An interesting discussion I came across concerning the Fed vs. income disparity debate on Mish Shedlock’s comments section. What causes and effects down turns or recoveries? Heres the link http://js-kit.com/api/static/pop_comments?ref=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F%2F2009%2F07%2Foverexpansion-by-banks-hits-brick-wall.html&path=%2F2009%2F07%2Foverexpansion-by-banks-hits-brick-wall.html&permalink=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F2009%2F07%2Foverexpansion-by-banks-hits-brick-wall.html&label=Add%20New%20Comment&title=Mish’s%20Global%20Economic%20Trend%20Analysis%3A%20Overexpansion%20by%20Banks%20Hits%20Brick%20Wall%20of%20Reality%3A%20The%20Point%20of%20Negative%20Returns&admin_bg_color=%23DDDDDD Can someone address scepticus postion on this. Thanks
Bad link. You should just quote it and link to Mish’s article will be good enough.
people of the internetz. http://tinyurl.com/ is your friend !
http://globaleconomicanalysis.blogspot.com/2009/07/overexpansion-by-banks-hits-brick-wall.html Comment section of the link.
scepticus
says:
Thursday, July 30, 2009, 2:20:38 PM
“mish blogged: “Expansion for expansion’s sake failed miserably, as it always does. And the Fed forever blowing bubbles of increasing amplitude is the primary reason.” Nope, the fed’s shennanigans are a symptom. The real cause is increasing income disparity that erodes purchasing power leaving a gap that is filled by debt. Exactly the same story before GD1 - the last time income disparity in the US was as high as it was in 2007 was in 1929. Why must growth always be accompanied by increasing welath inequality? If the two always have to go together it will always eventually result in a depression. always. |
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this is painting in words rather than critical thinking. in my humble opinion…perhaps you are even right, but its too hard to tell. as i have only metaphor and allusion to make the judgment on, if i dont already agree with you to start with. and i guess i dont…
I’ve encountered this kind of argument before:
It’s basically a spinoff of the underconsumptionist view of recession. It’s claimed that maldistribution of income leads to economic collapse becuase the people with all the money can’t spend it and the people at the bottom don’t have enough money to spend in the first place. It’s basically groundless - it leaves out the explanation of the boom for a start. Anyway, check out Rothbard’s comments on the subject.
Yeah, look at the industry that received most subventions through monetart pumping - banking/shadow banking/financials. Billion of dollars in bonuses and pays, millions of people hired without the real reason. It’s inflation that feeds money to all those people.
Thanks for the links. I’ll take a look at them.