patrick.net
An Antidote to Corporate Media
1,205,871 comments by 14,328 users - komputodo, krc online now
Of the stupidity of keynesian policies...
invite response
2014 Feb 4, 2:57pm 26,883 views 95 comments
« First « Previous Comments 85 - 95 of 95 Search these comments
You are totally wrong on this. Here is a typical "right-wing" source called
Wikipedia:
Inflation exceeded 50% per year in Zimbabwe before any of this, starting in the late 90s AFTER the US and UK cut them off and revolutionairies seized and tortured white landowners. Sanctions came, the economy crashed, and Zimbabwe printed even more to meet its obligations to the IMF. After printing started en masse to meet debt obligations, inflation surged from 100% per year to 1000% to 1,000,000%.
They would have had high inflation without the US and UK backing out and sanctions, but they would not have had currency collapse.
Inflation exceeded 50% per year in Zimbabwe before any of this, starting in the late 90s AFTER the US and UK cut them off and revolutionairies seized and tortured white landowners. Sanctions came, the economy crashed, and Zimbabwe printed even more to meet its obligations to the IMF. After printing started en masse to meet debt obligations, inflation surged from 100% per year to 1000% to 1,000,000%.
They would have had high inflation without the US and UK backing out and sanctions, but they would not have had currency collapse.
While I'm not a fan of IMF, I hope you do realize that IMF obligations are not denominated in local currency, so it's rather absurd to claim a need to print local money to meet IMF debt.
The real reason for the massive money printing was quite simple: Mugabe administration destroyed its own tax base (the productive farms across the country) and still had to pay its political base (the "revolutionaries"). So, just like numerous hyperinflating regimes throughout history, it resorted to money printing.
While I'm not a fan of IMF, I hope you do realize that IMF obligations are
not denominated in local currency, so it's rather absurd to claim a need to
print local money to meet IMF debt.
I know that they did not pay the IMF in local currency - but it is the exact same thing that happened in Weimar Germany. The "drain" on the economy from the IMF debt relative to production under sanctions forced them to print to pay the local bills.
No IMF debt, no drain, no need to print.
The sanctions desroyed productivity, not the seizing of the farms per se. One led to the other, but regardless of the "owner" of production the production could have still existed. Cutting off the demand from the outside world for that production is what killed the economy.
If the Canadians nationalized their oil reserves - the oil reserves would still exist. Their economy would crash if we didn't buy from them any more. If we still bought from them - no issue.
I know that they did not pay the IMF in local currency - but it is the exact same thing that happened in Weimar Germany. The "drain" on the economy from the IMF debt relative to production under sanctions forced them to print to pay the local bills.
That's not what happened in Weimar Germany either, despite Hitler's propaganda claiming so. Weimar hyper inflation was the result of French and Belgian occupation of Saar and Ruhr, which accounted for the bulk of German industrial output at the time, after German government refused to make debt payment; meanwhile, German government was printing up the money to pay all the workers on strike in Saar and Ruhr. Hyperinflation is always a monetary problem. Taxation by foreigners would be just like taxation and running big government surplus, which is usually deflationary not inflationary.
No IMF debt, no drain, no need to print.
IMF does not print Zim money. Zim central bank prints Zim money. There were plenty needs to print even without IMF:
War in Congo/Zaire
Pay for "revolutionaries"
tax revenue shortfall due to government destruction of its own tax base, the productive farms, for political reasons.
The sanctions desroyed productivity, not the seizing of the farms per se. One led to the other, but regardless of the "owner" of production the production could have still existed.
That's a classic fallacy among the socialist crowd. The Soviets, the Chinese, the Cambodians, etc. etc. all proved conclusively that mass famine can take place on the very same land that used to be productive when ownership and management are changed. Production can be drastically curtailed when you put the morons in charge. Contrary to Marx' beliefs, the society is not run by idealized amateurs like himself, but specialists who specialize in different expertise. When Mugabe yanked the specialist farmers and put the "revolutionaries" in charge of the farms, the result is precipitous fall in farm productivity . . . just like we witnessed in Soviet Union, in China and in Cambodia half a century or more earlier.
Cutting off the demand from the outside world for that production is what killed the economy.
Never mind the exports, the domestic economy was being crushed by Mugabe's policies. Most of Zim's exports could have been sold to the neighboring countries (especially South Africa), which did not participate in the sanction. The primary export of Zim was farm products, not gold and diamonds like South Africa had been during apartheid, so western sanction did not have real bite on Zim.
If the Canadians nationalized their oil reserves - the oil reserves would still exist. Their economy would crash if we didn't buy from them any more. If we still bought from them - no issue.
Oil reserve existing is irrelevant if the technology and the economic incentive to bring it out of ground are not there. Numerous countries witnessed their oil production stall and decline after nationalization.
Weimar hyper inflation was the result of French and Belgian occupation of Saar
and Ruhr
In response to Germany not paying WWI reparations. They took it as payment.
I always enjoy reading your alternative histories.
Weimar hyper inflation was the result of French and Belgian occupation of Saar
and Ruhr
In response to Germany not paying WWI reparations. They took it as payment.
I always enjoy reading your alternative histories.
You are the one relying on alternative propaganda histories; in this case, Nazi propaganda. You are also committing intellectual dishonesty by chopping up my post mid-sentence. The occupation itself would not have caused hyperinflation if not for Weimar central bank printing up the money to pay the workers in Ruhr and Saar to stay on strike instead of working at the factories during the occupation. In other words, the hyperinflation was the result of deliberate German policy to prevent the French and Belgians from taking Ruhr and Saar (their economic output) as "payment."
You are the one relying on alternative propaganda histories; in this case, Nazi
propaganda.
It isn't propoganda, it is a sequential fact path:
1. Reparations.
2. Occupation
3. Printing
4. Hyperinflation
You want to say the hyperinflation is because of the printing and loss of economic output. Those 3 happened because of Germanies inability to pay the reparations.
We both agree there is a baby, which came from an pregnancy. I am saying if there wasn't a man (or at least sperm) involved somewhere, there never would have been a pregnancy followed by a baby.
You are also committing intellectual dishonesty by chopping up my post
mid-sentence.
That was not my intention - and if I did that I apologize. I would not do that intentionally - and I wonder if the rest of the sentence has been added after the fact...
I don't know why I would make my counter point, given what you said in the rest of that sentence now. I read your entire post but somehow either:
a.) missed that part of the sentance
b.) you edited and added it after the fact.
If it was my mistake, I apologize.
You are the one relying on alternative propaganda histories; in this case, Nazi
propaganda.It isn't propoganda, it is a sequential fact path:
1. Reparations.
2. Occupation
3. Printing
4. Hyperinflation
You can add the invention of light bulbs and automobile to the front of the list. Would that make light bulbs and automobile the cause of Weimar hyperinflation? The Occupation did not have to lead to hyperinflation, which was the direct result of Germany central bank's money printing to keep workers in Ruhr and Saar on strike.
You want to say the hyperinflation is because of the printing and loss of economic output.
Hyperinflation happened because of the money printing by the German central bank to keep workers in the occupied industrial zones on strike. If our government raises minimum wage to $100/hr, thereby banning the vast majority of the jobs out there, then print up "unemployment"/disability/welfare to match their former job pays, we'd have hyperinflation within a few weeks to a few months too.
Those 3 happened because of Germanies inability to pay the reparations.
The reparation burden was onerous, but not outside German ability to pay. The foreign direct investment flowing into Germany exceeded the reparation debt service burden. If the German leaders knew what would happen with hyperinflation, they probably would not have made that deliberate choice.
We both agree there is a baby, which came from an pregnancy. I am saying if there wasn't a man (or at least sperm) involved somewhere, there never would have been a pregnancy followed by a baby.
How is that analogy even relevant? A sperm is a necessary condition for pregnancy. Taxation by foreigners is neither a necessary nor a sufficient condition for hyperinflation. Government monetary decision to print with abandon however is necessary and sufficient condition for hyperinflation.
You can add the invention of light bulbs and automobile to the front of the
list. Would that make light bulbs and automobile the cause of Weimar
hyperinflation?
Nice Strawman, or at least reductio ad absurdum. It is foolish to think that the reparations did not contribute to the occupation, which was not a factor for the printing. Reality says
The reparation burden was onerous, but not outside German ability to pay.
That is certainly an opinion.
If the German leaders knew what would happen with hyperinflation, they probably
would not have made that deliberate choice.
If the French and British leaders would have known that the reparations would have led to the rise of Nazism, they probably would not have demanded them.
We can go round and round all day, but I would rather not.
You can add the invention of light bulbs and automobile to the front of the
list. Would that make light bulbs and automobile the cause of Weimar
hyperinflation?Nice Strawman, or at least reductio ad absurdum. It is foolish to think that the reparations did not contribute to the occupation, which was not a factor for the printing.
War reparation was not a sufficient nor necessary condition for hyperinflation. Any of a zillion forms of short-term thinking could lead the central bank into printing with abandon when it has no particular fear of hyperinflation. There are always crises in government.
At the time of Weimar hyperinflation, there was an almost concurrent hyperinflation that started a couple years earlier in the Soviet Union, right next door to Weimar Germany, from 1918 to 1924. There was no war reparation imposed on the Soviet Union after the collapse of the German Empire in 1918.
If you have to look for a primary reason for Weimar hyperinflation, the prolonged price stability in the previous decades lulling the central banks into not fearing hyperinflation, and the initial seeming success in Soviet Union when massive money printing helped reinforce the regime as it robbed the peasantry may have been bigger factors in Weimar government's decision to print with abandon.
« First « Previous Comments 85 - 95 of 95 Search these comments
... And let me start by saying, by Keynesianism, I mean the current use of economic stimulus in the US and Japan for example.
So in 2006 people in the US were spending a lot of money. They were in fact spending collectively much more than their revenues. The Fed easy money had inflated a housing bubble and people were using their home equity - which they thought permanent - as an asset that they could spend to keep up with Joneses. The extra spending was reflected by a large and persistent account deficit at the country level.
Of course such heresy didn't last long and the whole scheme went bust.
Now what did the government do?: Maintain, at the country level, the spending of borrowed money. If people were not going to borrow money and spend it, then the government would do it in their names. 5 years later they are still largely doing it, and the country is still running its account deficit.
Then they started doing again the same thing that had created the crisis to start with: push easy money to force assets inflation. Easy money can't go to wages, because hundreds of millions of poor workers and new technologies have put a cap on wages. So the only things that they inflate are assets.
The Feds (and bankers) are perfectly happy with that: No inflation means they can continue printing money. Inflating assets means banks balance sheets are cured, while households once again feel rich and (hopefully) will start again spending of money that they think they have (while they in fact don't). The wealth effect, they call it. Massive deception in fact.
It doesn't matter to them that someone has in fact to pay for inflated assets (i.e. young people). And these people won't feel rich and won't spend as much as they would otherwise do.
It doesn't seem to dawn on them that asset prices are anchored in the real world. Just like in 2008 inflated assets will, in fact at some point, realign with the non-inflated wages, with once again devastating effects.
One just has to read what is happening in China to see the stupidity of such policies on display:
http://www.bloomberg.com/news/2014-02-04/china-savers-penchant-for-property-magnifies-bust-danger.html
What problems are solved with such policies: None. Every problem is always postponed and doomed to come back with a vengeance. No problem is ever solved - except maybe when they lose control and a crisis erupts.
Just look at Japan after 24 years of these post crisis policies: still no wage inflation. Still trying to reanimate spending of people whose wages is not going up. Tons of unpayable accumulated debts. And nothing to show for it. Just an unmitigated disaster threatening the world.
http://www.bloomberg.com/news/2014-02-05/japan-real-wages-fall-to-global-recession-low-in-spending-risk.html
That such policies continue to be seen as the best solution is beyond me. The whole thing is just a freak show, led by those that profit from it, at the top.
#housing