they know fully well the reality: a targeted stimulus is needed, fighting gov’t stimulus will prove deflationary, leading to recession, thereby causing Obummer to look bad so they can win. Its the repubs -s- the well being of the entire planet, they are being even more reckless and retarded than the Eurozone).
The “debt limit” is absurd, and may as well be called (LITERALLY, by accounting FACT) a “savings limit” or, in turn, a “GDP limit”. Its ridiculous.
The world remains mired deeply in a battle of ignorance -vs- the reality that all of its problems can be solved in about 3 hours.
The euro is doomed, IS doomed, uless someone somewhere provides a mechanism by which more are created as needed to match the desired rate of growth.
lol
These Austrians and these Tea Party guys and everybody thumping their chests and boasting and stomping their feet (EXACTLY as I was doing just a few months ago) with their preposterously folly filled visions of some perfect world in which taxes were low, the gov’t ran a surplus, everybody saved, and we had some kind of glorious economic nirvana…
are literally fucktarded. imagine an economy in which everybody saved everything they made, eating only from a modest garden they grew themselves…
IT’D BE THE POOREST ECONOMY IN HUMAN HISTORY. FAWK
Want a thriving middle class? penalize savers and promote consumption and expansion. savers, contrary to the belief of everybody, do not promote economic expansion via investment (banks are never reserve or deposit constrained when lending, and it’d be investors, not savers, that promote activity, by the way).
Saving is intrinsically deflationary, deflation is intrinsically bad.
None of this is that complicated, to be honest.