Comments on: U.S. fights fire, Germans fear flood http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: John http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10739 Tue, 24 Mar 2009 21:44:49 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10739 Many of you fear inflation yet you acknowledge the credit markets are frozen! Fearing inflation when credit is tight is truly a mark of the insane right now. As long as credit is frozen (or at least not as fluid as it recently was) you should fear deflation. The German political establishment is misplacing its concerns right now and seems to fear its own shadow. Once credit has eased then they can worry about inflation. Demand-led growth through fiscal spending on short term projects (infrastructure and the like) can be stopped/slowed once economic/employment growth is restored. In this case America & Britain are proceeding in the correct manner while Germany ought to do the same. Germany shouldn’t act as if the is identical to the 1920s & 1930s. They have more tools and options today to control the situation than they had back then. The idea that America created this mess alone is also stunningly ignorant. For every borrower there must be a willing lender. The lender nations (Japan, China, Germany, etc) have all pursued mercantilist/protectionist trade policies that necessitate lending to America. Now those nations fear America will essentially devalue its currency to get out of that debt. What did those countries think as their trade surplus bubbles inflated? The answer is, just like the borrowers, they weren’t thinking. Now their productive infrastructure is scaled and leveraged for a market that is choking on their production. We in America are simply not spending as much and are saving more – just as many Europeans are preaching to us to do. The manufacturing capacity of China, Germany, Japan will have to painfully shrink/restructure downward to survive. What should Germany do to make this transition? Should Germany just sit it out and let their industry crumble? Or should they spend on restructuring?

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By: oldmum http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10642 Tue, 24 Mar 2009 10:25:02 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10642 Soory for my poor enghlish,
as european I am intersted about what is the world conjunture that hit us in the past two years and is still hitting us.
printing new money is a sovereign right of a state, controlling the flux of new bills in the finantial system states controle the inflaction and also can lead effectively the System in accordance with the ideological bias of a particular government.
What happened in USA, UK and Ireland, taking in account my relative lay vision, is that banks and the finance took the place of states creating money.
That money, of course, was fake money, because not supported by a state but by a financial concept.
now all the world has to pay in real money that Barbie coins…

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By: Jerry Sumner http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10641 Tue, 24 Mar 2009 10:12:09 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10641 Wow, everybody seems to miss the entire point: The banks are like bottles of water, who is willing to drink from them? The “poison” (debt) has to be removed first. No banks lending money, nothing will work. What happened to “short-term” loans for manufacturing companies, no loans to produce, no production. The companies that are no longer producing are told to hold their breaths, for how long? And when it all starts to work again, what ever happen to “just-on-time” as the warehouses are on the road are they not? Think about it? And as long as the warehouses are full with little demand, low prices. Warehouse stocks run low, rising prices. The banks (body)is not lending as they should, the body has no blood in its vein’s so to say. What happens to a body with no blood? Economics 101

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By: Hans http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10638 Tue, 24 Mar 2009 08:39:25 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10638 Hi Yanks,
I am German, and your understanding of the world and others is just shocking. Real solutions are only found when the core of the problems are understood and accepted; … and you are still in denial mode. No good sign for the future. You seem to have past your zenith. It is time to realize that and act accordingly.
Win back the trust and respect through humility and living within your means, or face protracted decline with the satisfaction of taking a good part of the world with you. At the moment, you are your worst enemy.

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By: Paul http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10636 Tue, 24 Mar 2009 08:00:52 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10636 The US may well be trying to inflate its way out of trouble but a plunging Dollar is going to rattle countries like China with its huge Dollar holdings. At some point they’ll stop buying T-bills and head to other currencies. That point may well also signal the end of Dollar hegemony, which would be a disaster for Pax Americana.

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By: Daniel Tischer http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10635 Tue, 24 Mar 2009 07:53:02 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10635 The discussion on hyperinflation in the past is pathetic. The conditions prior german hyperinflation in the 30’s was characterised by massive / unsustainable reperation payments, the reorganisation of large parts of the popoulation and the impact of the global economy (which some economists say was way more integrated than now!). The german business system is much more stable as its anglo-saxon counterparts, and the versatility of Euro countries should positively affect inflation / deflation figures.

Both commentators and politicians who say spend money to get yourself out of the recession (and if you don’t have the money just print the staff anyway). History and theory shows this to be the least attractive option. How about instead focusing on the redistribution of capital via philantrophy as A. Smith proposed 250 years ago?

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By: mody http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10634 Tue, 24 Mar 2009 07:43:35 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10634 so i want someone to answer the question, who is right and who is wrong, america who want to spend big money to get out of the crisis so fast, or europe who choose to take it easy and go step by step

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By: Vojta Harok http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10630 Tue, 24 Mar 2009 06:37:09 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10630 Let me just make the last comment. The actual crisis was caused by a bubble that comes from US governement efforts to push banks to give mortages (own living) to everybody (so nice goal!). Now, the policy is to create another buble = put gas into fire = print more dollars. This is agains a common sense – and EU central bankers are against. If Fed would have had the same policy as EU central bank, the crisis would never happen!

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By: Vojta Harok http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10629 Tue, 24 Mar 2009 06:26:06 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10629 Germany is just trying to make a REASONABLE fiscal policy -runing on huge deficits was not normal before Hitler and Roosvelt. It has been proven that the New deal made the 30s crisis longer, not shorter. A new Ronald Reagan for president is what we are missing now. He had perfect insticts and common sense. In Russia and China, the US – it’s a joke. As seen from Europe, Mr. Obama is doing exactly what Russia, China and Iran want. It is frustrating.

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By: Tim Armstrong http://blogs.reuters.com/great-debate/2009/03/23/us-fights-fire-germans-fear-flood/#comment-10623 Tue, 24 Mar 2009 05:02:26 +0000 http://blogs.reuters.com/great-debate/?p=2612#comment-10623 clearly the lesson of the 1970s and 1930s that stagflation will result as a consequence of this – the value of money depends on the amount of moeny in circulation – and the lessons of the 1970s britain so very clearly that pump priming not done to increase the capacity of an economy will lead to inflation and then we will be in even a worse mess

while governments need to spend during a recession – they also need to save during a boom ow the value of their currency and the value of their money within their own economy declines

once inflation starts it can be very difficult to stop

so spending should only be done on infrastructure which reduce inflationary type blockages in an economy

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