First off, I know that many of you will laugh at the idea that I fell for an internet book that is plugged online. This criticism does not concern me, however, because I believe that the author is onto something so obvious and inevitable that we all would do well to pay attention. (and we don't have to subscribe to his newsletter, either...its entirely optional! )
That was the right title but the wrong book. Here is a review of Aftershock by authors David, Robert Wiedemer which is the one I am reading. (Scroll down to the comments and read the rebuttal by the authors themselves over Fortune magazines book review) The basic economic theory can be found at Economic bubble(wikipedia)
I just got my hardback copy of Aftershock in the mail yesterday from Newsmax. I'm looking forward into reading it. They send it free along with a paperback called High Income Guide and some other reports. You pay $4.95 shipping. If you don't cancel in time they have your credit card # and you will get quite price automatically deducted from your credit card if you don't cancel the next book, etc, something like $80 or $90 I've heard.
I told the one who received my call that I didn't want the next thing because it wasn't clear when you sign up for the freebee that you would be obligating for more. The processor assured me that it was canceled. I hope so.
Edited by Buzsaw, : add word
BUZSAW B 4 U 2 C Y BUZ SAW. The Immeasurable Present Eternally Extends the Infinite Past And Infinitely Consumes The Eternal Future.
Someone wisely said something ;ike, "Before fooling with a fool, make sure the fool is a fool." :)
Wrong "Aftershock" That was the right title but the wrong book. Here is a review of Aftershock by authors David, Robert Wiedemer which is the one I am reading. (Scroll down to the comments and read the rebuttal by the authors themselves over Fortune magazines book review) The basic economic theory can be found at Economic bubble(wikipedia)
Nah... already spent the time reading the first review.
It would be better to keep your arrogance to yourself. Clearly you dont take the threats mentioned in this book seriously, but many won't.
quote:David and Bob Wiedemer's first book, America's Bubble Economy, published in Oct. 06, not only correctly predicted the "Great Recession" we are in before it started, but more importantly they predicted it for the right reasons in the right order. They predicted it would begin with the deflating of the sub prime loan bubble and then spread to the housing bubble, credit bubble, stock market bubble and finally consumer spending...
Basically, the authors talk about six interlinking bubbles. 4 have already deflated, and the last two, the US Dollar and the Debt Bubble...will send the economy over the edge.
While they do talk about gold, they are not in the business of selling it. They say that they are not gold-bugs, and in fact warn that gold itself will have a bubble when it is over speculated, but wont crash for a few years.
I find no flaws in their logic. I do, however, admit that it gives me a sort of smug assurance believing that the traditional financial intelligencia is blind to this obvious development.
Personally, the easiest way to pay the bill (on the 15 trillion dollars plus that we owe) is to inflate it away, paying it back in inflated dollars. I plan on putting my money where my mouth is and investing in some stocks that are gonna survive this quagmire.
I just got my hardback copy of Aftershock in the mail yesterday from Newsmax. I'm looking forward into reading it.
While I am currently not as apocalyptic as you are, I do believe that many people will turn (or return) to religion once their fantasy land of easy money goes away.
I will admit, also, that it gives me a sort of smug satisfaction that all of these college boys that made a killing with their business degrees at the rest of our expense will finally get kicked in the teeth by reality themselves. If the United States goes down, everyone throughout the world will and should suffer right along with us, but when we all come back, it will be a paperless monetary economy and a cashless global system replacing the tattered old one.
Any time that money is pumped into the economy at the rate that Ben Bernanke has done in the last three years will make inflation inevitable.
Absolutely wrong. You're conflating the money supply with the value of goods and services, and they're not the same thing.
And you know they're not the same thing, because you don't buy and sell goods and services based on the number of US dollars in circulation, you buy and sell them based on today's demand for your goods and services. I forget exactly what it is you do, but let's say that you run a grocery store. When it comes time to put a box of tomatoes out on display at a certain price, you don't determine that price by saying that a tomato has X inherent value, and then consulting the CIA World Fact Book to find out how many dollars there are in the United States today, then dividing one by the other or something.
No, what you do is think back to how many people bought tomatoes last week and the week before; if demand was high, you charge a premium price for your tomatoes. If demand was low, you know you'll have to drop your prices to move those tomatoes.
Inflation is what happens when there's more money put in circulation to chase the same number of goods and services. But that's not the situation we're in. The recession dropped US aggregate demand and as a result, production dropped as well. More money chasing goods and services would mean a return to historical levels of GDP growth and then inflation if Bernanke kept printing money but the point is to stop doing that at the point where production is back to its historic trendline but before you start to inflate your currency.
Inflation is like a sled being pulled by a rope called "aggregate demand." When aggregate demand slacks, the sled isn't going anywhere. And you can use quantitative easing - printing money - to take up the slack in the rope. But as long as the rope has slack, the sled isn't being pulled anywhere.
What about this do you find so difficult to understand? With unemployment at around 12%, surely it's not hard to understand how much unused production capacity there is in the United States?
Good post. Demand, growth and jobs is the current problem and should be the current focus. But I don't think we can ignore the role of inflation altogether. I think it will play some part in this unfolding story at some point.
A prominent Keynesian economist/columnist over here has also been suggesting that significant inflation is at least one possibility.
He suggests that there are three possible ways out of debt - significant growth (looking increasingly unlikely as everyone embarks on growth killing austerity) - Defaults (looking almost inevitable to some extent e.g. Greece) - Inflation (whether managed or uncontrolled).
Elsewhere I have seen him suggest that some level of controlled inflation might be one of the least worst options in the absence of growth.
"No major advanced economy is doing anything to promote growth and jobs," says George Magnus, a senior policy adviser to investment bank UBS. He is right. Wherever you look, it is an economic horror story. Put bluntly, too many key countries – the UK in the forefront, with private debt an amazing three and half times its GDP, but followed by Japan, Spain, France, Italy, the US and even supposedly saint-like Germany – have accumulated too much private debt that cannot be repaid unless there is exceptional global growth.
That looks ever more improbable. Yet without growth there are only three ways out. The first is to increase public borrowing to compensate for the collapse of private borrowing. Private spending is bound to be depressed as individuals and companies lower their borrowing – so for a time exports (as long as other countries are buying) and growing public debts are the only reliable avenue to promote economic growth. But now there is a veto on growing public debt – due to the Tea Party movement in the US, the collapse in confidence in the euro and Britain's conservative government – and export demand from Asia is slowing.
The lessons from history are clear. Without publicly or privately generated growth there are only two other ways forward to pay down private debt after credit crunches: default or inflation, either containably managed or dangerously unmanaged.
What has unnerved the financial markets is that if the world cannot grow we are moving ineluctably towards these options. In the US, where the recent downward revisions to its economic growth statistics show how alarmingly weak its recovery has become, there has already been $300bn (£183bn) of private debt write-offs, according to McKinsey Global Institute's research. Now the Tea Party movement has vetoed any creative action by the federal government to stimulate growth, the pace of writing off consumer and mortgage debt can only accelerate. The impact on the American banking system, house prices and consumer confidence is bound to be serious.