{"id":19266,"date":"2016-03-28T14:38:32","date_gmt":"2016-03-28T19:38:32","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19266"},"modified":"2016-03-28T14:38:32","modified_gmt":"2016-03-28T19:38:32","slug":"all-is-not-well","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19266","title":{"rendered":"All is Not Well"},"content":{"rendered":"

All is Not Well<\/a><\/h3>\n
The 1987 stock market crash raised concerns for the dangers associated with mounting U.S. \u201ctwin deficits.\u201d Fiscal and trade deficits were reflective of poor economic management. Credit excesses \u2013 certainly including excessive government borrowings \u2013 were stimulating demand that was reflected in expanding U.S. trade and Current Account Deficits. Concerns dissipated with the revival of the bull market. These days we\u2019re confronting the consequences of 30-plus years of mismanagement.<\/p>\n

Japan was the early major recipient of U.S. Bubble excess (throughout the eighties). The world today would be a much different place if the policy onus had fallen upon the Fed and congress to rein in U.S. borrowing excesses. Instead, enormous pressure was placed on Japan (and, later, others) to ameliorate trade surpluses with the U.S. by stimulating domestic demand. Such stimulus measures were instrumental in (repeatedly) stoking already powerful Bubbles to precarious extremes.<\/p>\n

Fiscal and Current Account Deficits exploded in the early-nineties post-Bubble period. And as the nineties reflation gathered momentum, the boom in Wall Street and GSE finance pushed the Current Account to previously unimaginable extremes. Then, as the decade progressed, the associated global boom in dollar-based finance proved ever more destabilizing. Always ignoring root causes, each new crisis provided an excuse to further stimulate\/inflate.<\/p>\n

The fundamentally unsound dollar proved pivotal for European monetary integration, as the strong euro currency coupled with global liquidity abundance ensured runaway Bubble excesses throughout Europe\u2019s periphery. If the U.S. could run perpetual Current Account Deficits, why not Greece, Italy, Spain and Portugal? Having ignored problematic financial and economic imbalances for years, when European troubles erupted everyone turned immediately to pressure the big surplus economy (Germany) to further stimulate their Bubble economy.<\/p>\n

Economists traditionally viewed persistent Current Account Deficits as problematic. But as New Paradigm and New Era thinking took hold throughout the nineties, all types of justification and rationalization turned conventional analysis on its head.<\/p><\/div>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

All is Not Well The 1987 stock market crash raised concerns for the dangers associated with mounting U.S. \u201ctwin deficits.\u201d Fiscal and trade deficits were reflective of poor economic management. Credit excesses \u2013 certainly including excessive government borrowings \u2013 were stimulating demand that was reflected in expanding U.S. trade and Current Account Deficits. Concerns dissipated […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[13166,1806,111,175,7756,13167,426,1234,2731,805,806,827,860],"class_list":["post-19266","post","type-post","status-publish","format-standard","hentry","category-economics","tag-13166","tag-bubble","tag-capitalism","tag-credit","tag-credit-bubble-bulletin","tag-fiscal-deficit","tag-inflation","tag-stimulus","tag-stock-market-crash","tag-trade","tag-trade-deficit","tag-united-states","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19266"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19266\/revisions"}],"predecessor-version":[{"id":19267,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19266\/revisions\/19267"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}