House of Paine

gold breath two

  more economic
honest  dribble from 
a foggy bottomed 
     progressive 


===========================


Apocalypse Considered

What could up-end the apple cart?

 An unstoppable panic 
is probably not yet
      the largest risk.
-----no risk at all for the imperial currency ----------


 There are simply too many dollars 
in the theater 
of the world economy, 
too few exits
 and only a few 
        elephantine players
---------wrong but lovely phrasing ------------

 The latter would soon be 
discouraged from selling
 by the soaring price
 of the available alternative assets
 and the run would fizzle out
----nice point about any one  mammouth asset ------------


 Thus the final dollar crisis 
will probably wait until
 a political crisis
        say
 someday with China
                  sets it off.
--------------- shit is that long range -----------


Some fear
 rising long-term interest rates
and a recession

simply on account 
of the sliding dollar
 and price inflation

 But this also 
won't necessarily happen

 For an inflation premium 
to be built 
into the long-term interest rate
 there needs to be
 higher expected inflation 
on a continuing basis

---------- sense-able -----------------

 Notwithstanding
 the cheap psychology 
of "rational expectations"
 beloved of economists
 actual inflation can rise 
for a long time before expectations do

----------------- true 
                  if a bit boney ---------------------

 And the inflation adjustment
 coming (let us say) 
primarily through a rising dollar oil price
 could come and go rather quickly

-------------- right its already begun to fade-------------

 It need not get built
 into a spiral 
         of wages and prices 
-----ie no 1970's redux --------------


So far, 
despite the substantial dollar decline
 that has already occurred
 long-term interest rates 
have hardly budged

------------ explain thisperversion
 since you claim falling ratios  should lead
  to higher compensatory rates thru  automatic market foprces
as specs move their stocks of currency
out of dollars
to other currencies
to capture higher  appreciation rates--------------
 
They have generally risen
 no more,
 and in some cases less 
than the short-term rates 
Greenspan
 started pushing up
 last spring

-----------actually this shows 
the impotence of specs
flying solo 
without BC collaboration
they fear interventions
by the BC  cartel
to burn them 
 they ain't getting 
so since they can't hold value or safely play on gains
specs ain't  in the dollar game
and certainly not
holdin stocks of dollars 
          only CB's are ---------
--------------------------------------------



A change in European policy
toward 
a high-growth, 
full employment Keynesianism

could bring 
a decisive shift 
in the world balance 
of economic power.

 Such a shift would create
 profits in Europe 
(where there presently are few)
 attracting capital
 
It would open up 
a European current account deficit
 where there is presently a surplus.

 Soon the euro 
would not be a scarce currency 
any longer 
and the reduction 
    of the dollar's
 reserve status could truly get underway.

 Unfortunately for Europeans,
 European policymakers 
don't see
and won't seiz
—this opportunity

 Frankly,
 they are too reactionary
 and too stupid  

------------- no here 
          is precisely where
finance capital struts its stuff
franco-german  wagelings 
are to get the treatment 
like american workers
 got it under volker - reagan---------------

That's a tragedy for Europe,
 though in some ways 
it's undeserved good luck 
for the United States
---right on both counts -----------


 

------------------------------------------

---------- now graith talks turkey
watch his  leathal attack 
on dumbocratic fiscal school marming------------


"  Sadly, the Democrats 
will respond as badly as possible
In a touching devotion to dogma, 
they will call for fiscal discipline
 to close the budget deficit
 This will undermine the case 
for relief to working families
 for aid to state and local government
 and the defense of Social Security benefits
 that they might otherwise make

 Our jobless compatriots 
won't find this endearing.



 Faced with higher inflation 
Democrats may demand 
to know why Greenspan 
has done nothing 


Households struggling
 to manage their debts 
will not be greatly amused

 Then Democrats will say
 that things were better 
under Clinton. "

-0lovely bravo you got the picture just right
the  jack ass party:
 enemy of the working people  -----------
--------------------------------------------------------------
What Should Be Done?

The reality is that budget deficits 
cannot be controlled 
until the trade problem is fixed

---ie till we have an agressively narrowing trade gap
we need the fiscal gap 
to keep the econmoy 
              producing jobs ---------------- -------------

" So what should be done?
  Let's cut payroll taxes for now,
 to help working people cope."


---brilliant right on brother
exactly right ---------------------
----------------------------------------------

  --he makes this point----


" It would be a terrible mistake
 to create a system 
that imposed deflationary pressure
on us
 and through us on the world 
        as a whole
the problem of the classical gold standard"

------------but fails to tie this 
former gold deflation procrustean bed regime
 vs  the loose dollar regime 
which by being very soft 
increses 
the "flexibility "
   of the global price leveling mmechanism
the point being
an imperial currency isn't better because its harder
where there's a choice
soft wins 
thus the euro will no more replace the dollar 
then gold replaced the softer  silver  in china's age old silver economy ---------------


--------- want to de-reserve the dollar ?
 why not mention any one of the many
" paper gold" schemes 
   that would create
 a pure global reserve currency 
by agreement of the big players
problem :
 uncle needs to agree 
and won't -------------------

  

---------------------------------------------------------
  my annoyance is primarily all this transparent
high and mighty
rooting against uncle 

as if the euro 
caps 
jap caps 
or 
han caps
 would play it any differently
from the global wagery perspective 

and then of course his lack of any science 
behind his stabs at analysis 




=====================================================================