| Subject: | Re: US Deflation Watch: Serious Decline In Money Supply |
|---|---|
| Date: | Sun, 13 Jun 2010 08:33:19 -0700 |
| From: | Jas Jain |
US Deflation Watch: Serious Decline In Money Supply
Mish on my comments on Guru Achuthan and economists: "Exactly!"
Hugh: "We need to change the proverbial slogan to "It's about jobs stupid"."
Sabri: "This is why I am betting on the long-term US Treasuries. How the heck Americans can consume under these conditions? Credit has dried up and income is going down! This is an under consumption crisis! There is no way out until consumption picks up and it us not going to happen for many years to come. This is a depression."
Yes, the US economy has been in a prolonged, but slow, depression. The Secular GDP has been in decline since 1998! All the growth for the past dozen years has been due to consumption debt growth in excess of the GDP growth, i.e., the ratio of consumption debt, by households as well as governments, to the GDP has been rising exponentially. We have had an over consumption crisis for most of the past 28 years, i.e., borrow-and-consume now and pay later. The "later" has finally arrived with a vengeance. Therefore, we don't have an under consumption crisis per se; it is being forced due to over consumption in the past. It is the payoff time. Deflation results from the aggregate demand growing very slowly or not growing at all. You can ask Dr. Bernanke. In a fiat currency regime it is going to be very difficult to fight deflation after the Fed and the Federal govt are done with opening up the spigots! Americans are going to be put on a diet. The aggregate demand would go negative with low calories (less dollars in the pockets!) diet!!
Jobs doing what, Hugh? More over testing and over medication by sickness-care industry? There are already millions of jobs that are a result of bad practices, driven by pure greed, in this business. Nothing reflects moral degradation of Americans than the bloated sickness-care industry, especially, doctors, hospitals and insurance companies. Making more money, by bad practices, at the expense of sick people is an example of rampant shamelessness in America. Do we need more teachers? I don't think so. Do we need more structures (residential and commercial real estate, schools, sports complexes)? Do we need more people entertaining others for a living? Or, more fast food establishments? America is over saturated with capacity! America needs to lose ten million more jobs, at the minimum, to get fit again! There is no way out of the deflationary depression that has been baked in the cake. Bernanke would finally get to finish his book (that he stopped writing when he was summoned to serve on the Fed): How the Government and the Policymakers Caused the Greater Depression!!!!!!!!!!
Jas
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