Comments on: GFC confusion, part 3: caused by savings glut

By: Stephen Kirchner

Stephen Kirchner — Fri, 10 Jul 2009 00:48:21 +0000

See here for an explanation of the role of GSEs in intermediating forced foreign saving into US housing:

http://www.ft.com/cms/s/0/5315bab8-6caa-11de-a6e6-00144feabdc0.html

By: GFC confusion, part 4: blame derivatives « Thoughts on Freedom

GFC confusion, part 4: blame derivatives « Thoughts on Freedom — Wed, 08 Jul 2009 01:00:33 +0000

[...] (Previous articles in this series are about Lehmann collapse, greed & the savings glut). [...]

By: Bee

Bee — Tue, 07 Jul 2009 08:32:38 +0000

Hear, hear Terje!

By: TerjeP (say tay-a)

TerjeP (say tay-a) — Tue, 07 Jul 2009 07:17:16 +0000

The price of credit (ie interest rates) ought to be deregulated. This idea that central banks should fix interest rates, even if via the current crawling peg policy, is fundamentally flawed. They ought to simply fix the value of currency relative to gold or some such tangible natural commodity. Or even better they should exit the market entirely and cease to be.

By: Sean W. Malone

Sean W. Malone — Tue, 07 Jul 2009 05:50:48 +0000

I suppose I should also note that, whatever of the Chinese savings came from the Fed’s printing press would technically “not” be real wealth either, but I think it’s safe to assume that the majority of reason we (the US) sent them so much money over the last few decades is because we’ve systematically destroyed our own ability to produce competitive goods…

By: Sean W. Malone

Sean W. Malone — Tue, 07 Jul 2009 05:48:12 +0000

All correct, sir.

Blaming Chinese savings also ignores the fundamental issue of where China got the money – their savings is primarily in US dollar denominated assets after all. This was achieved solely through the sale of mass quantities of produced goods to the United States, since we no longer have any kind of manufacturing base. But that also means that the vast majority of Chinese savings was acquired through trading things of tangible value to Americans.

Whereas, the Federal Reserve’s artificially-created explosion in cash in the monetary base was backed by… NOTHING.

Point being, the Chinese savings boom was real and, while not indefinitely sustainable, most assuredly not any artificial bubble (and thus would not have required a correction… certainly not a painful one). The Federal Reserve bubble however is just fraudulent, currency devaluing idiocy.

By: nicholas gray

nicholas gray — Tue, 07 Jul 2009 05:25:30 +0000

So we need a good balance. The stimulus shows that Australia can stay out of trouble by judicious spending- but not too much.
Small items would be better, especially if they also improved the mind.
What every Australian should do is buy a good magazine, and read that magazine! A magazine devoted to current affairs, say, or policies. Wait a minute! There’s such a magazine on the shelves right now! With some rivetting items about income taxes!
Go out and buy ‘Policy’ magazine right now! And read the informative articles!