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piezoe

Registered: Jan 2006
Posts: 4944

02-14-12 03:51 PM

Quote from Fractals 'R Us:

There is no proof that Keynes was ever right. Politicians love his ideas, of course. It allows a lot of money to flow through their grubby hands to their grubby friends... so in their eyes Keynes is King but basically... no real proof for it at all....

Well to be fair to Keynes it seems most countries can't muster the fiscal discipline later on to really apply Keynes in the way he intended. It's easy to open the spigot, hard to close it.

Keynes advocated either raising taxes or cutting government expenditures during boom times as well as deficit spending during recessions. We are great at the second part of his cure, but once we start feeling better we are awful at completing the full course of the treatment. It's like the patient with a bacterial infection that is supposed to take antibiotics for two weeks but stops after three days because they feel much better.

The other thing to keep in mind with regard to Keynes is that his ideas were developed during the time that currencies were backed by hard assets. I would think a world of fiat currencies might have altered his thinking.

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piezoe

Registered: Jan 2006
Posts: 4944

02-14-12 04:20 PM

Quote from member:

Deflation will benefit western economies. There would be a catalyst to create jobs by repatriating manufacturing industries stolen by Asia and oil exporting countries would suffer also due to declining commodities prices.

I have a hard time agreeing with this. For the U.S. in particular, deflation would mean paying off debt with dollars having greater purchasing power than the dollars borrowed, in effect the equivalent of raising interest rates retroactively! For a country whose debt is held externally to a significant extent this could be disastrous.

A little deflation in Japan, by the way, is not nearly so harmful. as their debt is largely held internally.

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ammo

Registered: Feb 2007
Posts: 18258

02-14-12 04:28 PM

Quote from member:

Deflation will benefit western economies. There would be a catalyst to create jobs by repatriating manufacturing industries stolen by Asia and oil exporting countries would suffer also due to declining commodities prices.

http://www.elitetrader.com/vb/showthread.php?s=&postid=3446524#post3446524 good summation here by tomdavis

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m22au

Registered: Mar 2002
Posts: 3138

10-05-12 05:36 AM

I still don't have any position as yet in JPY or JGBs.

Here are a couple of articles that put forward the argument that Japan's high level of government debt is not a big concern:

May 2012:
http://www.businessinsider.com/japa...-default-2012-5

October 2012:
http://www.businessinsider.com/nomu...t-bonds-2012-10

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oldtime

Registered: Jun 2011
Posts: 7362

10-05-12 11:39 AM

quiet night in forex

I read every single post on this thread

it started back in 2010 when people were still intelligent

interesting to see how things are playing out

a good discussion on fiat currency

and then some activity surrounding the tsunami

best posts mentioned immigratation

it would seem we have virtually an unlimited supply of people that want to immigrate

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piezoe

Registered: Jan 2006
Posts: 4944

10-05-12 07:36 PM

Quote from Fractals 'R Us:

There is no proof that Keynes was ever right. Politicians love his ideas, of course. It allows a lot of money to flow through their grubby hands to their grubby friends... so in their eyes Keynes is King but basically... no real proof for it at all....

Actually there is an abundance of proof, but not about everything. When he was at Bretton Woods, virtually all of his objections, on which he did not prevail, have been later been shown to be well-founded. He was right about almost everything so far.

(I'm looking for a specific reference for you.)

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