Mish's Global Economic Trend Analysis |
Economic Illusions vs. Reality; Helicopter Drop, What Else? Posted: 26 Dec 2015 05:10 PM PST Without providing a link, ZeroHedge posted some comments today regarding "Helicopter Drop Theory" by Willem Buiter, Citibank's Chief Economist. Willem Buiter on Failure of Monetary Policy We believe that a common factor in the relatively low response of real economic activity to changes in asset prices and yields is probably the fact that the euro area remains highly leveraged. The total debt of households, non-financial enterprises and the general government sector as a share of GDP is higher now than it was at the beginning of the GFC.Economic Illusions vs. Reality I wholeheartedly agree with every point made above by Buiter. Actually, things are far worse than he stated. The problem is not just in Europe, but everywhere. With their deflation-fighting tactics, central banks have accomplished five things, none of them any good.
The solution is not more craziness, but rather an admission that central banks are themselves the source of the problem. Of course Keynesian fools would never admit such a thing. Instead they promote more and more of what common sense and history proves cannot work. Willem Buiter Proposes Helicopter Drop "Helicopter money drops (what else?)"Myth of the Deflation Monster Buiter wants to slay an imaginary monster, deflation. He moans "Japan has failed to achieve a sustained positive rate of inflation since its great financial crash in 1990." Other than the absolute mess Japan has gotten into as a direct result of decades of deflation fighting madness, what problem has a lack of sustained positive rate of inflation caused Japan? The answer is: None. The bank of Japan is now the entire market for Japanese debt. What positive result stems from that? The answer once again is: None. Nonetheless Buiter wants the ECB to pursue the same inane path. There will be no benefit. Leverage will rise, not sink. And to top it off, debt purchases of the nature he wants are likely illegal under the Maastricht treaty. Buiter has learned nothing from history. He ought to look in a mirror, admit he sees failure, and resign. But economic illiterates don't resign, they just keep promoting policies that both common sense and history show can never work. Challenge to Keynesians The simple fact of the mater is "Inflation Benefits the Wealthy" (At the Expense of Everyone Else) . If Buiter disagrees, he can respond to my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit" Mike "Mish" Shedlock |
Evolution of Shipping: Amazon Starts Own Air Cargo and Trucking Services Posted: 26 Dec 2015 03:03 PM PST Evolution of Shipping After announcing Amazon Prime, free Two-Day Shipping for eligible purchases, Amazon followed up Air Prime, a future delivery system from Amazon designed to safely get packages to customers in 30 minutes or less using drones. The next logical step is for Amazon to cut out as many air delivery middlemen as it possibly can. Thus, it cannot be much of a surprise to learn Amazon Starting its Own Air Cargo Operation. Cargo Facts reported today [December 18] that Amazon is building its own cargo operation and is in talks with Boeing to acquire up to 20 767-freighter jets to help deliver packages to customers around the U.S.Amazon Branded Trucks On December 4, Amazon announced Branded Truck Trailers for Inventory Management. for Amazon, the initiative is the latest sign of the e-commerce giant's increasing interest in taking transportation of its merchandise into its own hands.Amazon Planes Amazon Trucks Amazon Drones Mike "Mish" Shedlock |
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