Nouriel Roubini: 'There Is a Global Deflationary Risk'

[kotpet]

more stupid is that all other gvs in the world incl. russians a buying t-bills! this is mad! buy alcohol and guns revolutiion is near!

[truthadvocate]

Deflation a problem? I think thats hilarious. The US dollar has lost 96% of it's value since we've had a fed. What happens when it's value hits zero? Deflation is the natural counterbalance to inflation. If you keep pumping up a balloon it's going to burst unless you let air flow out. I'm sick of this interventionist mentality. The natural exchange of goods & services in a truly free society is a thousand times more stable than any government regulated economy.

[freedomthrough]

@truthadvocate Deflation is a problem, because deflation causes recession and thus waste by unemployment of resources. Humans aren't stable, thus the market can never be stable or naturally "equilibrate". Mass mentalities have a huge impact on what happens on the market.

I don't agree with some parts of this, though. The "recapitalisation of the banks"-part is not really necessary. A bottom-up tax holiday would do much to allow households to reach their preferred level of debt.

[mongobobo]

I believe the Fed is already buying Treasuries. This is not only enormously stupid but would be considered fraud in the business world. I don't think we'll have deflation much longer as the world sees how corrupt and stupid our fed and treasury are behaving. Unless of course the world wants to destroy their own quality of life in order to keep ours up.

[freedomthrough]

@mongobobo Well, essentially, since you have already had a current account deficit for ages, that's what's been going on. I don't see anything inherently wrong with it, though. Also, while you have a current account deficit and your private sector wants to net save (deflate debt), the government has to run deficits to allow it to do so.

[valhala56]

It could be worse, the earth could be hit by a large asteroid. Look on the bright side. :)