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| Authored by: Anonymous on Saturday, May 19 2012 @ 08:14 AM EDT |
The money supply has been increasing (where they put the
inflation rate at 2% or whatever) since 2008. While the
rest of the economies world wide have fallen (other than
China, that has seen constant 8-12 percent growth).
The question is, how do you "take" money out of the system,
where you take it, and shred it (every dollar) in order to
reduce the supply. Is the printing of money by the FED a
virtual event, where they issue the credit, and never print
the actual money? Is that what you mean? If so, then is
that true?
Even by restricting credit, then China could step forward
and be the bank of the world (they have that much money).
[ Reply to This | Parent | # ]
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| Authored by: Anonymous on Sunday, May 20 2012 @ 01:06 AM EDT |
The issue isn't just too much money. The problem is also that the money is in
the wrong place.
The economy can be regarded as being like a giant game of poker. The game is
playable so long as the chips are reasonably evenly distributed. However in real
life, as in poker, when the chips become concentrated in too few hands the
economy (gameplay) breaks down. In poker at this point you simply end the game.
We don't have that option with the economy. We have to find some way of getting
out of that deadlocked state and back to a condition where the chips are more
evenly distributed so that gameplay can continue.
Henry Ford ran into this when he famously recognised that his business would
have no future unless his workers were paid well enough to one day afford to buy
one of his cars. That is the problem we face again today. It is exacerbated by
the international currency dimension because today producers and consumers live
in different countries. So whereas consuming countries like the US and the EU
are deeply in debt to the extent that they are essentially broke, the Chinese
have so much cash they can't find enough places to stash it all.
In poker terms China won the game. Well played China! However what do we do now?
The game cannot continue so long as the Chinese hold all the chips. [ Reply to This | Parent | # ]
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