Category Archives: Society

It could work~!?

  By Mystic | May 18, 2013 - 09:16 | ,
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I think I see the big picture something like this -
The Great Depression was because money couldn’t make enough money investing in the real world.
The real world was stuck on the farm, with food products hitting their demand ceiling.
By 1950 the shift had been made to manufacturing. Investment was worth while, with no demand ceiling in sight.
Today, manufacturing is in the same place as agriculture was a hundred years ago.

On the strict understanding that people will always have to work for their keep … what is to replace manufacturing~?
Something else may turn up, but all I can think of is `services`.
Here we have a problem – Will investing in services ever be `a good investment`~?
I don’t know why not, but I think not.
This means that countries that want to stick with manufacturing and/or capitalism are going to run into a brick wall.
Not everyone can win the export game (and anyone who tries, will be on a race to the bottom, when it comes to wages).

Services must be the way to go … but who will pay~?
The answer must be – the state.
Where will they get the money from~?
The answer must be – the central bank.
States will expand education and health-care sectors and the CB will pay with fresh-air-money.
It could work~!?

Euro Allocation #3 – Is The Euro Closer to Being a $US or a SDR ?!

  By Richard from Canada | May 17, 2013 - 17:03 | , ,
1 Comment

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.

Euro Allocation1

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 !!!

Would that not surprise the world ?!

Working it off

  By Mystic | May 17, 2013 - 12:10 | ,
3 Comments

A good point (I forget where I read it) is that the Northern Europeans are missing a trick.

If you want the people that owe you money … to actually pay that money back; it is a good idea that they work harder than they did, so as to be able to get the money together.

The Northern Europeans have gone for a different angle … viz – throw them out of work~!

It is an interesting thinking game to imagine how they could actually `put the debtors to work`.

How could they do it~?

Twisted

  By Mystic | May 16, 2013 - 12:22 | ,
5 Comments

Two interesting articles in the FT today.
First by Gillian Tett and the next by Izzy.

They both state the bloody obvious about how the markets are all screwed up by QE.
Gillian goes on to say that QE is here to stay, but Izzy gives us writings from the IMF and BIS that QE should be wound up.

Gillian is obviously right, but Izzy trumps her by talking of -

QE may have done its job as far as propping up the financial sector goes but… for the economy to really recover, and for it to avoid another massive shock, there is still an urgent need to redirect much of the liquidity that’s been created — currently chasing risk assets — to those frozen out of the economy more permanently.

It may consequently be time to start talking about concepts like basic income, digital e-money or debt jubilees.

I am sure Gillian would reply with something like – “but, they won’t though, will they~?”
( and neither Izzy (or any of us) would disagree)).

So, here we are still … `bitter and twisted in CB Vegas`.
… and a lot depends on these guys~!
1
This Fed chart is up-to-date, but does not take into account of what is going to happen.
That `receipts` line is going to go up a lot and the `expenditures` line is going to stay flat.

The US has got across the river, but the bank up to the safe green fields is very slippery.
They have gone for four years of trillion dollar deficits and now are going to try and get up the slippery hill on about 600/700 billion deficits. Even with the `shale experience` and the natural brain-dead optimism of the average American … I don’t think it is going to be enough.

The rest-of-the-world has taken part in the seven trillion dollar Central Bank QE party, but has mostly gone very light on government deficits.
The people, mainly in the West, were scared by the wild river crossing and won’t start demanding credit again till they have seen two good seasons come and go in the safe green fields.
The bottom line is that, if the private sector is not borrowing and spending, then the governments must borrow and spend. The US has done more of this than anyone (except maybe China), but it has not done enough. I don’t think the US will be able to get up the slippery hill with the OECD on its back … and, if it slips backwards, the biter and twisted markets are going to freak the fuck out~!

Sticky negative money

  By Mystic | May 12, 2013 - 01:36 | ,
1 Comment

Another video – (including cock-up where I run out of film, so have to show images of pretty girls)
Ben Benanke says things are getting a bit frothy (so watch out~!)
Repeat of `fresh-air-money` and why it can be said that the loan was made from deposits.
Negative interest on reserves and what may happen.

The problem for Ben is … If things are now frothy, will he burst their bubble~?
It is the `cheap money` that is causing the frothiness.
Loans cause deposits.
Negative interest rates will cause banks pain.

Not so distracting audio –

Play

Podcast: Play in new window | Download

Where is the VaVaVoom~?

  By Mystic | May 10, 2013 - 14:01 | , ,
11 Comments

Growth is based on investment.
Investment is the desire to `make` money, rather than `hold` money.
(you could say that investment is just plain spending money)
(or, investment is borrowing and spending money)
(any way … growth is people not `holding` money).

The Reinhart and Rogoff spat will move politics.
The anti-austerians will take more power and exercise it on Central Banks.
The CB’s will continue with ZIRP (maybe even think of going negative). This is `cheap money`.
The problem is, that, like most things `cheap`, it loses respect. It may sound silly, but I think people’s desire to `make` more money is reduced. ZIRP seems to take the VaVaVoom out of the economy.

Quick overview of Western economies during crisis -
US has reduced private debt and greatly increased public debt = blah.
UK has reduced private debt, increased public debt = blah minus.
EZ has increased private debt, decreased public debt = blah double minus.

Years are ticking by.
More fossil fuels are being used up.
The Western World is going nowhere.
It is VaVaVoomless~!!