A Minsky Singularity
Jul07
on July 7, 2012
at 3:22 pm
Below is Steve’s recent interview on Capital Account with Lauren Lyster that talks about the Debt Black Hole that economies around the world have unknowingly been sucked into. Steve discusses the fundamentals of his unique analysis on using rising debt levels to finance economic growth. A fantastic renewed perspective on the current financial crisis!
RJ
By money printing I mean the treasury issuing bonds bought by the fed with newly created electronic money that the govt then uses to fund a deficit.
“…….I may be wrong of course.”
That’s an improvement in attitude, and a correct observation of course.
“Rational mindset?”
No. For the exhaustion of the RATIONALISTIC mindset. Its an important difference.
@Rob Rawlings
“They could for example finance tax cuts by money printing or subsidize final sales again via money printing.”
This is correct, and the nascent recognition of the power and effectiveness of the Distributist monetary paradigm as well as that of the dividend and compensated retail discount mechanisms of Social Credit which would accomplish these same purposes in perpetuity if adopted.
The open mindedness of some posters here enables them to think these thoughts. I’ve rarely seen such on Mish Shedlock’s forum after almost 6 years of posting there. The power of wisdom (cognition) is that it has the power to alter one’s reality for the better “in the twinkling of an eye.”
Orthodoxy is still laying around all over the place just waiting for actual open mindedness to dispel it. Getting comfortable with ambiguity is the starting point for cultivating such a trait. Amen. So be it.
Debt is not the only nature or the single ultimate reality of money.
To insist that money can only be issued by government or by anyone as only “this for that” is the ultimate in a smallish legalistic authoritarianism.
Grace, the free gift, individually experienced and governmentally instituted in monetary policy is not only real but completely doable, and would solve our monetary problems and serve a much higher purpose. Amen. So be it.
Whoa to you financial and monetary scribes and Pharisees! Your failure to acknowledge the BOTH/AND nature of reality and insistence on an ONLY type perspective condemns Humanity to some sad lobotomized basement “reality.”
Faith, Hope, Love and Grace exist!
Rob Rawlings
July 11, 2012 at 8:25 am | #
RJ
By money printing I mean the treasury issuing bonds (so far good)
bought by the fed ??????????????? (commercial banks or non banks not the Fed) with newly created electronic money (???????? what do you mean Reserves???) that the govt then uses to fund a deficit.(???? the Govt funds the deficit using initially reserves and then bonds )
I think the treasury sells the bonds to private banks who then in turn sell the bonds to the fed. But in any case the details are somewhat irrelevant to the question I was asking.
Rob Rawlings
July 12, 2012 at 1:03 am | #
I think the treasury sells the bonds to private banks who then in turn sell the bonds to the fed. But in any case the details are somewhat irrelevant to the question I was asking.
They sell the bonds to banks or non banks not the Fed. To drain Fed reserves that are released when the Govt pay someone or a company etc
The comments section on here used to be interesting. Now it seems several posters are tripping on acid and writing free form gibberish.
“Now it seems several posters are tripping on acid and writing free form gibberish.”
That is the standard unconsciously scientistic take on things. I assure you I am not on acid, and that I am considering more of ACTUAL reality than you are, as well as its economic and monetary relevance.
Three excellent quotes by Albert Einstein:
“You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew.”
“Intellectual growth should commence at birth and cease only at death”
“There are two ways to live: you can live as if nothing is a miracle; you can live as if everything is a miracle.”
may be of interest
http://www.cepr.net/documents/publications/argentina-success-2011-10.pdf
………..
Argentina’s experience calls into question the popular myth, as noted above, that recessions caused by financial crises must involve a slow and painful recovery. Argentina’s financial crisis and collapse were as severe as that of almost any country in recent decades; and yet it took only one quarter after the default to embark on a rapid and sustained recovery. This is not only because of the devaluation and improved macroeconomic policies, but because the default freed the country from having to be
continually hamstrung by a crippling debt burden and by pro-cyclical policies imposed by creditors.
It is these types of policies, along with the ultra-conservatism of central banks like the present ECB, that mostly account for the historical experience of delayed recoveries after financial crises. The
Argentine government has shown that this bleak scenario is just one possible outcome, and that a rapid recovery in output, employment, poverty reduction, and reduced inequality is another very feasible path that can be chosen.
………….
Regards
Paul