Comments on: G20 recipe for deflation, protectionism

By: HBC

HBC — Thu, 10 Jun 2010 21:03:59 +0000

Macroeconomic models rely for their validity on some measure of equilibrium and substantiality being present in the money system, which is sadly far from the case today.

If the world were relying solely on the munificence of US consumers of whom significantly fewer remain afloat than US statistical conjuring acts imply, the world would be on the road to perdition. How much further down the same old road the world is inclined to travel based on faulty American navigation remains to be seen.

Should it finally dawn on the other 19 of the Gs that Good Ol’ Number 1 has been deliberately leading them around by the nose into all kinds of trouble to be borne on the backs of their citizens a certain amount of whiplash is to be anticipated, not so much inflation or deflation as economic annihilation.

By: Robosuman

Robosuman — Wed, 09 Jun 2010 19:30:43 +0000

Well some economists believe that deflationary pressure is not very serious in long term. Atleast the Eurozone is moving swiftly to cut the spending. Atleast the eurozone is not inflating its way out. In US there is no talk of consolidation of the spending. They are inflating to make the exports cheaper, but they cannot control the inflation which can spiral out of control in no time.

I see deflation to be a short term impediment to the economy but inflation is more serious.

By: Uriel

Uriel — Wed, 09 Jun 2010 17:57:25 +0000

There would be no need for austerity measures and draconian deficit reduction if the market had any confidence at all in the Euro sovereign bonds, and that’s a HUGE “IF”.
But unfortunately, having being burnt to crisp by the credit crunch, there is not much appetite for risk. That said, I still do believe that the Euro bond market and equities are severely undervalued,mostly because, nowadays, the trendiest type of economist is the doomsday sayer.
And they are all on the streets screaming apocalypse coming.
Burton Makiel wrote in his book A Random Walk down Wall Street : If everyday you keep saying market crash, eventually one day you will be right, and people will put you on a pedestal.
The austerity measures are important, not to prevent default, but to restore confidence, and the price to pay will be slow EU growth for the next few years.

By: tmc

tmc — Wed, 09 Jun 2010 11:19:50 +0000

I agree with Poalima above. Reuters, please block people from advertizsing in comments. Just block all links.

By: Gen

Gen — Wed, 09 Jun 2010 07:44:43 +0000

When people talk about inflation as a way of magically making the problem go away they are simply in a dream world. It is going to be very painful to fix our situation. The only questions is whether we are going to have the courage to pay for our mistakes or are we going to make our grandchildren pay for our mistakes….

Under austerity and some deflation we pay for the problems we created. Under increased government sending and inflation we make our children deal with the problems we created plus additional postponement costs.

By: Northman62

Northman62 — Wed, 09 Jun 2010 04:35:23 +0000

All of this stumps the best economists. How can an average layman expect to grasp the ungraspable?

By: macira

macira — Wed, 09 Jun 2010 03:26:31 +0000

These folks cooked up a mess of gobbledegook and hope some folks will not have the nerve to say “WHAT?”

By: Poalima

Poalima — Wed, 09 Jun 2010 01:08:11 +0000

Reuters, I’d like to suggest that you edit (block) comments that direct your readers to web sites. This would both improve the security of your readers’ computers, and limit contributors to those who have something to say (at least, something they can say within your framework).

By: yr2009

yr2009 — Wed, 09 Jun 2010 00:07:44 +0000

Forget about the US consumer – they’re in rehab from credit addiction

By: mckibbinusa

mckibbinusa — Tue, 08 Jun 2010 22:38:49 +0000

Monetary policies do not rule the people — of course the world’s banking (monetary) leadership would acclaim austerity as the way forward. Moreover, bankers never did understand anything about foreign trade. The big fear of monetarists will always be that the people will vote against austerity measures, which only really leaves “printing” money as the only reasonable course of action since default is unthinkable. The future is inflation, and the G20 knows it in their hearts — such is the way of the world, past, present, and future. More at:

http://wjmc.blogspot.com/2010/05/student -recently-remarked-to-me-that.html

Thank you for the opportunity to comment…