I think this article neatly sums up the problem. It is all about the 'financialisation' of the economy and yet it never mentions gold once ! Just like the film Margin Call. No gold at the base of the pyramid (i.e. capitalism without real always liquid capital) means that you can build a debt/derivatives pyramid to the moon. This monetary inflation only benefits the rich while creating the illusion of wealth below. However a return to gold would destroy big government too and this is why it can never be talked about. The reason interest on savings is so low is that the fed has had to rig rates at multi century lows to try and keep the debt party going. It has thus created the biggest bond bubble in all of financial history. The fed IS the bond market and can not exit without creating a crash.
What an idiot ! Computers in banks are evil ??? He should stick to archaeology. As for bankers being inhuman, well they were the most moral of people when they had a gold standard and unlimited liability. But he won't do any banking archaeology.
When it is almost impossible to tell the difference between state, charity, business and government you have Mussolini's vision perfectly enacted. Society now serves to enhance the power and prestige of the state rather than the other way around.
They soon will. In the UK there are two versions of the BBC. The main one charges a 'licence fee' if you own a tv and another one called 'channel 4'. Channel 4 is part funded out of general taxation and part funded by ads. They will soon be forced to merge because the internet is bringing the licence fee racket to an end. The BBC is desperately trying to work out a way to tax ISPs !
Being from the UK the explanation is perfectly clear to me. The BBC is Mussolini's vision of the corporatist state distilled to its basic essence. He is perfectly correct to post this. Why are people forced to fund private business ? How can this generate an optimal structure of production ? If the demand was there for the product no 'force funding' would be required and thus we would be sure that scarce resources were being put to their best, wealth creating, use. It is immoral to send people to jail for watching unencrypted tv streams. Just as it is wrong to send people a product they didn't want and then bill them when they use it. It is even worse to do this then recycle the cash into a foreign business then use profits from that business to prop up the main racket !
Unlike the US dollars/balboas in Panama are not printed out of thin air. Panama has to do productive work in order to earn dollars and thus the money supply can not race ahead of the productive capacity of the economy. This is why Panama has never had an inflation problem (unlike the rest of Latin America) and has short periods of deflation.
The way I read it is that Krugman is quoting someone to support his argument for ultra low interest rates.
Krugman like all Keynesians thinks bubble booms are good and recessions are bad. He fails to mention the artificial carry trade in gold that central banks set up in the 90s to push gold prices down and stock prices up. Central banks at this time also promoted derivatives to create the illusion of low inflation by soaking up the price rises due to commodity speculation.
He also does not mention the FED money printing in the 30s to artificially support the pound and stop the draw on gold from London. Could this have had something to do with the boom then ???
The moral of the story is don't let the government and central bank 'run' your economy. All they can do is make bad guesses and try and cover up reality.
Krugman fails to mention that this is the corrupt fallout from his cheerleading in 2002 for low interest rates in order to create a housing bubble to fill the void of the .com bubble !
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Krugman 2002
