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Heroes of the Great Depression II

April 22nd, 2013
in Op Ed, syndication

Written by

Editor's note: Sarcasm detected.

super-heroI only took one course in International Trade and was very impressed with the Marshall Lerner Condition which needs to hold to have devaluation improve your balance of trade. The Marshall Lerner condition has never applied to the US mainly because our demand for imports is very insensitive to the price (currency ratio determines the price of imports and the exports to the nations to whom we sell) which is why we have always had a negative current account. At the time that I took the course, the only medication recommended for treating this unfortunate condition was a Great Depression.

Follow up:

It appears that everyone seems to be cooperating in making that happen which will free us from this albatross around our neck. Our inelastic demand for imports will finally be crushed. Only the truly rich will be able to buy fancy imported cars. Our demand for energy will be reduced to a level that domestic production will satisfy the larger part. Our current account will go positive and the Federal Deficit will be able to be reduced to zero or perhaps even a surplus position. Who cares if we have 25% unemployment. We will have a balanced Federal Budget. Plus we will see increased immigration of the most productive Europeans who flee the mess they are creating.

There will be many heroes to thank for this. Republicans will get the most credit and just slightly less deserving will be Democrats and there are rumors our FED will soon join the party. Seems they either made a sign error in figuring out how to "sterilize" the Asian currency devaluations or they have some juicy USD/JPY positions they want to personally make a killing on. Would bankers do such a thing?

It appears that they have all gotten the word that I am predicting a new boom in about five years and are thus pulling out all the stops to make me look bad. In reality they are simply creating a lower level for the next boom to start from so it does not change the timing but simply the path. Rather than a graceful transition from slow growth to rapid growth they appear to want to have one more really good downer to prime the pump and shake up the political landscape. Hopefully they do not shake up the geopolitical landscape too much as the half-life of radioactive material can really screw up economic cycles. One may have to redo the demographic calculations.

It is quite amazing to watch.

Here and here are some reading materials from a single issue of Global Economic Intersection to help you keep abreast of the extraordinary efforts being made to have Great Depression II put the first Great Depression to shame.
This is called "we have found the magic bullet for understanding why Keynes was wrong and it turned out to be a mirage...next time we will do our calculations on the back of an envelop and scrap spreadsheets...nasty things they be."

If you want some less sarcastic words on what is going on, try this and this and this.

Can one receive a Nobel Prize for having caused a Great Depression? If so, that prize might have to be divided and shared by a very large number of people.

It takes cooperation and coordination among nations to create a Great Depression.









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