Domestic non-financial debt owed by households and non-financial businesses, i.e. the economy that’s real , that works for a living, now totals (in 2008 according to http://www.federalreserve.gov/Releases/Z1/Current/z1r-2.pdf) 24.917 trillion.

As this balance is amortised and the debt service & debt retirement flows return from those real economic entites to the note holders, I’m left wondering where the issuers (read banks) will invest this now surplus cash. Make no mistake, to remain going concerns, they will have to turn these flows over into new assets (debt). They can’t tread water indefinitely.

As is well known, both households and non-financial businesses are now tapped out. That leaves only the imaginary economy: guvmint. As is also well known, governments have an endless supply of big, notoriously bad, and thus exorbitantly expensive ways to waste these flows.

All it takes are subtle changes in these massive financial flows to fundamentally and permanently alter the economic landscape. Financial reset is going to occur, just not in the ways Austrians like Bonner expect…things are NEVER what they seem…

Think of it: large-scale debt retirement during a period of rather elevated inflation…lots ‘o cash with nowhere to go…but to governments…almost like they planned it this way…

If there is one, it’s Chinese and Indian aggregate demand that’s the blindspot in the Austrian view of our current macroeconomic circumstances. I’m not saying the Austrians are wrong by any means, but that any analysis that tiptoes past the untapped demand in these two countries is bound to be woefully incomplete, and therefore inaccurate for this reason…

Unfortunately, people don’t generally distinguish between theories that are flat out wrong and those that are misunderstood…through no fault of the ideas, but only of their purveyors’ inability to fully understand the new economies of scale, (e.g. imagine the size of global economic output if ChIndia possessed just 25% of U.S. per cap GDP-that alone adds two US economies to world output) Austrian economic thought is about to get blasted to Mars…life ain’t fair…

Thanks to Obama for forcing me to participate in what is to me at least the first-cousin to infanticide through my tax dollars. This is truly where they will reap a Day of Reckoning.

I’m beginning to look forward to it now, even though I’ll share in it.

This is likely a blind spot in Libertarianism. People have liberty as long as they behave a certain way and do what their told.

“If it is monetary policy that is at fault, then that can be corrected in the future, at least in principle,” Greenspan wrote. “If however, we are dealing with global forces beyond the control of domestic monetary policy makers, as I strongly suspect is the case, then we are facing a broader issue.”

might be implying that he is referring to the politically incorrect to refer to ‘elephent in the room’ (global forces beyond the control of domestic monetary policy makers) population policy issue, such as:

“But the agenda-setting process seems useful only if we consider what the media do place on the agenda. This study shows that agenda-setting may have a dark side, when we consider what the media do not cover. To generalize from this study, it seems likely the media have a blind spot regarding the basic layers of multilayered causality. The deep causes that drive daily events remain off the agenda. Certainly this is the case with population growth, but such causal dissociation may keep many other deep-seated causes of social problems off the agenda.”
~ ‘WHAT BLEADS, LEADS’?: Media’s Population Agenda & ‘War on Terror’ Outcome: “HOW and WHY Journalists Avoid the Population-Environment Connection”, by Univ. of SW Louisiania ~

or phrased as:

Sometimes you may wonder: Why are nations so committed to economic growth at nearly any cost? Why do central banks continue to pump in so much money long after they recognize the inevitability of its inflationary consequences? Why has GDP growth become the supreme icon of most governments, businesses and investors? When debts and deficits run amuck, why dont our leaders just slow down, take a breather, and focus on finding a more stable path? “Your answers may be varied. But if you trace back through the chain of cause and effect, you will always return to one single, overriding factor: The population explosion colliding with finite resources. More mouths to feed. More demand. More pressure to perpetuate growth. More inflation.”
~ US Naval Services Long-Term Study: Global Tipping Points on Food, Water, Energy, Pollution, Population & Natural Resources & The Population Explosion ~

Just wondering?

JMCSwan

Think about it. Their 1 billion proletariat had to toil for years to earn a trillon in foreign reserves when America, the most powerful country in the world, can simply snatch it out of thin air. In addition, being Americans means you will be stimulated with trillions of money you haven’t earned.

And while China can only have 2 senators as the newest addition to the great empire, she can control up to 70 to 80% of the House of Representatives with her sizeable population. And most importantly, getting a son or daughter of Dragon elected to the White House would be easier than a stroll through a garden in Suzhou.