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January 02, 2009

Greenspan: "I made a mistake."

In Salon, see Andrew Leonard's excellent "The Economy Crumbled"--but then let's get busy cleaning up our mess. WAC? prefers Pollyannas who like to solve problems. Excerpt:

There were warnings along the way. Cassandras who feared that exotic financial innovation, specifically unregulated at the behest of both Democratic and Republican politicians, was setting the stage for a major systemic shock. But their voices were drowned out by a chorus of status quo defenders who told us, again and again, that financial innovation was making the world a safer, less risky place.

Posted by Holden Oliver (Kitzb├╝hel Desk) at January 2, 2009 04:07 AM


Quantitative Easing Won't Work

In a Liquidity Trap although Saving (S) is abnormally high investment (I) is next to 0.

Hence, the Keynesian paradigm I = S is not verified.

The purpose of Quantitative Easing being to lower the yield on long-term savings doesn't create $1 of investment.

It does diminish the yield on long-term Treasury Bonds but lowers marginally, if at all, the asked yield on savings.

This and other issues are explored in my tract:

A Specific Application of Employment, Interest and Money
Plea for a New World Economic Order


This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.

It shows that income / wealth disparity, cause and consequence of credit and of the level of long-term interest-rates, is the first order hidden variable, possibly the only one, of economic development.

It solves most of the puzzles of macro economy: among which Business Cycles, Stagflation, Greenspan Conundrum, Deflation and Keynes' Liquidity Trap...

It shows that no fiscal or monetary policy, including the barbaric Quantitative Easing will get us out of depression.

A Credit Free, Free Market Economy will correct all of those dysfunctions.

The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay.

A Specific Application of Employment, Interest and Money

Shalom P. Hamou
Tel: +972 54 441-7640
Email: shalom.p.hamou@17-76.net

Posted by: Shalom Patrick Hamou at January 2, 2009 07:45 AM

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