And the most recent `trends` (changed format) -
It’s not enough.
It would take a monster reflation by the Government to get it back up now.
The coalition government are not going to reflate and the opposition have said, if they win the next election, they will not reflate either.
So, I guess the UK will stay un-reflated.
(I don’t want to be boring on this … but, the longer it goes on … the longer people get used to the new way of doing things (a la Japan)).
I imagine that most central bankers are wishing they had chosen some other profession.
Take the Fed …
The are doing QE3 until the unemployment rate looks good (as long a inflation does not flare up).
It will be a long, long time till the unemployment rate looks good (because, when it improves, more people will come back onto the rolls) ((and inflation is not likely to flare up)).
This leaves the Fed stuck doing QE3ing till the end of time.
Not only boring, but potentially embarrassing as well; as more and more people get see that you are not as powerful as you had pretended to be … but what can you do~? You can’t do more, because doing more `non-powerful-magic` only shines more light on the magician’s powerlessness. You can’t do less, unless the unemployment rate looks good; because that would look like giving up.
I bet they would love to try and stop QE and give raising rates a go; but that would be inexplicably wild looking behavior.
There is nothing much they can do.
There is now only fiscal policy; but the government is swinging into tightening mode.
The Fed must know that this risks throwing the blah economy back into recession; but Washington ain’t listening.
This financial crisis was brought on by things that started in the 70′s.
As in – People, back then, did bad things; because they thought the `bad things` were all they could do to get out of thier bad situation.
It would be fair to say, that the `bad situation` they were in, was brought on by other things … that were probably bad.
That is to say – This financial crisis is not just an odd `one off`, brought on by a strange confluence of various swirling, modern, temporary, bad things.
This has been a comin’ for a long, long time.
Let me get my crayons out again -
Let’s base this round `the middle income trap`.
Back in history, some in the West got through the `mit` by various methods.
Since `history`, other countries have officially gone through the mit (off the top of my head, I know I should check, by my head is full of can’t be bothered) South Korea, Taiwan, a couple of places you’ve never heard of, oh … and our old friends Portugal, Ireland, Spain and Greece.
Here, it should be clear, that getting through the mit does not mean life will be roses from then on in.
I remember now that I should have spoken of Argentina first.
There was a time that it was projected to be, if not as big a thing as the US, but not far off.
What happened to them~?
They did not get through their middle income trap (just like a hundred odd others didn’t either).
A big question, about ten years ago (actually they still go on about it (re: INET Hong Kong conference)) was/is … “How will China get through their mit~?”
The answer from me is simple … they won’t~!
Well, not only will China not get through, neither will India, Brazil, Russia, Indonesia, Turkey or any other country you want to list. … And, speaking of lists – The countries that were ticked through, will all fall back out … It has started with the PIGS and will eventually pull Taiwan and South Korea back into the common muck.
One way of saying it, is that to get through `mit` you have to move into a service based economy (which I call the `hairdresser economy`). It is a happy little place with everyone living in a mutually loving society (or something like that). It might be necessary that millions of poor people in other countries are willing to sweat buckets for your local currency bits of paper (but that is all part of their `growing` into a big mature country).
Let’s take a break -
It all goes into a bit of a swirl here … something like – Them yellow niggas would make us stuff in exchange for our paper,, but we didn’t even have us enough paper to give ‘em,,, So we had to get us some more paper.
Where does the paper come from~?…The `paper shop` duh~!!
So we trooped on down to the local paper shop and got us some piles of paper, swapped it between each other for to buy houses and spent the rest on yella nigga shit. Say what~!
The world is full of niggas … and they will work for paper.
If you got you some good paper, then you got you some good niggas.
Nice Lord Turnups from yesterday is likely to wake up dead one day, if he keeps on pointing out that even `good paper` is … after all … only paper.
Da niggas should really demand `quid pro quo` for their blood sweat and tears; but they dont no wat dat iz, doo dey… duh~!
I thought I would create a Mystic inspired table. You know that debt is really about keeping money lubricated and not stuck, but that debt itself just sits there and is stuck, although well lubricated and ready to move. The debt flow is the “GO” that utilizes the lubricated debt and keeps it moving. The debt acceleration is the “GO GO Juice” and includes asset bubble creation.
So to fix it requires another asset bubble. Maybe more than one. Bond bubble, stock market bubble, housing bubble, gold bubble, highway construction bubble, education tuition bubble, green energy bubble, etc?!
Where or where has our Mystic gone ?! Let’s go somewhere else !
I never thought about asking the very basic question of what is a Euro ? There are many comments that say countries who use the Euro are effectively using a foreign currency and hence cannot print/inflate their way out of a debt problem. The US is a sovereign issuer of it’s own currency and hence can print/inflate itself out of a debt problem.
The SDR is of course like the Euro in that it is a foreign currency to all who use it. We also realize that the SDR has a more Publicly controlled allocation process (hand out new money to governments based upon GDP by the IMF) as opposed to the $US that has a more Privately controlled swap process (private debt exchanged for money by the FED).
So let’s use the Steve Keen approach to the debt problem. He says “QE to the people” as opposed to “QE to the banks”, but what about “QE to Governments” !!! That is what a SDR allocation is and it forces governments, with debts, to pay down their debts first with their allocated SDRs.
So if the Euro is closer to a SDR than a $US here remains the future plan. Allocate Euro to governments and force them first to pay down their debts ! If you have no debts you can keep it on reserve for the time you need it !!!
Here is a chart which captures what I think are some of the FED’s rational behaviour behind their interest rate policies. Rational of course from their perspective … not yours ! You are probably thinking the FED is alittle irrational ?!