tag:blogger.com,1999:blog-6948982521501107752.post4153886505027976899..comments2023-10-21T09:03:15.270-04:00Comments on Rogue Economist Rants: Can there be financial black holes/debt deflationary spirals?Rogue Economisthttp://www.blogger.com/profile/03439817966760459091noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-6948982521501107752.post-62869497524904452742010-02-15T10:07:54.796-05:002010-02-15T10:07:54.796-05:00The current economic environment is tough, with th...The current economic environment is tough, with the total debts of the US economy amounting to 60 trillion dollars (both private and public) the interest payments alone of 3 trillion a year prove to be a massive drag on economic activity. <br /><br />Generating inflation is now on the highmark of the agenda of the Wall Street elite, yet doing it in a deflationary environment is difficult. To find out how inflation can be brought into the world and the implications for geopolitics please read <br />http://financialmarkets2007.blogspot.com/<br /><br />I look forward to hearing from youMichael Asus https://www.blogger.com/profile/04473412676373140371noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-45554423145792757452009-12-27T20:57:57.976-05:002009-12-27T20:57:57.976-05:00"Deflation is its own cure, because as prices..."Deflation is its own cure, because as prices drop, people will naturally want to consume more."<br /><br />I think that there's a good rule in comments, that people claiming a doctor's degree disqualify themselves.<br /><br />People would like to consume more, but that doesn't mean that they can.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-80525519655579489272009-12-26T11:08:55.348-05:002009-12-26T11:08:55.348-05:00Interesting article.Interesting article.Huddersfield Markhttp://huddersfieldmarkshares.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-40211266173691966982009-12-26T10:10:00.534-05:002009-12-26T10:10:00.534-05:00Merry Christmas to you too! In both equilibrium ca...Merry Christmas to you too! In both equilibrium cases, scarce resources remain constant. So expanding fiat currency makes the scarce resource artificially more expensive, relative to other goods. Because these scarce resources have a stable demand, oil for instance, because it is a necessary component in many activities, then many investors could 'rationally expect' that holders of oil will be able to profitably sell it to the market when they take delivery. <br /><br />However, because hedge funds who are merely looking for arbitrage profit enter into the bidding along with bidders who are actually end users, they make pricing for the scarce resource artificially more expensive. This serves to crowd out the smaller businesses who may not have the economies of scale to be able to earn back what it will cost them to buy the scarce input. Think of it like scalpers crowding out potential concert goers with lower incomeRogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-50585156563060642692009-12-25T22:19:50.375-05:002009-12-25T22:19:50.375-05:00Merry Christmas!
You went rather quickly there:
...Merry Christmas!<br /><br />You went rather quickly there:<br /><br />"So if money supply is increasing, it is actually creating an imbalance in the economy. It makes whatever scarce resources there are to become even more expensive."<br /><br />Let me see if I understand what you are saying. We are starting from an equilibrium. The creation of new money disturbs it and creates arbitrage opportunities, which the arbitrageurs take advantage of to move to a new equilibrium where scarce resources have not only higher prices, but higher prices relative to other goods and services. Right?<br /><br />This new equilibrium is, however, inferior to the original one. Right?<br /><br />If that is right, I have a question. Since we have a fiat currency, with no intrinsic value, why don't both equilibria have the same relative prices?<br /><br />Many thanks.Minnoreply@blogger.com