I see deflation everywhere..

[blazespinnaker]

Re: I see deflation everywhere..

There is no room for VC.

I'm talking about specific legislation which creates liquidity for small business VC/Angel investing.

[blazespinnaker]

Re: I see deflation everywhere..

This did not happen in 1920, when the government got out of the way and followed the path of the "liquidationists". Why no deflation spiral? (P.S. We were on a gold standard)

http://mises.org/daily/3788

We didn't have massive global over capacity though in 1920. People needed things built all over the world and the US could do it (and became a great manufacturing power) like China is doing it now.

You think employment is going to return .. to what may I ask? Making cars? Manufacturing? Nobody knows. We need massive risk taking and random experiments to figure it out.

[lsa420]

Re: I see deflation everywhere..

We didn't have massive global over capacity though in 1920. People needed things built all over the world and the US could do it (and became a great manufacturing power) like China is doing it now.

You think employment is going to return .. to what may I ask? Making cars? Manufacturing? Nobody knows. We need massive risk taking and random experiments to figure it out.

I agree with your last point. And I have no idea what or where employment would return to. Believe me, neither does the government. That's what the free market does, if allowed.

[chr5648]

Re: I see deflation everywhere..

You can do whatever you want with the tax rates, raise them or lower them, the government will not stop spending, and .gov spends regardless of democrats or republicans in power. These arguments of left vs right are getting annoying because there is no EVIDENCE that the policies are ever implemented or whether they work. policies are implemented for the good of the rulers, when they want to spend they spend, when they want a tax cut they get a tax cut.

[lsa420]

Re: I see deflation everywhere..

HOWEVER .. as marvenge said the problem is over capacity in areas that are *not* in demand.

I have to completely disagree with you guys on this one. Demand is unlimited. My demand for goods and services has not decreased since 2007, despite the fact that I have tightened my belt and not spent as much money. I would prefer to be typing this email from my yacht in the Caribbean that I flew to on my private jet, but I'm sitting in my living room instead. My demand for these things exists, I just haven't earned enough to be able to afford it. In a broader sense, the same thing exists in the real economy. Demand is unlimited for energy, food, clothes, gadgets, etc. The problem is not demand, the problem is that we are broke. We are over indebteded and under saved and we can no longer afford the things we used to think we could. Our former levels (pre 2008) of consumption were driven by debt growth and asset bubbles. Without those supports, we simply can't afford our former level of consumption. Demand is there. We just don't have the money!

[lsa420]

Re: I see deflation everywhere..

You can do whatever you want with the tax rates, raise them or lower them, the government will not stop spending, and .gov spends regardless of democrats or republicans in power. These arguments of left vs right are getting annoying because there is no EVIDENCE that the policies are ever implemented or whether they work. policies are implemented for the good of the rulers, when they want to spend they spend, when they want a tax cut they get a tax cut.

Am I not allowed to be an ideologue?

[Jay]

Re: I see deflation everywhere..

I'm talking about specific legislation which creates liquidity for small business VC/Angel investing.

You are, of course, right. The root of the problem is just much, much deeper. I don't think a few regulations are going to help the small dig out from under such a huge rock that grows heavier every day, but you have to start somewhere and giving VC money a boost is essential. I am of the mind that until we have some sort of reset, opportunities for entrepreneurs will be difficult. The whole picture is just too slanted against them. And that slant becomes more oblique each passing day. We need an economic world which is growing, not shrinking, for capital to come out effectively. That will only happen when something big changes. But then again, I don't believe in the recovery and I don't think it is possible to have one in the near future, at least until the wealth gap shrinks.

[blazespinnaker]

Re: I see deflation everywhere..

The problem is not demand, the problem is that we are broke.. We just don't have the money!

That's generally what people mean when they talk about capacity utilization.

Obviously we don't want to drive demand directly via debt. We've seen that leads absolutely nowhere and does nothing for the long term (or even medium term) structure of the economy.

What we do need to is drive risk taking though. The best way to do that is negative interest rates for small business loans on a massive scale.

Banks will be responsible for the long term return on those loans so they're going to find ways to make sure that money comes back to them. We'll want instill checks to make sure the money doesn't get loaned out in a fraudulent manner (eg, we'll loan it to you if you deposit it all in our bank and leave it there) or something silly like that, but beyond that, I'd say leave it up to the banks to be innovative about how they make sure the money doesn't get spent stupidly.

[Jay]

Re: I see deflation everywhere..

You can do whatever you want with the tax rates, raise them or lower them, the government will not stop spending, and .gov spends regardless of democrats or republicans in power. These arguments of left vs right are getting annoying because there is no EVIDENCE that the policies are ever implemented or whether they work. policies are implemented for the good of the rulers, when they want to spend they spend, when they want a tax cut they get a tax cut.

Democrats: entitlement spending.

Republicans: war.

Both equal debt. The rulers are fat and grow fatter every day.

[Jay]

Re: I see deflation everywhere..

That's generally what people mean when they talk about capacity utilization.

Obviously we don't want to drive demand directly via debt. We've seen that leads absolutely nowhere and does nothing for the long term (or even medium term) structure of the economy.

What we do need to is drive risk taking though. The best way to do that is negative interest rates for small business loans on a massive scale. Banks will be responsible for the long term return on those loans so they're going to find ways to make sure that money comes back to them. We'll want instill checks to make sure the money doesn't get loaned out in a fraudulent manner (eg, we'll loan it to you if you deposit it all in our bank and leave it there) or something silly like that, but beyond that, I'd say leave it alone.

Why would any of the power mongrels want to set up small businesses? They are close to check mate. Why fund competition? I guess it might be like a Russian billionaire buying an NBA team. Kind of fun.

[blazespinnaker]

Re: I see deflation everywhere..

Well, I dunno about this part. Apple is the second most richest corporation in America right now. To argue that only the oligarchies can rule is a bit more cynical than I think is warranted.

[ThePythonicCow]

Re: I see deflation everywhere..

Both equal debt. The rulers financiers are fat and grow fatter every day.

Just a little refinement to your good words.

[Jay]

Re: I see deflation everywhere..

Just a little refinement to your good words.

Sometimes I need a little help.

[Starving Steve]

Re: I see deflation everywhere..

I see a use for government: PUBLIC WORKS PROJECTS TO LOWER OUR COST OF UTILITIES, and I don't mean windmills, nor do I mean solar photo-electric projects. Another use for government is SOCIALIZED MEDICINE, and I do not mean stopping with Obama-care and calling that the socialized medicine that we desperately need in the U.S.

We can pay for this with tax HIKES, especially for the high income earners. We can also pay for this with a consumption tax such as a GST in the US. We can also pay for this with spending cuts in government such as getting rid of the EPA in Washington. We can also pay for this with fewer wars and with less appeasement of terrorists. We need to hunt-down the terrorists and not be afraid to exterminate every last one of them. It is the appeasement of terrorists that leads to more wars---- as history has shown many times in the past, starting with the appeasement of Adolf Hitler and his nazis.

Reaganomics got the USA into this mess, lest we forget. We did not grow our way out of deficits; we drowned in our deficits. But oh how these supply-siders like to re-write recent history! WE DROWNED IN THE DEFICITS THAT REAGANOMICS CREATED THROUGH TAX-CUTS such as Proposition 13 in California.

[Jay]

Re: I see deflation everywhere..

Well, I dunno about this part. Apple is the second most richest corporation in America right now. To argue that only the oligarchies can rule is a bit more cynical than I think is warranted.

A large chunk of the US is on food stamps and instead of the 250 million they were pulling a few years ago, top hedgies are now pulling in 3 billion. It ain't getting better.