"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Saturday, January 29, 2011

Jim Rickards on Quantitative Easing... Currency War... Inflation... Political Instability

Jim Rickards pretty much sums up what we have been discussing: how the poorest of the world are bearing a disproportionate burden in this crisis, especially those in unstable areas of the developing world.  And how QE2, that is, Bernanke's monetary easing, is creating not only inflation elsewhere in the world, but is also indirectly causing political instability as well.  In my view the unresolved financial crisis is causing unintended geopolitical consequences that may prove even more costly than the original crisis.  The world is becoming a much more unstable and dangerous place.


OKL said...

well said.

it really isn't funny you know; people go hungry, revolt, turn against one another... yet, this is just mimicking nature's progress; many times i wonder if we are really at all that different.

Misthos said...

The only difference that I see in the recent riots in Europe and the ongoing riots in the Middle East is in the degree of hunger the exists in the two populations. Europe has a way to go.

The western wealthy elites should take note. The disproportionate accumulation of wealth in the hands of the few at the cost of the many is not a static thing, it's a reinforcing process. That process continues until society breaks apart.

OKL said...

Yet, what can be done? Should we re-distribute the wealth from the rich to the poor? Would that solve the problem?

Should we have higher minimum wages?

It's almost an invisible force is pushing us from doing what humans tend to do; band together and help each other in a crisis... ironically, if we stick too tightly, we run the risk of alienating others a la Hitler, though that would take a real disappointment.

I just don't know; the only thing I find that makes sense is "live and let live".

I've pretty much given up trying to find the solution, but instead focus on using these issues as learning lessons... hopefully I see some logic in it...

Misthos said...


The best way I can describe what is going on globally, and within many nations is a supercycle. Maybe Kondratieff was right.

I think the accumulation of wealth in the hands of the few, both within nations and globally, has peaked. And so, the situation resolves itself with a long drawn-out process of rebalancing, or the existing paradigm is reinforced violently - war between countries, upheaval domestically.

We're living in one of those moments in history where the cumulative actions of the past have created a watershed moment in history.

I now look at the fall of the USSR, the Asian financial crisis, LTCM, the rise of Islamisists, global terrorism, Iraq/Afghanistan Wars, the global financial crisis and sovereign debt crisis, and recent mideast uprisings as one seamless unified process. What we see today was created in the past, mostly the product of post WWII/Cold War era foreign policy and financial system.

Unfortunately, many of the consequences of past mistakes are all converging together all at once, historically speaking.

There's no manual for handling this, no historical precedent. The world has never been so interconnected and complex as it is today.