Monday, November 1, 2010
RE GLOBALIZATION TRAP: DEFICIT SPENDING TARIFFS DEBT
Some pundits now talk about an Economics Trap, or Liquidity Trap, or other kinds of terms for the same thing.
Economics certainly has been a 'trap' for the unwary.
I would call the current situation a 'Globalization Trap', for a few choice reasons:
1. When you are in a globalization trap, increased government spending tends to find eager foreign sellers (alleged bad fit between labor market and jobs, even new government ones).
Not so many domestic producers hoping to participate.
2. Tariffs don't work so well because of lack of preponderant domestic production, for similar reasons. Why put up high barriers to protect something you no longer have, an industrial base?
3. Increasing government spending means government borrowing from the very lenders whose trade is fed on globalist regimes like ours.
4. Can't raise interest rates, because that ultimately raises cost of borrowing and growth even more.
5. QE or QE2: 'everybody's doing it. So this will be no solution, in a globalized fiat currency world.
Thus, a GLOBALIZATION TRAP.
CONTRARY TO OTHER KINDS OF 'TRAPS', YOU CAN'T 'ECONOMICS' YOUR WAY OUT IT.
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