Print money and create inflation?

Generali

I'll be surprised if the EUR survives this. You have a country in Germany that has been determined to maintain a strong currency and avoid inflation at almost any cost paired with an Italy that has slowly devalued its currency down the years to maintain competitiveness of its industry.

The 2 are incompatible.

chucky

!!!!!!? wrote: »

Right now it's just a question of which of the Pound/Euro/Dollar comes out worst at the end of all this.

My money is on the pound.

Hmm, maybe that Lewes currency might be worth having after all.....

long term it's got to be the Euro. most of the economies are at different levels and there are a number of dis-joints between the countries on an economic level too. the only way that they will survice is due to the size or the number of countries that they have.

StevieJ

Generali wrote: »

I'll be surprised if the EUR survives this. You have a country in Germany that has been determined to maintain a strong currency and avoid inflation at almost any cost paired with an Italy that has slowly devalued its currency down the years to maintain competitiveness of its industry.

The 2 are incompatible.

In the extreme I suppose you could argue even for at least two currencies in the UK, North and South allowing for more targeted monetary and fiscal policy instead of just subsidies.

neverdespairgirl

Generali wrote: »

A piece in the Sunday Times a few months back claimed that private health insurance in Beverly Hills cost less than the average cost of the NHS in the UK. I have no idea if that is true or not.

In general, though, the Americans pay a lot more than we do for health care, and die younger, I think.

neverdespairgirl

StevieJ wrote: »

I think you were predicting a 1930's like recession were you not? I for one don't want that, although if you may help you to purchase a cheap property.

That fact that !!!!!! predicts something will happen doesn't mean he wants it to.

kennyboy66_2

neverdespairgirl wrote: »

That fact that !!!!!! predicts something will happen doesn't mean he wants it to.

Very true, however anyone who thinks that there is a risk of a 30's depression would logically think that the bank rescue & increasing bank liquidity (whether by printing money or borrowing) is the right thing to do.

Even Milton Friedman believed that the restriction of the money supply (in the USA) and the failure of the Federal reserve to supply more money was one of the main causes in turning a recession into a depression.

A fairly deep recession is inevitable, I am hoping that it is more like the 90-92 UK one rather than the 79-82 one - where disasterous monetary policy decisions made the recession worse, and permanently killed off what had been productive industry.

I guess we could try the Hayek idea that any intervention by government is bad & that the market will always self correct.
We could let banks fail, let deflation let rip & see what happens.
As this is precisely what happened during 1929 - 1933, it doesn't, at least to me seem the best idea in the world.

StevieJ

neverdespairgirl wrote: »

In general, though, the Americans pay a lot more than we do for health care, and die younger, I think.

In general they are not exactly sprightly soles are they?, must put a strain on the ticker.

amcluesent

> I got the impression that Sir Humphrey was a bit of a socialist at heart<

His style of argumentation is straight from the Trotskyist manual: evasion, demanding 'references', strawman, ad-hominem etc.

>I guess we could try the Hayek idea<

CLown and his fellow Fabians/Common Purpose accomplices are certainly using 'The Road to Serfdom' as their 'how-to' guide.

neverdespairgirl

StevieJ wrote: »

In general they are not exactly sprightly soles are they?, must put a strain on the ticker.

It's not just that, though, it's higher levels of infant mortality, people dying of things because they just can't afford the treatment, etc.

dopester

kennyboy66 wrote: »

Even Milton Friedman believed that the restriction of the money supply (in the USA) and the failure of the Federal reserve to supply.

That is a big myth as far as I'm concerned - or at least misinterpreted - and my books state the Fed embarked on an easy money policy but this just couldn't stop all the forces making for economic contraction after the boom.

It is wholly more complex than just easing the money supply, and it all collapsed for many other reasons - not least for enterprise which was geared only to survive and prosper in the boom was not a good lending risk as trade deteriorated, not lending on properties which were falling in price, nor lending for business ventures that were deemed poor risk or return... and for the general public's preference for low-leverage money (dealing in cash for buying/selling - not credit... although credit did become tight). All the excesses of the boom had to be liquidated.

A careful reading of a mass of contemporary literature and an analysis of economic and financial developments in 1930 yield little or no support for the views (a) that Federal Reserve policy in that year was open to serious criticism, or (b) that flooding of the money supply by the Federal Reserve System would have effectively checked the contraction or moderated the current and ensuing collapse. With enterprise "collapsed," the forces making for contraction were too strong to be overcome by the stimulus of artificially reducing short-term money rates below the very low levels actually reached.

- Joseph W. Davis (Economic Historian)

There is no reason to assume that the crisis was started by a deliberate deflationary action on the part of the monetary authorities, or that deflation itself is anything but a secondary phenomenon, a process induced by the maladjustment of industry left over from the boom. - F.A.Hayek (1933)

Just take a look at a few comments from US newspapers of 1st April 1930:

Wall Street Journal:

"Extraordinarily easy money and stability in the commodity markets are important factors working to that end" [making for prosperity].

"... fundamental credit conditions have undergone a marked change for ease not only in this country but all over the world."

New York Times

"An outstanding development is the sharp drop in interest rates, marking the end of a period of credit strain and bringing rates to the lowest point in several years. In its bearing on general business conditions the advent of really cheap money has been widely heralded, and rightly so, as the most important and promising feature in the general situation. That cheap money is a tonic for the recuperation of business has been proven by long experience."

"Money rates declined rapidly to the lowest levels since early 1925 and accompanying this ease in money, the bond market in March made a vigorous recovery.

Such is the news you would have read in the two papers that offered the finest financial coverage in America in 1930. Here and there were hints of trouble. A destructive trade bill was nearing passage. But there was also plenty to feed the imagination of a bull.

Notice that contrary to what is now supposed, the economy did not fall into the abyss on the day the stock market crashed. By All Fools' Day, 1930, the tone was optimistic.

Also notice the recurring references to monetary policy. Contrary to the current wisdom that stupidly tight money turned the '29 stock market crash into depression, accounts of 1930 speak of "extreme ease of money."

The point is not that financial coverage in 1930 was woefully bad, nor that investors in 1930 were chronic optimists. That what seemed to be easy money at the time was denounced later as "too tight" may only show that the dynamic of contraction works behind the scenes. More muscular attempts to counter that dynamic process by inflating faster would paradoxically strengthen the deflationary impulse.

- William Rees-Mogg & James Dale Davidson (1994)