Thursday, November 4, 2010

Banks Gone Wild, Again

The Feral Reserve is at it again.  They have decided to create $600 billion to $1 trillion completely out of thin air.  Gold and oil are on the rise again. 

Of course, all that money is going to the banks, and will be concentrated among the super-rich at the top.  While the TSAP does not advocate creating money ex nihilo, if it must happen, it should be distributed to the people.  $600 billion would provide nearly $2000 to every man, woman, and child in the USA, or alternatively nearly $100 to every man, woman, and child in the entire world.  Would that boost consumer spending, and thus the economy?  You bet it will--but then comes the inflation surprise a few months later, of course. 

However, no amount of prinitng funny money got Japan out of their "lost decade" following the Nikkei crash of 1990, a crash spurred on by the same factors as our 2008 stock market crash (housing and credit bubbles).  Japan's prolonged deflationary recession lasted until 2003, a full 13 years.  And they still never fully recovered, unfortunately, despite a significant rebound from 2003-2007 before the current financial crisis and recession.  But I guess a deflationary recession is better than an inflationary depression.

We're "turning Japanese," all right.  Just not in a good way.

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