patrick.net

@OO 7:41pm post

That's good and interesting stuff.

What if the Fed decides to reflate and inject via new and creative channels to counter this dilemma you describe?

For instance, how about a massive government VC effort. The DOD and CIA have both embraced early stage VC model to incubate early stage tech in which they have a strategic interest. Interesting jobs plan to go that route with an "injection".

Probably we will not be that smart.

Hey it's time for a giggle....

Someone on Craig's List came up with this idea, names for the week like:

Mail in the keys Monday
Teardown Tuesday
Walkaway Wednesday
etc.

Maybe we can think of a good set of day-names for the new housing regime we're in!

OO,

That brings up an interesting point. Is it not the relatively modern concept of free flow of capital that is the reason that the Japanese government could not re-inflate the economy. With some new restrictions on international capital flow, could not this "problem" be avoided?

How did this use to work before the age of gloabl and free-wheeling hyper-captitalism?

justme Says:
How did this use to work before the age of gloabl and free-wheeling hyper-captitalism?

As recently as the 1980's, many countries of the developing world had current-account controls that prevented or inhibited bulk conversions of currency. However, western currencies (USD, GBP, FFR, etc.) were still freely convertible, so my guess is that the opportunity to arbitrage was limited until the Japanese adopted ZIRP.

NVR,

Perhaps one of the reasons for the public works created during the great depressions of the 1930s was that they were guaranteed to have a domestic economic effect, rather than the money flowing elsewhere in search of bigger gains.

SP,

That;s they way I remember it, too, but I think even some western countries had currency limits in 1980.

# justme Says:
That;s they way I remember it, too, but I think even some western countries had currency limits in 1980.

I guess it is relative. It was a huge hassle to convert from a controlled currency to USD/GBP/etc. - I remember my dad used to leave large amounts of local currency (worth like 100 USD) to tip hotel staff instead of bothering to fill out a dozen forms for the local bureaucracy.

The western currencies seemed very free in comparison. Even in France :-) , it took only about 15-30 minutes at a bank to exchange a couple of thousand in travelers checks.

New thread has been started. This one will be closed shortly. Thanks a lot everybody, for a very interesting discussion.
SP

Thread closed. Thanks for your participation.

I deleted some posts that I felt were inappropriate, and I hope you found the rest of the discussion as useful and informative as I did.
SP