We've disagreed on this stuff before, and I assume we'll have to
agree to disagree this time as well.
I'll half-agree with this -- probably all times are "abnormal" inStilesBC wrote: > There are no "normal" times and "abnormal" times. There are only
> people acting based upon the available information they have. As
> GD points out, people tend to weight various information according
> to factors involving their peer group (ie. they act based on their
> own archetypal characteristics). This causes inflations,
> deflations, manias, panics and all sorts of other things. No one
> combination can be seen as normal and another abnormal.
some way. However, for convenience, I contrast "normal" times with
the current times because we're in the middle of a generational
financial crisis, and those only happen every 80 years or so.
However, it's not true that generational theory implies that people
in a generational peer group act the same way throughout their lives.
Each generational archetype tends to act the same, but they act
differently during different eras. In particular, generational
Crisis eras change everyone's behaviors, and cause a regeneration of
civic unity throughout the population (though that has only partially
happened so far).
For example, Boomers were making highly risky investments five years,
but I don't think you'd be able to sell a CDO to a Boomer today.
Same generation, different times.
Absolutely untrue. During the credit bubble, hundreds of trillionsStilesBC wrote: > Breaking a window is breaking a window, regardless of whether it
> is during inflation or deflation. Destroying capital to rebuild it
> does not "stimulate" anything in an economy. It just shifts money
> from one group of people to another.
of dollars in money was created through the use of structured finance
securities and leveraging. Since August 2007, deleveraging has
reduced the amount of money in the world. It's more than just
shifting money; it's the actual destruction of money.
Not true. Yes, in "normal" times, saving money is investing, sinceStilesBC wrote: > Lastly, saving money is investing. With the exception of the tiny
> amounts "hoarded" and stuffed under mattresses, buried, etc, all
> money saved is used to make loans that couldn't otherwise be made.
> The pace of lending right now may be slow, but it would be slower
> if banks did not have the extra deposits available from the
> increasing savings rate. They would otherwise be forced to
> contract credit even more. With a high enough savings rate, loans
> can be extended to entrepreneurs who will lengthen the structure
> of production, employ workers, etc. Going to war before this
> happens only
banks loan out the money. But during this generational financial
crisis, this deflationary spiral, banks are NOT lending out money.
They're REFUSING to loan money -- for mortgages, for credit cards, for
student loans -- even though they can get plenty of money from the
Fed.
I don't understand this at all, since all money is created throughStilesBC wrote: > Only by looking at inflation/deflation as a rise/fall in prices,
> can this become confusing. By looking at it as increases/decreases
> in the supply of money and credit, one sees the cause and effect
> forces far more clearly.
credit.
Sincerely,
John