<blockquote>"We have lived beyond our means. The chickens are coming home to roost and this is just one in a series of countermeasures that will be required over the next decade."
- California governor Jerry Brown (
Context, August 29, 2012)</blockquote>
'..he nature of a credit-based economy..'<blockquote>'Indeed, if $50 trillion printed tomorrow sat as excess reserves (the most likely event), it would have the same effect as if it was buried in the ground, or not printed at all. Such is the nature of a credit-based economy, and a point that has caused hugely inaccurate inflation forecasts from many Austrian economists.
As previously mentioned, such massive printing might briefly cause a temporary attitude change accompanied by a brief asset bubble of some sort (especially in long-dated treasuries given banks would put some of it to that use).
However, massive printing would collapse treasury rates, further destroying those on fixed income, and make it even harder for pension plans to meet assumptions.'
- Mike Shedlock,
Reader Questions On Hyperinflation; Would Printing $50 Trillion Tomorrow Do Anything? August 30, 2012</blockquote>
'..the nature and role of attitudes and credit in boom and bust cycles..'<blockquote>'Very few Austrian economists seem to understand the nature and role of attitudes and credit in boom and bust cycles. Most woodenly stick to views that excess reserves will come pouring into the economy 10 times over causing massive inflation.
Careful observation would suggest the economy does not act as prevailing Austrian theory believes it does. Unfortunately, this is why many Austrians have looked ridiculously silly vs. Paul Krugman when it comes to inflation predictions.
This is by no means a defense of Bernanke or Krugman, as Bernanke has created other very serious problems and economic distortions of all sorts. Moreover, Fed policies and deficit spending have indeed created boom-bust cycles of ever-increasing amplitude.
Indeed, the policies espoused by Bernanke, forever bailing out banks whenever they have gotten in trouble is one of the factors driving money and assets to the 1% vs. the 99%. Clearly, those on fixed income have been destroyed by Bernanke's policies.'
- Mike Shedlock,
Economist Fired for Expressing Opinions on Max Keiser Show; Errors in Observation, August 29, 2012</blockquote>
'..I would argue that sharply reducing infrastructure investment, or at least diverting it into more useful – if less glamorous – projects, is more important..'<blockquote>'..While the real estate bubble gets most of press, I would argue that several of the analysts who have been in the skeptic’s camp for many years, like Logan Wright of Medley Advisors or Victor Shih, now with Carlyle, usually agree that debt is the most worrying problem.
Of course borrowing money to fund a real estate bubble is an important source of bad debt, but I have argued for many years, and continue to believe, that economically non-viable infrastructure investment has been a much greater source of bad debt, by which I mean debt whose servicing cost (excluding of course interest rate repression) exceeds the debt servicing capacity created by the investment (excluding subsidies and including externalities). Empty buildings may be much easier to visualize, and much more photogenic, and many people still have an impossibly tough time understanding why it is possible to overinvest infrastructure (isn’t all infrastructure spending good?), but I would argue that sharply reducing infrastructure investment, or at least diverting it into more useful – if less glamorous – projects, is more important than reducing excess real estate development, although this too is clearly a problem.'
- Michael Pettis,
How do we measure debt? August 27, 2012</blockquote>
Context<blockquote>
'..central bank financing can become addictive like a drug.' - Jens Weidmann
(Affectivity) '..deontology and ethics should have a preponderant place..'</blockquote>