tag:blogger.com,1999:blog-3240565408401956331.post6649912044252120585..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: Global Inflation – It takes 150 to Tango.Unknownnoreply@blogger.comBlogger14125tag:blogger.com,1999:blog-3240565408401956331.post-16764600843409814132011-06-07T08:53:24.835-04:002011-06-07T08:53:24.835-04:00By law the Fed is independent of the administratio...By law the Fed is independent of the administration and has both the right and the responsibility to not fund or monetize government deficits. Unfortunately Bernanke has not exercised his right of independence and acts as if he is a member of the administration. That's a shame but this will provide a nice chapter in a future textbook as to how not to do central banking.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-90169372693493083172011-06-07T07:29:36.875-04:002011-06-07T07:29:36.875-04:00Yes, and it is the focused intent of this administ...Yes, and it is the focused intent of this administration to continue to print more money then spend it as fast as it can.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-46825514165212658742011-06-06T12:26:53.694-04:002011-06-06T12:26:53.694-04:00While Volcker is correct and always worth listenin...While Volcker is correct and always worth listening too the probable truth is that we will never return to the 19 century or a situation without a central bank. Seems to me we could control inflation under the current system if central bankers would just keep their eyes on one ball -- inflation. Unfortunately that isn't going to happen under Bernanke.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-55115633768455528702011-06-06T11:20:42.644-04:002011-06-06T11:20:42.644-04:00"It is a sobering fact that the prominence of..."It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.' The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy."<br />-- Paul Volcker, former Federal Reserve chairmanAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-30614008727486271362011-06-03T09:46:45.721-04:002011-06-03T09:46:45.721-04:00Dear Rage,
I'll drink to that.Dear Rage,<br /><br />I'll drink to that.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-23734651266777607112011-06-03T09:39:56.386-04:002011-06-03T09:39:56.386-04:00Just my two cents. You go into a bar around 9:00 ...Just my two cents. You go into a bar around 9:00 PM and order a Becks and check out the babes. When closing time rolls around a few hours later you have a stack of Becks bottles on your table and are still checking out the babes; but they have all started to look better than they did at 9:00.<br /><br />The US dollar is one of the babes that has been there since 9:00, but is looking a lot better after drinking Becks, especially compared to the other babes.<br /><br />It is not so much that the US dollar is the best choice for currency buyers, rather that the other choices are worse choices.Ragebothttps://www.blogger.com/profile/05170206892100643257noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-60116991178970210792011-06-02T15:09:48.388-04:002011-06-02T15:09:48.388-04:00John,
Bretton Woods lasted from about 1946 to 197...John,<br /><br />Bretton Woods lasted from about 1946 to 1971. Under this system currency rates were fixed against the dollar. The dollar's value was fixed to gold. When a currency had market pressure on it the country had to buy or sell its currency until the market value converged on the agreed fixed value. This system had its ups and downs. Sometimes countries were given permission to fix at a new value if the old one no longer seemed relevant. The system ended when the US failed to keep its pledge to maintain a constant value to gold. The US monetary policy was causing global inflation. Since the US would not promise to reverse its monetary policy and therefore could not keep the gold peg, this ended the system. Today we have similarities since some countries willingly peg to the dollar. Thus US monetary policy has been causing global inflation. Nowadays the difference is that these countries do not have to keep their currencies pegged tot he dollar. And that was the point of my blog -- they are willingly participating in a process of global inflation. They have other choices.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-86836285827987100112011-06-02T14:54:35.989-04:002011-06-02T14:54:35.989-04:00Are these circumstances comparable to anything bef...Are these circumstances comparable to anything before the dissolution of Bretton Woods?Johnhttps://www.blogger.com/profile/07581149595369473512noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-32393470287575786562011-06-02T14:16:24.972-04:002011-06-02T14:16:24.972-04:00Crash,
I hope you had a little milk and bourbon o...Crash,<br /><br />I hope you had a little milk and bourbon on those depressios.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-77749805393144068312011-06-02T11:50:08.651-04:002011-06-02T11:50:08.651-04:00Yes! They can use their money to build more sophis...Yes! They can use their money to build more sophisticated weaponry with the technology we have given them/they have stolen from us. Eventually, along with Pinky and The Brain, they can take over the world an we won't care about inflation...or much else for that matter.<br /><br />I had two bowls of Depressios this morning.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-89493495840403799042011-06-02T10:11:52.689-04:002011-06-02T10:11:52.689-04:00Crash,
I think James is concerned that by China m...Crash,<br /><br />I think James is concerned that by China manipulating their currency we lose exports and jobs in US manufacturing. But James can speak for himself...<br /><br />My additional belief is that this is not good long-run policy for China since it is unsustainable to keep lending money to America. They have better things to do with their money. It also contributes to rising US and global inflation.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-36855122026331550192011-06-02T07:26:56.646-04:002011-06-02T07:26:56.646-04:00So what's the big deal? China ships us their m...So what's the big deal? China ships us their manufactured goods, and we buy them with the dollars they loaned us.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-55423781984680780622011-06-01T14:14:29.282-04:002011-06-01T14:14:29.282-04:00James,
Below I paste a list of countries that pe...James,<br /><br />Below I paste a list of countries that pegged against the dollar as of 2008. When the dollar depreciates these countries would be at a competitive disadvantage if they did not depreciate too. So they try to keep their exchange rates relatively fixed against the dollar. Note that China has let its currency appreciate against the dollar since 2005. The appreciation has been gradual and less that what the US would like but it illustrates that the RMB is not totally fixed against the dollar and is headed in the right direction.<br /><br />Of course, my post this time explains why this mentality may be over blown. Countries have other ways to improve trade and manage than their economies. For example, China would be well served if they had better domestic policy to control growth and inflation.Well managed reforms in currency, finance, and economic development would help a lot more than their current exchange rate policies... <br /><br />Here is the paste: As the actions of China and Syria indicate, no list of pegged currencies can always be accurate. Nevertheless, as of 2008, there were at least 17 national currencies pegged to the U.S. currency, not counting other organizations that maintain a similar link. These include the Netherlands Antillean guilder, Aruban florin, Jordanian dinar, Bahrain's dinar, Lebanon's pound, Oman's rial, Qatar's rial, the Saudi riyal, Emirati dirham, Maldivian rufiyaa, Venezuelan bolivar, the Belize dollar, the Bahamian dollar, the Hong Kong dollar, the Barbados dollar, the Trinidad and Tobago dollar, and the Eastern Caribbean dollar, which is used by Antigua, Dominica, St. Kitts, St. Lucia, St. Vincent, the Grenadines and Grenada<br /><br />Read more: What Currencies Are Pegged to the Dollar? | eHow.com http://www.ehow.com/about_4675892_what-currencies-pegged-dollar.html#ixzz1O36H1GexLarry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-51809268186581908502011-06-01T13:11:18.390-04:002011-06-01T13:11:18.390-04:00In the case of China they need to free their RNB f...In the case of China they need to free their RNB from the US dollar and let it float with the global economy. As it is now they can produce cheap goods which are exported to the US(no or little tariff) and bought by selling US bonds to China. Is this different and if so by how much than the other countries where their dollar floats in the open market?Jameshttps://www.blogger.com/profile/16257806506590834840noreply@blogger.com