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Old 08-11-2012, 07:21 PM
 
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Now that I had dessert, lets go through your article.
Greece’s inability to devalue its currency is often cited as a reason for the extreme economic pain its citizens are enduring, and many commentators say the country should return to the drachma to restore competitiveness.
Correct. Under the Lisbon treaty no sovereign debt can be monetized.
In the U.K., which -- unlike Greece -- isn’t part of the euro area and can devalue if it wishes, there’s growing pressure to do so. A letter recently circulated to some 3,000 influential figures proposed deliberately weakening the British pound to boost exports and hence economic growth. Debasing currencies in this way is promoted as an alternative to sovereign default, as well as to other methods of increasing competitiveness, such as cutting nominal wages.
Well I would think they know how a currency war works. You send out you fiat currency and buy everything up. It also shifts wealth from labor to finance, and since Britain is controlled by the city, that's no surprise. That's why Brazil already had capital controls. Its called "hot money" and is economically dangerous and fickle.

[To start with, devaluation is not an alternative to sovereign default. When a government decides to devalue, savers who trusted the currency to store their wealth, and creditors who bought bonds denominated in the currency, find the value of their assets cut. That’s sovereign default by a different name.
Yes and that name is inflation. And the devaluation is not just a fiscal policy. Its monetary policy. The US can run a freaking surplus and ZIRP can still weaken the currency. We already are suffering USD currency carry trade. If the US ran huge deficits, it could still have a strong dollar with high interest rates.

That's why you need to call it by its real name. Its all related and you can say its like something, but its called something else for a reason.

Official net U.K. debt excluding the effect of financial interventions such as bank bailouts is about 1 trillion pounds ($1.57 trillion), or 36,000 pounds per household. A recent analysis of U.K. pension accounts by Ros Altmann of Saga Group Ltd., an enterprise focusing on financial services for those aged over 50, estimated that the 5 trillion-pound to 7 trillion- pound cost of U.K. unfunded state pensions amounts to at least an additional 180,000 pounds per household. The U.K. government must either default or modify unfunded promises if it is to resolve those debts. Devaluing the pound would be one way to achieve that.
Those are nothing but socialist transfer payments in the first place by their state industries. Its called cutting social spending over here.

I don't suppose they are going to go after other unearned income like their land speculators and finance industry?
But if the U.K. were to decide to default or reduce unfunded liabilities, it would be better to do so openly, with conscious decisions made as to which creditors will lose out and by how much. A structured default avoids triggering inflation and helps people plan.
No one thought so during the housing bubble when it created massive inflation. Seems like inflation is bad only when da guberment does it, or shall I say forced to since the public sector did not fall apart as fast as the private sector and now they are trying to adjust it down. How about not blowing huge asset bubbles in the first place? I'll tell you why. Bloomberg is a shill for the finance industry.

Default through devaluation, in contrast, is a policy of deliberate inflation. Inflation is popular with elected governments as it reduces the real cost of national debts without the need to declare default or ask for a bailout. But that comes at a cost. One of the downsides to inflation is the arbitrary way in which it redistributes wealth. To quote from John Maynard Keynes: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” This lesson was subsequently forgotten by Keynes’s own followers, but was relearned during the stagflation of the 1970s.
How about the huge 27 trillion dollar housing bubble over here that shifted wealth? 27 trillion in bank credit was created out of thin air. Think that did not cause inflation? Think emergency interest rates did not spew all this inflation? Nope, only now I guess when da guberment tries to contend with the black hole left by finance.

This guy is a real piece of work. The reason why stagflation occurred was because of a non labor produced resource, oil was in shortage. This is a balance sheet recession and is completely a phenomenon of credit. We have bloated asset prices. The reason why everyone was surprised is because they forgot about how economic rent works and its why I keep telling people to relearn the concept well know before the 20th century. High oil prices caused incomes earned by increased marginal utility and not labor which inherently does not employ labor. So unless profits flow to populations with similar consumption employment will drop. In other words it just made billionaires in the middle east and no demand for US goods was nigh.
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The counterargument is that devaluation improves a nation’s relative competitiveness and gives a boost to its export industries. But here’s the rub: Such a boost can only ever be temporary. The U.K. discovered this again in 2008, when the effect of “crisis resolution” policies, such as dropping interest rates to near zero and printing money in the form of quantitative easing, resulted in the pound losing 25 percent of its value. As the policy took effect, imports became more expensive and prices rose to compensate, triggering inflation. Exporters enjoyed benefits, but these were matched by the costs suffered by importers -- and, in turn, consumers. Like other forms of monetary debasement, such as quantitative easing and bailouts, devaluation creates the mirage of benefits in the short term, but these are paid for by citizens over time.
Gee, ya think? That is what's happening here because of monetary policy and dollar carry trade. That why Japan worked for 20 years and hardly moved. Yen carry trade jacked up prices on labor while profiting their FIRE sector.

Yeah I get enough of Wall Street, and the City Gosbank TV.

Now read this. He is one of the ones who taught me never to look at anything in economics without a good foundation before economics was polluted by financial propaganda in the 20th century.

Financial Predators v. Labor, Industry and Democracy | Michael Hudson

Last edited by gwynedd1; 08-11-2012 at 07:38 PM..
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Old 08-11-2012, 07:38 PM
 
1,730 posts, read 1,820,116 times
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Quote:
Originally Posted by gwynedd1 View Post
I don't know the basics?
Fine, but then it's the ideology.

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We are not going to default.
No matter how much debt the government will amass?

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They cannot just politically decide not to default. They had to default. They are not the authority. A normal default is not in its own authority.
They can sell something, like government property (or nationalized private) or land. It may be totally idiotic, but the possibilty is there.

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The US cannot be forced to default in its own fiat currency.
Default is absolutely possible, because it's not just an inability to make payments, but failure to make it under the terms creditors expected.

Non-technical default is also possible even if all debt is in domestic currency. All that's needed is a sufficiently independent "printing press", who refuses to print money - effectively forcing the sovereign's inability to pay the obligations.

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Then you don't read many of my posts.
I don't know the world-class economist, named gwynedd1 - sorry

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You deny dictionaries
I just said that reality is often much more complex than a simple definition.

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Silver mines discovered in Peru made the European main currency, silver lose value. What's your point?
Lets stay in the 21st century, ok?

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Yes and that name is inflation. And the devaluation is not just a fiscal policy. Its monetary policy. The US can run a freaking surplus and ZIRP can still weaken the currency. We already are suffering USD currency carry trade. If the US ran huge deficits, it could still have a strong dollar with high interest rates.
Absolutely. But you didn't disagree that devaluation is default

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Those are nothing but socialist transfer payments in the first place by their state industries. Its called cutting social spending over here.
It's called that way everywhere, but it's also called debt. And not paying it as people expected = default. Not that it's always bad...

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No one thought so during the housing bubble when it created massive inflation.
But governments are fast to exclude real estate from CPI, when such things happen - so it's not inflation, at least by capitalist definitions

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Now read this.
Too many letters, so I'll take a look at it tomorrow... I've tasted some gin&tonic already, after a hard day
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Old 08-12-2012, 01:05 PM
 
19,337 posts, read 16,927,911 times
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Quote:
Originally Posted by russiaonline View Post
Fine, but then it's the ideology.


No matter how much debt the government will amass?


They can sell something, like government property (or nationalized private) or land. It may be totally idiotic, but the possibilty is there.


Default is absolutely possible, because it's not just an inability to make payments, but failure to make it under the terms creditors expected.

Non-technical default is also possible even if all debt is in domestic currency. All that's needed is a sufficiently independent "printing press", who refuses to print money - effectively forcing the sovereign's inability to pay the obligations.
You seem more bent on redefining things. Yes there are problems just wildly printing currency. However the results and how it plays out is very different. When it comes to a mugging or a contract, who has the gun?
Again, a structured "default" is nothing other than cutting out some public benefit.

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I don't know the world-class economist, named gwynedd1 - sorry
I just rely on world class economist. My ideas are certainly heavily influenced by Adam Smith, Ricardo, Henry George, J.S Mill, Keynes and Marx. Perhaps even more so by Micheal-Hudson who inspired me to be influenced by them. I particularly oppose neoliberalism. Then I just look at reality. We already defaulted into a Charlatist moneys system which is entirely based on government debt.

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I just said that reality is often much more complex than a simple definition.
Can't understand complex systems playing loose with the fundamentals. What you are doing can't even get us off the ground. Why do you think we cannot even get to anything. Every other person who understand our money system is going to balk at "default". Its going to conjure images of an authority imposing the terms of liquidation, not an entity just deciding who it decides the terms.

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Lets stay in the 21st century, ok?
Lets not. Is there a 21st century version of Euclidean geometry? Well I guess was Gauss along the way. but if its new, there is a 95% chance its a lie designed to make someone rich.

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Absolutely. But you didn't disagree that devaluation is default
No because a classic default does not occur under one's own authority. There are no contractual terms to enforce. and if there were, they can be changed. You are committing a simple logical fallacy and apparently you are not alone. Just because they are true in part that they cannot pay the creditor what he wants. They differ in the way that the creditor is at the debtors mercy.

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It's called that way everywhere, but it's also called debt. And not paying it as people expected = default. Not that it's always bad...
Again, there is a reason why its silly to just call everything a default. Inflation is a devaluation and its silly to cause it a default.

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But governments are fast to exclude real estate from CPI, when such things happen - so it's not inflation, at least by capitalist definitions
And now you know why I am quite a Georgist. It literally is the swindle of the 20th century.

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Too many letters, so I'll take a look at it tomorrow... I've tasted some gin&tonic already, after a hard day
He is often a long read.
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Old 08-12-2012, 03:04 PM
 
1,730 posts, read 1,820,116 times
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The article should have been titled - What's neoliberalism is really about.

Nothing new for me. Even more - I had a chance to witness and feel on my skin Chicago Boys raping the massive and very developed economy.

Today's Russia serves as a very easy to understand example of his main point. The government holds half a trillion dollar foreign debt, and at the same time banks and corporations have taken abroad the same half a trillion dollars - but at double the interest!

Recently Putin has finally managed to push money printing policies. The discussion currently in place, that the inflation rate may not be met, and the government may be required to "unlock" the foreign currency reserves. Now that's the discussion I really like!

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Yes there are problems just wildly printing currency. However the results and how it plays out is very different.
I'm not against money printing - far from that. I just speak about default, which is inevitable, no matter what they do or don't do.

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I just rely on world class economist. My ideas are certainly heavily influenced by Adam Smith, Ricardo, Henry George, J.S Mill, Keynes and Marx. Perhaps even more so by Micheal-Hudson who inspired me to be influenced by them. I particularly oppose neoliberalism. Then I just look at reality.
Then we are very alike

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Lets not. Is there a 21st century version of Euclidean geometry? Well I guess was Gauss along the way. but if its new, there is a 95% chance its a lie designed to make someone rich.
When it comes to economics science - your point is perfectly valid. But when we talk about the default that's upon America, we shouldn't revert to the science - because, as you are perfectly aware, the current system is not based on science!

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Just because they are true in part that they cannot pay the creditor what he wants. They differ in the way that the creditor is at the debtors mercy.
But at the same time the debtor is at the creditors' mercy. We are not talking about some system, where there's no need for the government to raise money. But about today's America, which will be crying 24/7, when faced with huge interest.

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Again, there is a reason why its silly to just call everything a default. Inflation is a devaluation and its silly to cause it a default.
Default is not a math term. For as long as it is defined as "failure to pay what was expected", devaluation is in fact a default - unless very high rapid inflation was expected, of course.
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Old 08-15-2012, 09:38 PM
 
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The US debt grows at $10 million per minute only because Obama hasn't figured out yet how to grow it at $20 million or $30 million per minute.
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Old 08-16-2012, 02:41 PM
 
19,337 posts, read 16,927,911 times
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Quote:
Originally Posted by Teak View Post
The US debt grows at $10 million per minute only because Obama hasn't figured out yet how to grow it at $20 million or $30 million per minute.

Obama had nothing to do with it. Keep in mind I detest him if you are looking for bias.
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