Monday, Oct 20, 2008
Best line about credit crunch from AEP
Telegraph: Do our rulers know enough to avoid a 1930s replay?
Quote "The world stole prosperity from the future for year after year, with the full collusion of governments, regulators, and central banks. Now the future has arrived." This sums up the current situation, whatever your views on AEP. It's a bitesized, economic newby friendly summary which I plan to use on anyone who asks me what's going on.
Posted by goweresque @ 01:17 PM (536 views) Add Comment
10 Comments
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1. nooneo said...
"Do our rulers know enough to avoid a 1930s replay?" - errr, NOPE.
What Alistair "caught in the headlights" Darling, Yvette "there won't be a property crash" Cooper, and the Ringmaster in the circus that is NewLabour, Gordon "no more boom & bust" Brown.
2. mountain goat said...
This chart from FT Alphaville Time for the Darwinian flush. Makes 1930 look like a small problem. The deflation arguement is pretty strong although I still hanging on to it being inflation that will be the problem.
USA debt versus GDP for the last 100 years...
3. The Spaniard said...
"The world stole prosperity from the future for year after year, with the full collusion of governments, regulators, and central banks."
In what sense can the whole world steal from the future? Logistically and physically humanity can consume only that which it has already produced.
Of course financially one section of humanity can borrow from another. In this sense great swathes of humanity can indeed borrow from their future, but borrow from whom?
Who are the creditors whose future will be eased and enriched by the income from the debtors? The Martians?
So we are here actually discussing our financial system, that complex but questionable interface and conduit between producers and consumers, and the medium through which real wealth is distributed and exchanged between people, present and future. This is where great change is needed. Our global debt-based money system is destroying us.
(Note: Also of course humanity as a whole can uselessly consume irreplacable natural resources and steal from the future in that sense.)
4. mountain goat said...
The Spaniard - "In what sense can the whole world steal from the future? Logistically and physically humanity can consume only that which it has already produced. Who are the creditors whose future will be eased and enriched by the income from the debtors? The Martians?"
good points, makes you realise it is all crazy games we humans play. I recon our children are going to say f-you when presented with the bill.
5. Doomwatch said...
Maybe AEP has watched http://www.chrismartenson.com/crash-course/chapter-19-future-shock
6. letthemfall said...
Growing dept has to stop sometime and then it has to be paid back. In this sense it is taking cash flow from the future, which means recession. A good example is US housing. Here some of the housing stock is standing empty and is deteriorating because there is no one to maintain it. Thus the wealth represented in these houses, derived from the money borrowed (and not repaid), is being destroyed. Work has been wasted.
7. ontheotherhand said...
Spaniard, it's about who owns the rights to future production. Do we leave our pension system and national accounts in balance so that the future generations can feel all the benefits of their own production? No. We retire with no pension and tax the future worker to pay for it. We create huge national debt, and effectively sell off rights to pieces of our future production in the form of government bonds. And related to this site, we buy houses borrowing money that we have no possibility of paying off completely out of post tax income before we retire.
Look at it another way, all public sector employees whose salaries represent the equivalent increase in national debt each year are effectively being paid for by selling the rights to future taxes from our children.
8. icarus said...
It doesn't matter how much our rulers know. Bank bailouts and cutting interest won't help.
9. sold 2 rent 1 said...
mg,
"I reckon our children are going to say f-you when presented with the bill."
NO. We will say it in about 2-3 years time.
10. matt_the_hat said...
2. mountain goat - please don't post the equivalent UK graph I've just bought a new monitor