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07/31/2012

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Ben

Hussman's comments reminded me of a book I read a few months ago written by an incredibly arrogant man named Francis Fukuyama. The title of the book is The End of History, and Fukuyama argues that there is no "systematic alternatives to Western liberalism". Basically there is no alternative to managing the economy through central banks and global financial institutions, and those who argue otherwise are ignorant of history .....

Ben

This is the book I referred to http://tinyurl.com/dyqbobr

Anywhere But Here Is Better

Dave - a light bulb lit up while reading your latest insight.

This mantra word growth is nothing more than a big bad wolf in cutesy sheep's clothing. Look at an average well-off American and an average dirt-poor African, in profile. Both have grown stomachs that stick out from their skeletal frame, but one is the result of consuming too much and the other from consuming too little.

Ultimately, this growth hurts both and leads to earlier graves than would be the case if resources were fairly shared and conserved.

We need look no further in grasping that we went wrong as a species from the year dot. It is highly amusing to me that such thinking is branded evil communism by political ignoramuses, when it is Darwinian global capitalism that is responsible for our forthcoming date with destiny.

Ken Barrows

I think "printing" is an inappropriate word here. Correct me if I am wrong, but the central bank provides a cash equivalent in exchange for an asset (like a Treasury). The private bank that receives the cash equivalent (i.e. an account at the Fed) can spend and/or lever that money. Hence, the rise in asset prices but very little bank lending. If the banks lent this money in spades to businesses and individuals, consumer price inflation would soar. But since they are not, no inflation and strong asset prices. Free lunch! ;)

Don Levit

In the Bible, it speaks of not paying one's debts to another is like stealing from God.
Hey, I think we have created another God, here, an entity, like God, who can create something from nothing, who can create money out of thin air!
Of course, this new God must be written with a small g - god.
You know where it says in the 10 Commandments "You shall have no other gods before Me."
In God's infinite wisdom and sense of humor, He allowed for other gods AFTER Him.
Shalom,
Don Levit

Mister Roboto

Mainstream liberals can be just as willfully myopic as conservatives about the fact that you can't have infinnite growth on an finite planet. If you could, then maybe Keynesianism would work. Even then, you would still want to be careful about not racking up so much debt that the accumulating interest rates (ZIRP is certainly an unsustainable state of affairs) make it impossible to properly service the debt.

T E Cho

There's gonna be a lot more depressed liberals and angry conservatives when TSHTF.

James

Modern "Liberals" and "Conservatives" of the American variety are equally clueless when it come to economics largely because they are clueless. They cling to ideology over facts and have only known broken, corrupt systems. The problem is that both cling to a flawed understanding of basic economics that favors their viewpoint. You can neither spend nor borrow your way out of every situation- sometimes you have to change the game fundamentally. That's why economics largely stays conceptual and academic- because entrenched interests don't really want anything to change. Any implementation of a rational economic policy must give way to politics.

Printing money isn't a liberal position, it's an institutional one. No doing so means and end to free money, and alot of groups don't like that idea.

The problem with so called conservative and liberal economic philosophy is that so often the former is used to justify corporate greed (self correcting markets, rational drivers) and the latter government overreaching (stimulus, corrections). It is such a large and complex problem, it's easy to focus on minutiae and theory without addressing anything of substance. So it just turns into alot of babble to cover power struggles, misuse of money, etc. while the underlying problems grow. Just like most human affairs.

And don't confuse political conservatives with fiscal conservatives or political liberals with economic liberalism. They are far from the same thing. Economic liberalism advocates minimum government interference in the markets and is tied to classical economic theory. America has accepted some form Keynesian economic theory since the Great Depression. Full Employment has become a Holy Grail for both sides of the political spectrum. True fiscal conservatives (that is those who do not believe any form of government debt) are exceedingly rare. So called conservatives have not been interested in balancing the budget in some time. Rather they advocate a position of spending (usually military) with lower income through taxes (predominately for upper income stratas). Thus, borrowing becomes necessary.

So the the real argument is tax and spend v. borrow and spend. The inherent problem is, of course, the spending part.

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