"Be happy with your lot because it could be worse."
No, it's more like Americans have become a spoiled and entitled lot that don't understand how good they had it, and still do have it. Look at how a kid grew up in the 1940's vs how a kid grew up in the 1990s'. It's night and day.
So, he says that the people setting interest rates don't need to be concerned with the devaluation of overpriced assets when it isn't related to an actual depression of the real economy. That would be applicable in cases of not-an-actual-depression, right? Are you implying that this economic recession/depression is imagined?
That's not at all what he was saying. He was asking (I would say warning) that if a real estate bubble was being created, and this bubble was fueling consumption that was not sustainable...."irrational exuberence" that it was going to lead to a situation like the " lost (two) decades" in Japan---speculative bubbles pop and cause major problems in the REAL economy---jobs gone, production/construction falling off a cliff, and price instability (deflationary spirals).
Of course, he retired in 2007, one year before the collapse happened at the end of 2008. Ben Bernanke, someone who spent his entire life writing about and researching the Great Depression, was brought in to contain the damage that they knew full well was coming.
Everything he wrote about years ago that he thought would save us has been tried, and either failed or did not work as effectively as he expected it would. Now, we're treading water much like what happened in the great depression----there's no bullets left to be fired with fiscal stimulous or monetary policy....If a second wave hits now...like then...we're in for a rude surprise.
I guess it is good business to choke of those who demand the things your produce so they can't buy your products anymore.
Something about myopia and short-term thinking yadi yadi yada...
If anything it's the exact opposite of short-term thinking. It's a long-term vision.
The American consumer base may shrinking, but they've created a world wide market with globalism and as those markets mature, they can simply start to sell consumer goods to that emerging middle class as well as Americans. Those people will start to want new clothes, shoes, tv's, video games, and the like. The fortune 500 are doing incredibly well right now, mostly fueled by increasing market share overseas---and slashing costs domestically, which is accelerating the transition.
As the dollar devalues by intentional (loose monetary policy) and forced means (horrible fiscal management), Americans will continue to take up less and less of the world pie. The problem is a social expirement of this magnitude (essentially taking away the high standard Americans have come accustomed to) has a high potential to end in disaster----the social classes turn against each other...rich vs poor...young vs old....government worker vs private sector worker and eventually nation vs nation when governments seek to stave off their collapse by blaming a foreign enemy for their woes-----central banks create massive wars....and the anger is building day by day.
We often hear the phrase, "Saved by WWII" when talking about the Great Depression and the 1930s. Back then, the world was in disarray, based on economic constraints rooted in WWI reparations, the expansion and bursting of the stock market, and worldwide abject poverty.
Saved by a war that cost 60 million lives? What was the option? The starvation of the poorest had begun in Eastern Europe, and revolution was in the air in the United States. No one can contemplate the extent of the disaster that is coming now, since we don't conceptualize WWII as being caused by economics.
Perhaps it's time to promote this explanation, so it would be clearer just what kind of a precipice we are now looking over.
