The BOC thinks Canada is in a recession and this comes just two months after the US was in recession so I have to say I won. Now the critics will say sure you were right but you never said why you were going to be right, so you were wrong ( the critics are still in denial about unemployment). To that I will only reference what I said at the time. What did I miss?
De-linking has been revealed as a fantasy for china too. This is the mother of all fears.
Travis, would you say our monetary system is in large part to blame for the fiscal crisis the world faces or is it only an issue of the mismanagement of monetary policy?
Personally I believe that one leads to the other but I’m curious to see what you think. From what I read here, it seems like you’re of the mind that fiat money can be managed properly and encourage economies to grow at a quicker rate than currency tied to something tangible.
Next stop, depression…and no you’re not allowed off the train!
tied to something tangible like say gold?
Well I’m not a fan of the gold standard because frankly, a government can go off a gold or silver standard just as easily as it can go on one. As a result, a gold standard is just as much about confidence backed currency as fiat currency in my humble opinion.
My preference is an unfettered private currency market. I would love to have several options for currency rather than the one inflation based series of confidence backed notes that are foisted upon us today.
Why would a system of private currency be anymore stable then a system of national fiat money? Why couldn’t states just step in a nationalize a private system?
Well states inevitably abuse their monopoly or where they do not have a monopoly, end up using coercion to bring one about.
Currencies were private at one time in many parts of the world. Fears of wild cat banking led to their being outlawed but very little documented evidence exists to suggest that private currencies were anything but stable. Lots of conjecture and fear mongering can be found on the record, but not a lot of horror stories with any backing.
National fit money just can’t possible work out in the long term. Perhaps as layman I’m misunderstanding how it works but it seems like it’s about endless credit creation and the continued growth of the monetary base. Along with that system of growth comes a typical government power to inflate the base as much as it wants in order to meet spending demands and as we can see with the United States, that’s certainly coming to bite them in the keester is it not?
Private currencies are much more accountable to community standards where as government money is accountable to the law…which is government. Doesn’t seem overtly equitable to me and in fact, creates a massive conflict of interest. Modern Money Mechanics really did a number on my poor little brain but all I got from reading that was a vision of doom and gloom.
This discussion was not my intended path here though Travis. I really am after your own thoughts regarding the impact them onitary system has had on the global financial melt down if you think it has had any.
Ok, I was just trying to narrow down what we were talking about here. For the record I have never been a fan of the private money arguments. Just look at all the chicanery on wall street and the mortgage markets in the US. By and large private players accountable to their peers, clients, and equity holders. Imagine what they could have done with printing presses. Well in fact they had printing presses in the form of leverage and it must be remembered that private banks can and do create money: its called credit.
It is helpful to distinguish between a monetary system and monetary policy. I don’t think the monetary system per se (if by that we mean the system of nationally based currencies issued by states and regulated by central banks) has much to do with it. Although some argument could be made to the contrary. If I had the time or inclination I could work up one but it would involve going beyond the narrow description of the monetary system provided above.
I think monetary policy has had quite a bit to do with the present financial crisis both directly and indirectly. In an indirect way I think the tight money, fight inflation at all cost lead to two and half needless decades of lackluster wage and employment growth. More directly once mission accomplished was declared on price stability I think CB policies particularly in the Anglo-American world but in other jurisdictions too became recklessly pro-cyclical because they were green-lighted by their singular pre-occupation with inflation. With little to low inflation the CBs open the spigots by dropping interest rates and continued to do so (or failed to raise interest rates) in the face of a number of assets bubbles most obviously but not limited to housing. And it seems they have not learned much: a little deflation and they drop rates to zero. When inflation does pick up again they will start choking-off the recovery.
All this apparently is what conservatives credibility with respect to monetary policy.
See but to me, I think that’s just inevitable when you have CB’s working the money supply at the behest of governments. I can’t think of a single situation in which a government demonstrated proper and measured control of the money supply over the long term.
It’s like giving a kid a credit card and telling them to spend responsibly. Best of luck on that count.
As for the private money argument…I register my disagreement sir. Hahahahaha. I think I can leave it at that as that’s an entirely different discussion.