The Eurozone countries are no longer able to give up the monetary union.
Even though the cost of continuing the monetary union is high, the loss of benefit when they dissolve the monetary union is very high.
As one of this blog entries [Sunday, September 04, 2011: Empirical evidence prooving Liquidity-trap: Lower interest rate does not stimulate economy ] demonstrated, all Eurozone member countries, except for Ireland, share a strongly harmonised business cycle. The dependency of these Eurozone countries (excluding Ireland) on the inter member state is extremely high.
Furthermore, when these countries abolish using the Euro, the value of their national debt will be almost worthless. Majority of Eurozone nations, especially the Mediterranean ones and the newly entered Eastern European countries, were benenefitted from their national debt value based on the value of Euro. These national debt is valued not only on the credit of these countries itself but also the credit rate of the entire Eurozone economy. Therefore, leaving or dissolving the Eurozone will decrease the value of their national debt, so these countries will suffer in their public finance. This means that these countries eventually have to go back to the old system relying on the excess money supply which induces a high inflation in their countries. (* Read "2. The problem caused by the monetary policy transformation" in [Saturday, July 23, 2011: The European Monetary Union is inevitable, but has to be fundamentally revised ])
Even Germany will be indifferent between restoring German national currency and keeping the Euro. German GDP relies on the export and German industries expanding their business in the EU member states with a low cost of labour, corporation tax, land, and utilities. In addition, German tourists visiting European (Tourism is an import from foreign countries to home countries: The monetary transaction of Germans touring foreign countries is German import from abroad). Therefore, the cost of German economy of leaving/relinquishing Euro is equally significantly high as same as keeping and assisting the European Monetary Union (EMU) by German effort. Germany may do well even she leaves/dissolves the EMU. But, the loss of the benefit Germany is gaining from the EMU is certain, and the cost of leaving/relinqushing Euro is uncertain.
All in all, even though the cost of keeping the EMU is high, the balance of the both cost and benefit all these Eurozone countries have is certain. The benefit will be certainly lowered by dissolving the EMU for both Germany and the rest of the member nations. Thus, the certainty of keeping and improving the EMU is certain at least, therefore the optimum solution for the European economy despite the high cost of reforming and maintaining the EMU.
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2. Mr. Cameron's failure in the Game Theory
On the other hand, the UK and Ireland will suffer from participating thsi scheme due to their independent (dis-harmonised) business cycle with the continental Europe. However, I would like to blame Mr. Cameron's unwise way to excuse to avoid participating with the European fiscal integration. The diplomacy is a serious mind game. As I have studied the "Game theory", I understand the importance of reading the mind of opponents, and not being too honest.
This considers both prisoners do not trust each other fully and there is no communication taken place between them.
Even though both can gain the best outcome (if they still think of each other as friend) by cooperating together by insisting both of them are not guilty, they are more likely to incooperate with each other. The most likely outcome will be that both prisoners will be guilty. This is because you can obtain the better outcome only for "yourself" by betraying your partner. You also may think that your partner is also about to betray you to gain the better outcome than helping you. Therefore, both you confess your partner is guilty and your partner confesses you are guilty.
However, if both of prisoners trusted each other and cooperated together to support each other, then both of them would not confess their partner is guilty.
Ms. Markel's feeling must feel like Henry (the guy in this picture) betrayed by Dave (Wow, same name as Mr. Cameron's first name accidently lol). In the conference, Ms. Merkel said that the best outcome would be that all the EU nations including both the Eurozone and the non-Eurozone cooperate together. However, it fell into the "second" best outcome in which not all but many EU nations agree to participate. From now, not only Germany but also the other EU nations start regarding the UK as an incooperating member in the Game Theory. All cooperating EU nations will act like the prisoners trusting in the previously shown matrix. By contrast, between the UK and the Europe will be the prisoners not trusting each other in the matrix.
When one player, whose chose has a high influence, chooses an incooperative answer, it will be a threat on the opponents. Now, the EU has started to see the UK to be an incooperative opponent (The free rider) so that the EU's treatment on the UK will become harsh from now.
If Mr. Cameron wanted to keep a distance from this treaty on the fiscal unification, he should have pretended he would still cooperate with them but inducing the consequence for the UK not to sacrifice her national interest a lot..... The U.K. obviously wants to avoid being too much involved in the fiscal unification. It burdens a cost on the UK because the UK is a relatively richer country so the EU expects Britain to participate or even sacrifice herself to help the EU. However, it is an extremely tough task for the U.K. to declare keeping distance from the EU fiscal unification plan. The U.K. has signed up the trade agreement with the EU since the U.K. joined the EU so that the U.K. has a responsibility for the entire European economy. Therefore, the U.K. has to be very wise to keep the distance by preventing the situation that the EU realises the U.K. is incooperative. I do not have any particular advice for Mr. Cameron. But he should have not been too honest to show the U.K. keeps an incooperative attitude on the current EU fiscal unification. We should have learned from what Machiavelli taught in his book "Prince" to act wisely in a foreign diplomatic game...!
Saturday, December 17, 2011
Sunday, December 11, 2011
Discussion on European Integration
The European integration has failed* due to the compromise of economic rationale (Maastrict treaty on economic policies), and Kantasian = deontologist passion blinding both Europhiles from the currently shown reality which we can immediately observe....!
* Okey, I meant the "current administration" of European integration failed so that it requires the "new" administration. They still postpone the final weapon to tackle with the Euro crisis, which is the fiscal integration by establishing a common fiscal policy ordered by the EU federal government. But, they certainly "must revise Maastrict treaty " (I bold this word), fundamentally restructure of both labour market (by reducing barriers to enter any national labour market) and capital market (unifying the financial market regulation) to make them more flexible, and reduce the power of national governments (e.g. abolishing the right of incurring national debts, and irrational ego unstabilising the integration process).
But, they still postpone the final weapon to tackle with the Euro crisis, which is the fiscal integration by establishing a common fiscal policy ordered by the EU federal government. I don't think they are going to give up their economic integration so easily. I can see a sort of Kantasian = deontologist passion: They don't see the fact = reality they can obviously see: They merely focus on the anticipated outcome based on their fundamental principle rather than the reality they can see at the immediate moment. Therefore, for both Europhiles, the cost burdened on the European integration doesn't matter for them to quit striving to acquire their anticipated outcome.....
Judging from my point of view which is based on the "reality", "sum of utility", "freedom of choice (individual liberty)", and "economic rationale", the European integration has failed due to the compromise of economic rationale (Maastrict treaty on economic policies), and over-idealised analyses and expectations of European integration based on their fundamental deontologism which blinds them from the currently shown reality which we can immediately observe....!
I am not an enthusiastic supporter of the European Federalism: I would support only if they want to keep the common monetary policy. Actually, compared to North America and Asia, European population mobility rate is still low, which is a disadvantage of not having a strong federal gov't intervention into the business cycle of each member country. However, Europe has more frequent trade tie (GDP share of inter-country/state trade) between the member countries (states) than the USA. This fact lead the European monetary integration inevitable. The US monetary integration works better than European because they naturally had a common interest to make one strong unified nation without the conflict of interests like what we see in Europe. Even though the US citizens are very diverse (sharing each own different identity), they naturally have a very strong fundamental principle as a US citizen which works as "a priori" of their identity as the US citizen. Even though the US citizens are proud of their diversity and keep their own background identity from the motherland where they or their ancestors are from, almost all of them share their pride as the "US citizen". There is one remarkable political leader, who came into the power in a half century ago, said that the stable process of European integration requires one super-national federal authority which conducts them structurally and provides the "a priori" of their identity. His analysis was, and still is, underestimated, but the current situation proves his analysis was not false.
I agree with you having said that there is a risk of the federalism encouraging some member countries to become like Detroid and some minority states in the USA. The current US fiscal and monetary structure is based on Hamiltonian political model. Hamiltonianism advocates in the meritocratic/technocratic bureaucratic centralised structure which puts priority on socioeconomic stability. Thus, this Hamiltonian system merely focuses on the interest of the USA as a whole so that sacrifices the minority states' interest for the US federal interest. This induced that change in the industrial structure caused the highly volatile business cycle of some cities like Detroid. This is one aspect reminding why there are still substantially many people advocating "The South Rise Again". I am not particularly fond of Hamiltonianism at all. However, I noticed that Hamiltonian was once required when the USA needed to be unified when her people's interest became same to protect themselves under one umbrella of the federal principle guideline. Actually, at the time when the USA shifted to the more centralised federalism at the contemporary period, many uninfluential states were willing to support the federalism and be under the influence of the federal interaction due to the benefit from joining the unified social and economic tie with the other states and the federal authority, and the security required to protect from foreign nations. Nonetheless, nowadays, the USA should be more decentralised and many states started to want to be more detached from the federal intervention. This is that the different needs in different time, place, and occasion. Actually, the Mediterranean countries and Eastern European countries were "willing to" join the European political and economic integration more than Germany wanted them. These nations have already had a strong co-integrated business cycle with the main player of European economy so that it was inevitable they required the common currency to smooth the trade between these nations. The Mediterranean countries' GDP is very reliant on the key players in European economy (Germany, France, and Benelux countries). Italian economic and financial centre, Lombardia, is related to the West and Central Europe with a same or higher degree of the tie with the rest of Italy. Spain and Greece depend on exporting their tourism to these key European economic players. Eastern European nations still suffer from the asset of the USSR administration so that they are clinging to the father ship kinda protection from the EU to wipe out the suffrage from the USSR influence. These factors seem to be a resemblance of the USA transit to Hamiltonian nation state. If the centralisation like the US Hamiltonianism is required and answers to the great sum of utility, it should be adapted to temporary. I don't hope the strong federal reform continues in too long term. But, it looks like a temporary centralisation seems to be required as an emergent surgery for Europe....
Sunday, December 04, 2011
Global Wealth Tax is Inevitable to Sustain Capitalism
This is a new policy which should be "inevitably" introduced to this globalised economy. As the economic activities of individual economic agents have become so globalised that richer individuals transact their income and wealth across national borders frequently. Therefore, taxing rich has become more complicated and the income tax organised by one nation is not able to tax on richs' income efficiently. If individuals have freedom to move their wealth across the border, the nationally based tax system is not longer able to tax on their income efficiently and even fairly.
Furthermore, managements of the public goods (natural resources, environment, and very externally contingent industries such as nuclear technology and air traffic) have become globalied as well. It seems to be more necessary to manage these public goods usage and distribution in a globalised scale than national scale than the past as the economic activities are globalised more than the past. Therefore, there needs a public fonding resource based on a global scale i.e. Tax by a global institution to spend for global public goods.
Some monetarist zealots may claim that this is a socialist system which disturbs an equity of rich individuals. Nonetheless, if they blame this introduction of the new policy as a socialist idea, we also should abolish the progressive income tax based on national and regional scale. If they supported the complete abolition of tax system, government, public sectors, corporations, and nation states, I would agree with them. However, as long as they still stick to keeping these institutions in our community, the claim against the global wealth tax is not convincing.
I believe the progressive income tax is a necessary evil. As the world now still requires us to tax system, government, public sectors, corporations, and nation states to maintain a healthy usage of public goods, we inevitably need the progressive tax at the "minimum but optimum" level in order to be able to manage the public goods well. The income tax is the unfair tax, but the most efficient tax to take it by means of marginal propensity of saving. It is a macro economic issue. The richer individuals tend to split their disposable income into saving which does not goes into the economic stimulus. By contrast, the poorer tend not to be able to split their disposable income into saving. So, the higher income tax on richer is less likely to reduce their income expenditure into economy and reduce their utility by taxing on their income. So they are more likely to maximise their utility at the given disposable income level after the newly increased income tax. On the other hand, the higher income tax on poor reduces their income expenditure into economy and reduce their utility because their disposable income is reduced from the level maximing their utility.
As a matter of fact, the introduction of the Global Wealth Tax may reduce the bureaucracy rather than keeing the income tax collection based on national and regional level. It would be easier to tax some rich individuals transacting their wealth across the national borders than national governments cover the cost of scrutnise how these rich individual keep their wealth. This new tax also keeps the cost for rich individuals to move across countries by means of the different tax systems and the credit rating in each different countries. It will be possible if the introduction of the Global Income Tax system enables them to exempt from national income tax and maybe regional income tax as well. The middle and the lower income individuals will be taxed nationally and regionally, but the high income individuals should be taxed globally and exempted from paying national and regional income tax, or exempted just from national income tax and still paying regional income tax. The global economic institution should then distribute the Global Wealth Tax revenue to both the expenditure for global public goods and the government expenditure for national government and regional local authorities.
J.M. Keynes was actually the savor of capitalism because he said that, as capitalism grows, the wider scale of intervention becomes inevitable like establishing the IMF in 1944, and establishing the EMU in 1990s and 2000s (and possibly the European federal government). This is a next step of what J.M. Keynes described about an evolution of the global economy. I definitely think this global tax on rish is rather a capitalist idea. The reason why is that in order to make a process more efficient, fair, and effective, the progressive tax system has to be revised and evolved in order to sustain capitalism.
If we support capitalism going on, we inevitably need to support introduction of some globalised public economic system. Otherwise, the negligence of introducing a new global based policy causes instability of economies in this globe, causes economic catorophe, and then rising socialism. In order to stop socialism rising, we must adapt the inevitable global public policy and the institution controlling over it. Capitalism is only one most liberal alternative economic system which distributes the highest sum of utility as much as possible. Socialism and Cultural-Conservativism, the counter-part of Capitalism = Liberalism, are the opposite: retarding, supressing the sum of utility, and idealised system ignoring the natural geometry of market mechanism which inevitably exists in our living world. Hence, the monetalists' and bandit libertarians' objection against the new global capitalist order may help socialism and cultural-conservativism coming into the power. Capitalism inevitably evolves, and we must adapt into the new order following this evolution process as Prof. J.M. Keynes taught us...!
Furthermore, managements of the public goods (natural resources, environment, and very externally contingent industries such as nuclear technology and air traffic) have become globalied as well. It seems to be more necessary to manage these public goods usage and distribution in a globalised scale than national scale than the past as the economic activities are globalised more than the past. Therefore, there needs a public fonding resource based on a global scale i.e. Tax by a global institution to spend for global public goods.
Some monetarist zealots may claim that this is a socialist system which disturbs an equity of rich individuals. Nonetheless, if they blame this introduction of the new policy as a socialist idea, we also should abolish the progressive income tax based on national and regional scale. If they supported the complete abolition of tax system, government, public sectors, corporations, and nation states, I would agree with them. However, as long as they still stick to keeping these institutions in our community, the claim against the global wealth tax is not convincing.
I believe the progressive income tax is a necessary evil. As the world now still requires us to tax system, government, public sectors, corporations, and nation states to maintain a healthy usage of public goods, we inevitably need the progressive tax at the "minimum but optimum" level in order to be able to manage the public goods well. The income tax is the unfair tax, but the most efficient tax to take it by means of marginal propensity of saving. It is a macro economic issue. The richer individuals tend to split their disposable income into saving which does not goes into the economic stimulus. By contrast, the poorer tend not to be able to split their disposable income into saving. So, the higher income tax on richer is less likely to reduce their income expenditure into economy and reduce their utility by taxing on their income. So they are more likely to maximise their utility at the given disposable income level after the newly increased income tax. On the other hand, the higher income tax on poor reduces their income expenditure into economy and reduce their utility because their disposable income is reduced from the level maximing their utility.
As a matter of fact, the introduction of the Global Wealth Tax may reduce the bureaucracy rather than keeing the income tax collection based on national and regional level. It would be easier to tax some rich individuals transacting their wealth across the national borders than national governments cover the cost of scrutnise how these rich individual keep their wealth. This new tax also keeps the cost for rich individuals to move across countries by means of the different tax systems and the credit rating in each different countries. It will be possible if the introduction of the Global Income Tax system enables them to exempt from national income tax and maybe regional income tax as well. The middle and the lower income individuals will be taxed nationally and regionally, but the high income individuals should be taxed globally and exempted from paying national and regional income tax, or exempted just from national income tax and still paying regional income tax. The global economic institution should then distribute the Global Wealth Tax revenue to both the expenditure for global public goods and the government expenditure for national government and regional local authorities.
J.M. Keynes was actually the savor of capitalism because he said that, as capitalism grows, the wider scale of intervention becomes inevitable like establishing the IMF in 1944, and establishing the EMU in 1990s and 2000s (and possibly the European federal government). This is a next step of what J.M. Keynes described about an evolution of the global economy. I definitely think this global tax on rish is rather a capitalist idea. The reason why is that in order to make a process more efficient, fair, and effective, the progressive tax system has to be revised and evolved in order to sustain capitalism.
If we support capitalism going on, we inevitably need to support introduction of some globalised public economic system. Otherwise, the negligence of introducing a new global based policy causes instability of economies in this globe, causes economic catorophe, and then rising socialism. In order to stop socialism rising, we must adapt the inevitable global public policy and the institution controlling over it. Capitalism is only one most liberal alternative economic system which distributes the highest sum of utility as much as possible. Socialism and Cultural-Conservativism, the counter-part of Capitalism = Liberalism, are the opposite: retarding, supressing the sum of utility, and idealised system ignoring the natural geometry of market mechanism which inevitably exists in our living world. Hence, the monetalists' and bandit libertarians' objection against the new global capitalist order may help socialism and cultural-conservativism coming into the power. Capitalism inevitably evolves, and we must adapt into the new order following this evolution process as Prof. J.M. Keynes taught us...!
Thursday, December 01, 2011
Fed's Monetalism will fail: It cannot save the world economy
.... This is "Nothing but a drop in the bucket"! I really detest the fact that there is still a fundamentalist intiutive ideology of monetalist theory dominating this world economy....! We've got to learn what J.M. Keynes mentioned about the "liquidty-trap"!
Speaking of European mal-functioning economy, the fundamental reason why Euro failed was the compromised role of fiscal policy and financial market regulation. Therefore, the further liquidity into the current European economy will not be effective enough, and only leaves negative changes more than positive changes.
I am sure that these money injected without any fundamental reconstruction of the fiscal structure will just flow into the "saving" rather than averting a further recession or even a depression!
Futhermore, this injection of US$ will definitely cause the further depreciation of the long run US bonds!
The hypowered money theory offered by the monetalist theory does not work because the velocity of money flow is already very low! Extra supply of the hypowered money does not induce a high velocity of money; it is an opposite! The hypowered money only works in the situation that the velocity is already high! The velocity of money is exogenous; not endogenous like what the monetalists say!
As I am now reading a wonderful book written by Prof. Stiglitz about the paradigm of monetary transactions, I know the monetary policy by central banks' role is too weak to influence/control over the monetary transactions in the market. The interest rate, reserve requirement, and money supply are less likely to direct the flow of the monetary transactions. The monetarist theory completely ignores the different characteristics of individuals and financial institutions; they only assume all of us are risk neutral, there is no risk of bankruptcy taken for account, and influences from the information about credit rating!
Monetarists believe that the interest rate and the volume of lending activities are determined merely by the supply of money available. However, in the real world, private banks and financial instutitions are more likely to set their interest rate and control their volume of lending activities by means of the risk premium of borrowers (consisitency and volatility of change in their profit rate, risk of bankruptcy, risk of assymetric information about borrowers, credit rating of borrowers, etc). This fact infers that the traditional macroeconomic policy via the monetary policy seldomly works to control the macroeconomic environment. The characteristics of each individual economic agent is the key issue to analyse the money lending activity.
Majority of these lenders, assisted by the central banks, have already become risk averse so that they are less likely to increase the volume of their lending activity. But, even though, they keep themselves as either risk neutral (acting as what Monetarists assume) or risk lover (becoming more active to invest in a tough economic climate), and then they lend high volume of funds, the risk of bankruptcy still remains same unless the structural change in the real market takes place. They may probaly invest more funds even though these targets of their investment become riskier. However, they will either charge the high interest to cover the unseen risk of these borrowers or charge a moderate interest rate and burdern a high risk of the bankruptcy of themselves. Either case scenario is tough because it is either increasing the cost for borrowers (and eventually induces borrower's bankruptcy, and then loss or even bankruptcy of lenders) or increasing the risk of bankruptcy of both lenders and borrowers. The market becomes more voluatile when the economic sitations becomes worse, the balance sheet of both lenders and borrowers becomes very inconsistent i.e. their profit/loss is unpredictable. In this case, even though the volume of money transaction is stimulated by the central banks' monetary policy, it will end up with the high interest rate (for the security of lenders) or gambling of lenders (welcoming risk of investing with a moderate interest rate to risker borrowers).
All in all, even though the central banks' action offers the sizably low interest rate and/or the high volume of quantitative easining, private banks and any other financial institutions may increase their own interest rate due to the high risk of bankruptcy involved in this investment under this current economic climate. Borrowers still suffer from unchanged or even increased interest rate. The exective members of banks and financial institutions gain benefit from securing the existence of their work place due to the central banks' assistance to their corporate finance by the quantitative easing. Those who can spread their aggregate income to their saving will be benefited, but this kind of individuals tend to be minority under such a tough economic climate. Thus, this action is irrelevant to encouraging the high volume of money lending.
* If you would like to know why and how the structural change of EU economy is emerged, please read "Friday, June 03, 2011
Europe in crisis...! (Click here to read!)"
I often wonder why these big guys in these superior positions have never learnt from history although they are supposed to be educated? When we learn from the history, only relying on the monetary policy channel does not work under the deflationary pressue i.e. the recession period = socio-economic stagnation. The perpetuation of it always caused rise in the oppressive political groups such as Natiz and Japanese National Shintoists.
Only the remarkable legendary economist claimed the danger of deflation is J.M. Keynes. Unfortunately, majority of economists in the history tend to underestimate the impacts of deflation. It is because the deflation is a unique phenomenon which can be only seen in the nations and the globe whose capitalism is developed and spread out. So, many classical economists had not seen deflation during they were alive. The first experience of the recession (and then deflation) simultaneously taking place in the entire globe could be the depression from 1920s to 1930s. J.M. Keynes was the first and probably the last economist who warned the danger of deflation.... When we forget about what Prof. Keynes warned, this world will inevitably be drawn into the "depression"...!
Speaking of European mal-functioning economy, the fundamental reason why Euro failed was the compromised role of fiscal policy and financial market regulation. Therefore, the further liquidity into the current European economy will not be effective enough, and only leaves negative changes more than positive changes.
I am sure that these money injected without any fundamental reconstruction of the fiscal structure will just flow into the "saving" rather than averting a further recession or even a depression!
Futhermore, this injection of US$ will definitely cause the further depreciation of the long run US bonds!
The hypowered money theory offered by the monetalist theory does not work because the velocity of money flow is already very low! Extra supply of the hypowered money does not induce a high velocity of money; it is an opposite! The hypowered money only works in the situation that the velocity is already high! The velocity of money is exogenous; not endogenous like what the monetalists say!
As I am now reading a wonderful book written by Prof. Stiglitz about the paradigm of monetary transactions, I know the monetary policy by central banks' role is too weak to influence/control over the monetary transactions in the market. The interest rate, reserve requirement, and money supply are less likely to direct the flow of the monetary transactions. The monetarist theory completely ignores the different characteristics of individuals and financial institutions; they only assume all of us are risk neutral, there is no risk of bankruptcy taken for account, and influences from the information about credit rating!
Monetarists believe that the interest rate and the volume of lending activities are determined merely by the supply of money available. However, in the real world, private banks and financial instutitions are more likely to set their interest rate and control their volume of lending activities by means of the risk premium of borrowers (consisitency and volatility of change in their profit rate, risk of bankruptcy, risk of assymetric information about borrowers, credit rating of borrowers, etc). This fact infers that the traditional macroeconomic policy via the monetary policy seldomly works to control the macroeconomic environment. The characteristics of each individual economic agent is the key issue to analyse the money lending activity.
Majority of these lenders, assisted by the central banks, have already become risk averse so that they are less likely to increase the volume of their lending activity. But, even though, they keep themselves as either risk neutral (acting as what Monetarists assume) or risk lover (becoming more active to invest in a tough economic climate), and then they lend high volume of funds, the risk of bankruptcy still remains same unless the structural change in the real market takes place. They may probaly invest more funds even though these targets of their investment become riskier. However, they will either charge the high interest to cover the unseen risk of these borrowers or charge a moderate interest rate and burdern a high risk of the bankruptcy of themselves. Either case scenario is tough because it is either increasing the cost for borrowers (and eventually induces borrower's bankruptcy, and then loss or even bankruptcy of lenders) or increasing the risk of bankruptcy of both lenders and borrowers. The market becomes more voluatile when the economic sitations becomes worse, the balance sheet of both lenders and borrowers becomes very inconsistent i.e. their profit/loss is unpredictable. In this case, even though the volume of money transaction is stimulated by the central banks' monetary policy, it will end up with the high interest rate (for the security of lenders) or gambling of lenders (welcoming risk of investing with a moderate interest rate to risker borrowers).
All in all, even though the central banks' action offers the sizably low interest rate and/or the high volume of quantitative easining, private banks and any other financial institutions may increase their own interest rate due to the high risk of bankruptcy involved in this investment under this current economic climate. Borrowers still suffer from unchanged or even increased interest rate. The exective members of banks and financial institutions gain benefit from securing the existence of their work place due to the central banks' assistance to their corporate finance by the quantitative easing. Those who can spread their aggregate income to their saving will be benefited, but this kind of individuals tend to be minority under such a tough economic climate. Thus, this action is irrelevant to encouraging the high volume of money lending.
* If you would like to know why and how the structural change of EU economy is emerged, please read "Friday, June 03, 2011
Europe in crisis...! (Click here to read!)"
I often wonder why these big guys in these superior positions have never learnt from history although they are supposed to be educated? When we learn from the history, only relying on the monetary policy channel does not work under the deflationary pressue i.e. the recession period = socio-economic stagnation. The perpetuation of it always caused rise in the oppressive political groups such as Natiz and Japanese National Shintoists.
Only the remarkable legendary economist claimed the danger of deflation is J.M. Keynes. Unfortunately, majority of economists in the history tend to underestimate the impacts of deflation. It is because the deflation is a unique phenomenon which can be only seen in the nations and the globe whose capitalism is developed and spread out. So, many classical economists had not seen deflation during they were alive. The first experience of the recession (and then deflation) simultaneously taking place in the entire globe could be the depression from 1920s to 1930s. J.M. Keynes was the first and probably the last economist who warned the danger of deflation.... When we forget about what Prof. Keynes warned, this world will inevitably be drawn into the "depression"...!
On Striking Action by Trade Unions: Unconfortable Proletariat Culture...
All those went for strike should not be paid! Although I don't say the union bargaining power should be zero, I despise trade unions' influences on economy and their style of living....! Oppresive trade union is one of the notorious obstacle in both macro-economic environment! If I were one of these workers, I would rather choose to go to work at the work place or quit working to go to another place rather than joining this collective bargaining with the comrade proletariats! Although I am not particularly a bourgeoigie, I detest scrumming with these proletariats.... :( I'd rather be a private individual than a tiny member of these proletariats calling themselves "loving comrades" in this uncomfortable collective action :(
If there is not an unnecessary strong proletariats' wage bargaining power, it does not need to have a wealth re-distribution through an intensive fiscal policy which is conducted by a big government. If this excess resistance by proletariats is diminished, we just only need the spontaneous mechanism of free market plus only a little fiscal policy intervention to correct the business cycle movement :)
... It is definitely the time to de-regulate the labour market! We should adapt a further more flexible labour market! Also, they should set a common unified financial regulation of transactions in the financial market in the enture global economy in order to encourage the efficient and stable flow of capital inside the globe! Reduce all the national trade unions in to establish a flexible flow of labourers and capital in the entire globe!
Monday, November 21, 2011
The moment to know soul and spiril certainly exist in humans...
Today, I found and realised that something like soul and spirit exist certainly in this terrestrial world .... It's found in an immediate moment when a person encounters another randomly in an odd place in a transient time zone... Body, face, voice, and action in an immediate moment inspires us like static electric goes through out body.... The action taken by the person was not special, but something like a special spiritual contact certainly took place. It took place in an unusual place. I felt a unique shock when I entered into the space where is isolated from a repetitive daily life. It was like going into a hidden place in a darkening shift from day to night where the unknown mystery is hiding in...
When there is an opportunity to communicate with people from different civilisations, ethnicity, and religions (or ideologies), it makes more possible to feel and understand the quality of soul human-beings are endowed with. Then, it makes also possible to observe the soul of others from our own native background. This experience may lead us to either gain a confidence or become disappoint in people and civilisation of our own. The true strength of human-beings may come from such a quality of soul: The guarantee of obtaining the true happiness and the long term survival of this person and his/her family shall depend on the quality of soul regardless of their physical strength, material wealth, intelligence and knowledge, authority, recorded historical backgrounds, and pleasure coming from subordinance...
The strong soul with a good quality will make a strong sense of feeling a spirit revealing out from each human-being. The characteristic of these spirits can be either weak or distinctive. Human-beings with a weak spirit are those who are made to live rather than live themselves: They live as though they are died. The distinctive ones are either cursed or vital. Cursed spirits harm others by encountering them. The human-beings with a cursed spirit harm us even though they protect us with a physical strength, distribute us an abundant material wealth, provide various kinds of knowledge with their intelligence, hold a strong authority over us, record a long history of survival, and subordinate us to please us. By contrast, the human-beings with a vital spirit lead us to a miracle. The human-beings with a vital spirit impress us even though they are deprived of physical strength, material wealth, intelligence and knowledge, authority, and prideful history, and ability to subordinate.
As Greco-Roman philosophers argued, a priori of human-beings' quality is their soul forming their spirit. We cannot change the quality of our soul within a short time period. The quality of soul is built in our innate nature such as our environment surrounding us, family, culture and civilisation we are from, and the luckiness to have an opportunity to encounter with those who improve our soul. Those without spirit are gradually ceasing away; those with a cursed spirit are rotten in their life and/or starve until they die; and those with a vital spirit thrive with hope even in poverty, deprivation, oppression, and fear...!
When there is an opportunity to communicate with people from different civilisations, ethnicity, and religions (or ideologies), it makes more possible to feel and understand the quality of soul human-beings are endowed with. Then, it makes also possible to observe the soul of others from our own native background. This experience may lead us to either gain a confidence or become disappoint in people and civilisation of our own. The true strength of human-beings may come from such a quality of soul: The guarantee of obtaining the true happiness and the long term survival of this person and his/her family shall depend on the quality of soul regardless of their physical strength, material wealth, intelligence and knowledge, authority, recorded historical backgrounds, and pleasure coming from subordinance...
The strong soul with a good quality will make a strong sense of feeling a spirit revealing out from each human-being. The characteristic of these spirits can be either weak or distinctive. Human-beings with a weak spirit are those who are made to live rather than live themselves: They live as though they are died. The distinctive ones are either cursed or vital. Cursed spirits harm others by encountering them. The human-beings with a cursed spirit harm us even though they protect us with a physical strength, distribute us an abundant material wealth, provide various kinds of knowledge with their intelligence, hold a strong authority over us, record a long history of survival, and subordinate us to please us. By contrast, the human-beings with a vital spirit lead us to a miracle. The human-beings with a vital spirit impress us even though they are deprived of physical strength, material wealth, intelligence and knowledge, authority, and prideful history, and ability to subordinate.
As Greco-Roman philosophers argued, a priori of human-beings' quality is their soul forming their spirit. We cannot change the quality of our soul within a short time period. The quality of soul is built in our innate nature such as our environment surrounding us, family, culture and civilisation we are from, and the luckiness to have an opportunity to encounter with those who improve our soul. Those without spirit are gradually ceasing away; those with a cursed spirit are rotten in their life and/or starve until they die; and those with a vital spirit thrive with hope even in poverty, deprivation, oppression, and fear...!
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