Devaluation Thread Continued

[Somewhereinba]

In my country of origin we have 0 inflation.
There is no blue or green or whatever black market currency.

We also have 45% of youth without jobs. The economy has contracted 40% in the last 6 years, and people are being evicted en masse from their homes.
Everyday people can buy less and less because wages and pensions are decreasing/non-existent.
People who had life's savings have seen it handed over to a small group of bankers.

But, hey there is no inflation and no dollar blue!

Inflation sucks, but I'll take it any day over the austerity being doled out in Europe.

1. Youth unemployment is more like ~13% (those who would like to work but aren't). You have misrepresented the statistics by suggesting 45% unemployment - because of the age bracket (16-24) a lot of youth (48% actually) choose not to work due to study commitments which is in no way a sign of economic weakness.
2. I have no idea where you get this 40% collapse in economic growth for 6 year period, can you provide a source? The US economy grew at the fastest rate this quarter in 11 years (5% annualised).
3. The only people being evicted are those who took on a mortgage they could not service - the Government plays a very small part in controlling the economic decisions people make.
4. Inflation is less than 2% so I don't know what makes you think people are buying less and less with the economy growing and gasoline at record low prices? What you said is actually an accurate description of Argentina.
5. Peoples life savings handed over to the Government?? 401k's have not been touched unlike the wonderful Argentine government who use their countries pension funds as personal bank accounts. The only effect on peoples pension has been fluctuation in values due to stock market correction in 2008, however market levels have pretty much recovered to make up for any losses.

 

[EdRooney]

Thanks somewhereinba, which country are you talking about?

 

[Somewhereinba]

Thanks somewhereinba, which country are you talking about?

A country with nearly 0 inflation - have a guess.

 

[EdRooney]

Cyprus? That's where I was talking about.

It sounds like you mean the US, which would be another example with a different set of circumstances.

 

[Somewhereinba]

Cyprus? That's where I was talking about.

It sounds like you mean the US, which would be another example with a different set of circumstances.

Another example of the many that shows the positive side of low inflation as a long term goal. High inflation is not a sustainable model and the policies this Government has in place suggest that it is - or they don't care because it will be a different Government in office when the next crash happens.

 

[Pensador]

Chart stops at 2011 ! Just a comment, Italy's debt continues to rise, Greece now has a contracting debt. Not much cheer there for the average greek I am guessing, but just saying.

Austerity was a horrible side effect of a horribly mismanaged, overspending, income negative economy which should have never been crow barred into a currency union which only ever benefited the hungry markets of their northern lenders aided and abetted by Goldman Sachs and criminally by a corrupt greek govt. The EU currency union was rushed for political gains, the northern european countries ignored their own fiscal rules to expand their (and international partners) debt markets.

Shame Greece didnt stick with the drachma until they met the "real" conditions for entry, by which point the crisis would have hit and they would have been on the sidelines.

I have a really different take on this....

I think the banksters were so stupid that they thought the ignorant masses of looser's and politicians they voted for in these countries would turn the money into economic prosperity. Just like the fools that gave the morons in Argentina 100B and did not get their money back. I think the banksters failed to accurately evaluate what these backwards cultures were NOT capable of and they are paying for that ignorance in spades.

 

[Pensador]

Its called the Dunning - Kruger Effect I pay very close attention to understanding it and weighing it in just about project I work on. I think the Banksters failed to include that in their Due Diligence.

http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

 

[Joe]

If deficit spending were used as Keynes intended it to be it might be a benefit to mankind (only for brief periods of recession and depression and then quickly reversed).

Unfortunately deficit spending is used by those in power to enrich themselves and maintain their power at the expense of loading the general population with burdensome debts. Once a politician's reelection is coming up, he will push through "stimulus" packages to goose the economy to help his reelection. Rich people in the financial industry benefit by being the first with access to the money and at preferential rates. Since the finance industry and the central banks are rife with incest, the financial industry can make trillions by "front running" central bank policies.

QE is a particularly heinous version of deficit spending because unlike traditional money printing, it insures that only the rich and connected benefit.

Central banks in their manipulation of interest rates cause malinvestments like the 2000 era housing bubble and recently the bubble in fracking/shale oil explorations. What are the chances that the general public are handed the bill for the bankruptcies in the oil industry from the drop in oil prices. A lot of the investments in shale would have never have occurred if interest rates were at their natural level - not manipulated by the QE programs.

Before the era of central banks and their manipulations, boom and bust cycles were much shorter. The world economy is now into it 6th year of "recovery". A recovery that has seen wages decline in US, Europe and Japan.

If we didn't have these politicians and central banks messing with the economy, the rest of us would all be better off. Certainly Argentina is a prime example of that.

 

[sleslie23]

In my country of origin we have 0 inflation.
There is no blue or green or whatever black market currency.

We also have 45% of youth without jobs. The economy has contracted 40% in the last 6 years, and people are being evicted en masse from their homes.
Everyday people can buy less and less because wages and pensions are decreasing/non-existent.
People who had life's savings have seen it handed over to a small group of bankers.

But, hey there is no inflation and no dollar blue!

Inflation sucks, but I'll take it any day over the austerity being doled out in Europe.

At least you're not delusional about the problems that exist in your country of origin. I can't say as much for our board members whose country of origin is Argentina, some of whom have liked your post.

 

[EdRooney]

If deficit spending were used as Keynes intended it to be it might be a benefit to mankind (only for brief periods of recession and depression and then quickly reversed)...

Rich people in the financial industry benefit by being the first with access to the money and at preferential rates. Since the finance industry and the central banks are rife with incest, the financial industry can make trillions by "front running" central bank policies.

QE is a particularly heinous version of deficit spending because unlike traditional money printing, it insures that only the rich and connected benefit.

This is spot on. It is exactly why QE is a nefarious programme and why it is increasing inequality and instability in the global financial system.

[background=rgb(252, 252, 252)]Unfortunately deficit spending is used by those in power to enrich themselves and maintain their power at the expense of loading the general population with burdensome debts. Once a politician's reelection is coming up, he will push through "stimulus" packages to goose the economy to help his reelection[/background]

Here however you seem to have a very common misunderstanding of the relationship between debt and issuing of fiat currency. Since most currencies are not backed by a reserve (gold or otherwise), when a central bank prints money (or QE or whatever), it is not taking out a debt that needs to be paid at a later time. It owns the printing presses and the monopoly on legal tender, so its constraints on printing are not a limited amount that can be printed without going into debt. Rather the constraint is devaluation of the currency (ie inflation). So for example, the European Central Bank can print forever, but its Euros will only remain valuable as long as people want to keep trading them for goods and services.

If you were talking about a gold-backed currency, you would be completely right about debt burdens, but since these are all fiat currencies, no one is being loaded with burdensome debts; rather the question is what will those Euros/Dollars/Pesos/Guaranis/etc be worth in the future.

When politicians hand out pork, they do so to their constituencies. In the case above, the politicians' constituency is the Finance Sector (just look at their donor lists). Thus QE is exactly what you said it is: it is passing out free money to banks, creating huge asset bubbles.