Posts by "macrosam"

re: catnip, I'm not sure what happens first, however, regarding political fallout (being kicked down the road) versus deflation, which strengthens a currency

Fundamentally I see the following a reasons why I would expect a Euro rally:

- tight fiscal policy, which results in less Euros being spent into the economies, promoting deflationary domestic conditions.

- Fed USD swap lines buy institutions time to borrow USD to cover USD losses at an inexpensive cost rather than having to sell EUR to obtain USD

- higher price of crude makes USD more obtainable by non-US sectors (can obtain USD from oil exporters rather than having to obtain them via trade with the US)

The reasons why I would expect a Euro decline:

- political uncertainty

- Dollar losses don't recover

I suspect the reasons for decline will continue to be kicked down the road although I'm not certain what the time frame is for some nations that seem to be overlooked like Belgium. Any Euro member withdrawal would reduce the operational demand base for the currency.

Part of the difficulty in understanding the US economic system is the false instruction provided in academia reinforced through the brainless media and equally brainless (or increasingly untruthful) US politicians. Neo classical economists, monetarists, Austrians, all have their shortcomings, the largest of which is an implied insistence of their theories as if they were religion rather than a science. I acknowledge the contributions of each group but have started to notice a segment that seems to "get it" more than the aforementioned: the Post-Keynesians. Note that Post-Keynesians are not Neo Classicals, as the latter will claim Keynes' teachings but leaves one suspecting if they've ever read The General Theory or any of Keynes' subsequent notes in the first place.

Much as Sting Theory was rejected decades ago as nonsense (to the point now it has evolved to M Theory), we are realizing the shortcomings of Neo Classicals, Monetarists, Austrians as their theories in their inception seem to all have failed to understand how a fiat money system differs from a commodity based one.

catnip: I realize QE is not printing money. It is a redefinition of the term structure of the maturity of government treasuries. The first wave of QE (started in late November 2008) is sitting with the Fed as excess reserves. All that really happens via QE is that the Fed debits and credits the Treasury accounts and Excess Reserve accounts by the amount of purchases.

Food inflation doesn't negatively impact the poor Chinese?