US fiscal and monetary policy ineffective in a globalized world?

[touchring]

I'm starting to have the impression that the 'inflationary' fiscal and monetary policies of the Fed and Treasury are not effective in combating recession due to globalization.

Money created leaks out of the USA and drives up commodity prices, causing consumer and asset price inflation in Asia and commodity markets, whilst the USA still languishes in deflation.

The higher interest rates caused by this "external inflation" (which does not benefit US businesses) ravages US home owners. Rising commodity prices dampens the domestic economy further.

If the Fed continues printing money, more money, and maybe even people, followed by businesses will flow out the USA. It's like trying to infuse blood into a patient with a drip while blood guzzles out of an open neck wound.

Am I talking sense?

[c1ue]

Re: US fiscal and monetary policy ineffective in a globalized world?

Again, you're operating with the assumption that the US doesn't want inflation.

But what if the government does? And this is all just a handwaving to pretend to care?

Deflation won't last long if interest rates rise to monstrous levels and the dollar collapses.

[touchring]

Re: US fiscal and monetary policy ineffective in a globalized world?

Again, you're operating with the assumption that the US doesn't want inflation.

But what if the government does? And this is all just a handwaving to pretend to care?

Deflation won't last long if interest rates rise to monstrous levels and the dollar collapses.

That the US government wants inflation to gradually write off debt with inflation, I believe that will be the ultimate goal. But will it happen overnight? Can it happen quickly without damaging the economy?

[c1ue]

Re: US fiscal and monetary policy ineffective in a globalized world?

Again, your assumption is that the US government wants the best for its people.

If this assumption is false, then absolutely inflation can be created pretty much overnight.

In fact the behavior we see now seems more buying time for bankers than fixing any structural issues or 'helping the people'.

[jtabeb]

Re: US fiscal and monetary policy ineffective in a globalized world?

and the dollar collapses.

Hudson says the gov wants this, do you agree?

[touchring]

Re: US fiscal and monetary policy ineffective in a globalized world?

Again, your assumption is that the US government wants the best for its people.

If this assumption is false, then absolutely inflation can be created pretty much overnight.

In fact the behavior we see now seems more buying time for bankers than fixing any structural issues or 'helping the people'.

ok, i get it.

[c1ue]

Re: US fiscal and monetary policy ineffective in a globalized world?

Hudson says the gov wants this, do you agree?

I do.

My mental model of this process is to consider the US government as a serial welcher - in negotiation with someone else who has money said welcher needs.

Now given this orientation, would any of the US government's major economic actions/policies in the past decade be seen in a different light?

Such as 'Strong dollar' talk but weak dollar policies?

(No, really, the check is in the mail)

(I just need a little more time to come up with the cash)

(My population is undergoing a recession, can I skip my payment this month)

(Would you take my genuine Rolex Treasury Bond instead of cash)

etc etc.