Export your way out of miseries!

Now, if only one could know exactly where that abyss lies...~

~I really hate the term 'Quantitative Easing'. It suddenly appeared in the past couple of years. I have tried to track its source down, and as far as I can ascertain it originated with some flack in the Federal Reserve.

There is nothing new about 'printing money' or 'money creation by the Fed'. That term appears in the textbooks (at least until recently) and everybody understands it. Not some pretentious euphemism.

So much for that.

Now in a recession/depression money creation by the Fed is GOOD, or at least not harmful.

The major purpose, universally not mentioned, except by monetary economic specialists,is to prevent the money stock falling. Yes, Virginia, money stock can as does fall. It is not all those physical bits of paper. It is in bank balances, and without going into an explanation, it can and does 'evaporate', with really disastrous consequences - bank failures, further depression.

Fortunately we have avoided that this time.

What about reducing interest rates? You might ask.

And this is where Ben Bernanke is getting his policies entirely wrong.

It was pointed out 70 years ago by Keynes that low interest rates will not make a shred of difference in getting a country out of recession. This is taught to students, such as Ben Bernanke, as the 'liquidity trap'. EVERY ECONOMIST SHOULD KNOW THIS.

Thus a policy aimed at reducing interest rates by buying government bonds with created money is a total waste of time. It is not inflationary at the present time, but a low interest rate, (below 4 per cent, the 'natural risk free rate' as it is known), is extremely dangerous as it encourages speculation and misuse of loanable funds.

So money creation is good. What does one do with it? Though I am a monetarist by inclination, I will tell you that the only policy which will work at the present time is FISCAL POLICY. The created money must be spent on 'high multiplier' activities such as infrastructure expenditure. That very fast train from Boston to Washington, fellers. Repair those rotten drains, and shaky bridges. All employment creating activities. The money will flow to the regional banks to be on-lent. Not go straight to Goldman Sachs, so that they can turn a point on a trillion dollars.~



~Evil Captain Ben is going to destroy globalization economy, (which may be not a great idea according to some people.) QE is currency war. Unwanted unwelcome QE money is flooding the emerging markets like the flood in Pakistani. They have no place to hide.

The stock market worldwide soar priced in QE2 prices since Ben opened his mouth about QEs. Now base on the sizzling excitement and the enthusiasm, Wall Street already start to price stocks in QE3, 4, and 5. 6, 7... . By 2011, QE 11, 2012 QE 12. Mac Fabre is right.

So what will be the next big Bubble to pop? QE bubble or Bond Bubble?~



So, what's the solution? I've no idea either.
But if you're rich enough, gold is the way to be in.
So far, the last time I took a peep (less than 24 hours ago), it's already trading near to US$1400 an ounce! If you're broke, well, try to "export" your debt the way the Fed is doing. How successive you're going to be depends on how "innovative" you can be. Good luck! ;-)

As a last resort, I do believe we all need to pray more! :p