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What would happen if ALL the central banks of debtor nations, pretty much all of the developed nations, printed/injected trillions of dollars into their respective economies? This can be in the form of direct cash infusions to every citizen, etc. to eliminate their debt or increase their savings.
Of course this would devalue their currencies and it'll also devalue the creditor nations holdings... but, it'll reduce/eliminate the citizen's debt load as well as the value of the nation's debt holdings.
This action would also pretty much instantaneously leap frog the value of the currencies of the creditor nations... causing the Yuan to rise, Saudi Riyal to rise, and pretty much increase the purchasing power of those in these nations bringing them instantaneously into the first world.
Would this work? Or would something like this cause WWIII with the Developed nations vs. the developing nations? Creditors vs. Debtors?
If we did this, there wouldn't be a "cheap" labor argument anymore for the developing nations.
runaway inflation and a huge separation between upper and lower classes with virtually no middle class, right? Just an intelligent guess
Yes, I can see massive inflation... but not sure if it'll be hyper inflation... just one huge injection... instead of continuously printing... and it's not just one nation, but all of the nations.
It'll be something like the stimulus checks... so it shouldn't deflect the classes. Essentially to the same people, but instead of $300, it'll be more like 50k a person.
In a sense, it's taking from the rich to give to the masses... how the previous stimulus checks were set up last.
With the instant increase in the value of the Yuan, companies would think about how much more expensive labor is in China... and keep jobs here. Exports will increase as China would have higher purchasing power.
Illegal immigrants would be reduced as the value of the Peso would increase.
Essentially right now the US and other developed nations can't compete with developing nations because our currencies are too strong. So, in one large move we can totally devalue all of our currencies while increasing the value of theirs.
hey, it's just hypothetical... and I've never criticized any of your "ideas" or opinions as just plain stupid.
Anyhow, in a sense this is already happening now as the Bank of England, Bank of Canada, etc. are already injecting capital into their economies... but not at the level I'm talking about.
The problem is, is that most "injections" are going straight to the banks where they're shoring up their own books and finances and holding off loans... the real people that need it are the actual citizens.
Even the Great Roubini, talked about the necessity of reducing consumer debt directly in his "Triage"... "a sharp reduction of the mortgage debt burden of the insolvent household sector;" http://fabiusmaximus.wordpress.com/2.../04/roubini-4/
I tell you what needs to happen here. All the countries need to stand some ground and offer the "central banks" 1 cent on the dollar for all their debt and move back to GOLD backed currency.
Part of the offer should have the ultimatum to return all the missing gold that was originally used by countries before they "injected themselves" into every countries economy. If not, these world bankers should be hunted like Osama.
sorry didnt mean to come across as a dick- but im just sick and tired of being robbed by inflation by people with no forthought whatsoever and your post just kind of stuck a nerve
then again you were asking an innocent question and not in charge of the fed like that pos scumbag bernanke
I keep hearing this moron on CNBC - Steve Liesman saying the "fed has unlimited balance sheet". Do they ever stop to think how stupid they are. The fed has no money, none. The US is broke period, largest debtor nation in history. The only way out is a dose of what has been needed for decades which is fiscally conservative actions. People need to to deleverage and reduce personal debt and learn to save. Basically we had overleveraged banks loaning money to overleveraged consumers and nobody can pick up the tab.
I'm not sure how much inflation this would cause or if it would fix things, but I doubt it would be done as it would cause to much conflict. After this was done it would be very hard to find buyers for US debt.
So, you are reducing your debt load but at the same time restricting yourself to future debt. But like defaulting on personal debt.
But, I tend to agree with Roubini. I don't see how the economy is going to recover without some sort of debt reduction. I'm not sure how it should be implemented though, its not just housing and there is already an easy way of getting rid of housing debt - walking away. I'm not sure how it would work politically either, the "I never use credit, let them suffer" types will complain. But they will be joining the debt slaves in the soup lines if things don't get fixed.
Its starting to smell a lot like 1930.... I suppose it just took 2 generations to forgot. The more I read about the 1920's the more I get a bad feeling in my gut! Maybe, I'll see you in the soup line!
Quote:
People need to to deleverage and reduce personal debt and learn to save. Basically we had overleveraged banks loaning money to overleveraged consumers and nobody can pick up the tab.
The problem is the people's ability to reduce their debt is being taken away. You can't keep your current economic activity and also have all consumers start to deleverage. The very act of deleveraging will reduce economic activity (as money will be going into servicing debt rather than consumption) and hence make it harder to service the debt. This can spiral downwards. Perhaps if we transformed our economy into an export economy we could do it in this fashion, but without a dramatic raise in exports it isn't going to happen. You have to wonder what the Chinese, Japanese etc are going to do with all their dollars though. Either they sell them to someone else, burn them or use them to buy American products. Regardless, if exports don't increase greatly then consumers will need a bailout too.
Last edited by Humanoid; 10-10-2008 at 06:20 AM..
Reason: Additional comment
What would happen if ALL the central banks of debtor nations, pretty much all of the developed nations, printed/injected trillions of dollars into their respective economies? This can be in the form of direct cash infusions to every citizen, etc. to eliminate their debt or increase their savings.
Of course this would devalue their currencies and it'll also devalue the creditor nations holdings... but, it'll reduce/eliminate the citizen's debt load as well as the value of the nation's debt holdings.
This action would also pretty much instantaneously leap frog the value of the currencies of the creditor nations... causing the Yuan to rise, Saudi Riyal to rise, and pretty much increase the purchasing power of those in these nations bringing them instantaneously into the first world.
Would this work? Or would something like this cause WWIII with the Developed nations vs. the developing nations? Creditors vs. Debtors?
If we did this, there wouldn't be a "cheap" labor argument anymore for the developing nations.
-chuck22b
hyperinflation... got gold?
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