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Sunday, November 2, 2008

Where's My Bailout?

[ Hat Tip: Evil Speculator ]

"Where's my bailout? ... Because all Americans should be protected from their own stupidity."


David Pearson said...


Totally off topic.

Here's an observation for you.

If inflation is impossible, then the government could spend printed money on goods and services. Spend and spend and spend. Eventually, it could buy up every good and service in the world.


Of course not. It would drive up prices as it tried to spend the printed money, which would prevent them from buying much with it.

You deflationists don't understand that this is a political choice. Not between "Japan" and "Weimar", but between a mass of newly-destitute, crime wave-inducing, disaffected people and the small possibility of inflation. That's the way the government will see the choice. What will it do?

As for consumer hoarding, there's a way to address that. The government just has to PROMISE that it will create inflation. It has to threaten it, to shout it from the rooftops with every Fed and Treasury budget data release. People hoard because they have an incentive. So just change the incentive. Velocity is a psychological phenomenon, and psychology is not set in stone.

BTW, one last observation. You deflationists are just too optimistic. All this talk about the Japan lost decade analogy. We're going to wish that we could be like Japan in the 90's.

Tord Steiro said...

Answer to totally of topic:

If the deflationary pressure in, say, consumer goods from, for instance China, keep track with expanded M1, we will not see much inflation in CPI.

So we'll simply see the inflation somewhere else, for instance in the property market.

And to add a peculiarity, as far as I understand some of the Ninja-Charts, banks are hoarding most of the newly printed money, until they eventually feel safe. Then, this money will flood the financial systems around the world. When excess money are being released through the financial system, we will see unprecedented creativity in inventing new ways to give people loans, in order to secure some interest on investment on this excess liquidity.

The result should be something like we see now? Or not? Feedback appreciated!

Andy said...

Here's some not so serious reasons I want my bailout

1. I want my 40%+ investment portfolio and 201K losses returned. Why should I suffer losses for companies that were badly run or could not have anticipated such bad economic conditions. You can't blame me either for bad investment choices, because who knew stock markets and house prices could go down. If my portfolio losses were returned to me, I would think about re-investing them in insurance companies or putting them in an FDIC taken over bank that is already supported by a bailout. It is a win-win situation for all, right?

2. I want my job security back. I had a perfectly stable and boring job a few months ago, but now with companies going bust and unemployment shooting through the roof, even my firm is feeling the pressure which means my job is now at risk. My morning coffee conversations have turned from sport and high oil prices, to the sorry state of the job market and seeing who lost their job on the various social network sites (LinkedIn, Facebook) and blogs I visit. is also moving up the list on my top sites visited as I try and see what is out there, just in case.

3. I want my 2006-bubble house price back. I like the fact that a house which should only have been worth $500,000 was worth $1,000,000. Being a paper millionaire felt great. So what if I could not afford it, at least I was not alone. Everyone on my street was in over their head. Alas, many of them have now left, and not by choice. Luckily, because I still have a job and lots of credit cards I can make my home repayments. However that could all change very quickly when the next LCD TV that I must have is on sale, or I lose my job. So can the US government please restore the housing and stock market bubble. Things were much more fun then.

I got a whole list, but you get the gist.

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