If it still has merit, maybe it should be REprinted.
D.
On 11/09/2012 7:58 AM, de Bivort Lawrence wrote:
Agreed. It is unfortunate that John's book is no longer available.
Cheers,
Lawry
On Sep 11, 2012, at 10:41 AM, Ray Harrell wrote:
Things are not automatic. You have to want things to get better.
When there is a political agenda that reacts in opposition, nothing
works. Markets aren't natural institutions. They are formed by
arbitrary decisions based on many things. They are mega systems.
One problem is incompetence but another is recalcitrance and class
war. John Warfield's "A Science of Generic Design" is a masterful
exploration of mega systems and how they work. They only people who
seriously study him is the Department of Defense and the Chinese
Government. He's like Deming with the Japanese.
REH
*From:*[email protected]
<mailto:[email protected]>
[mailto:[email protected]] *On Behalf Of *Arthur
Cordell
*Sent:* Tuesday, September 11, 2012 10:13 AM
*To:* [email protected]
<mailto:[email protected]>; 'RE-DESIGNING WORK, INCOME
DISTRIBUTION, EDUCATION'
*Subject:* [Futurework] Central bank money machines fail to spur
global economy
Central bank money machines fail to spur global economy
* /by/ John W. Schoen, NBC News
* Sept. 11, 2012
* Read Later
<http://www.readability.com/articles/2dzlncoq?legacy_bookmarklet=1>
Stelios Varias / Reuters rile
By John W. Schoen, NBC News
*Economics 101 says a massive dose of easy money is supposed to be a
reliable cure for a sluggish economy. For the first time in decades,
the prescription isn't working, to the rising frustration of central
bankers in the U.S. and Europe.*
*Four years and more than $2 trillion after the Federal Reserve
opened the money spigots following the financial collapse of 2008,
the U.S. economy remains stuck in the mud
<http://economywatch.nbcnews.com/_news/2012/08/01/13054652-economy-may-be-permanently-stuck-in-slow-growth-mode>.*
Fed Chairman Ben Bernanke, in a widely-watched speech last month in
Jackson Hole, Wyo
<http://www.federalreserve.gov/newsevents/speech/bernanke20120831a.htm>.,
defended the central bank's past decisions to churn out
record-breaking volumes of cash -- a process known as "quantitative
easing" -- saying the policy had prevented a much more painful
recession. Bernanke also left little doubt that more money may be
coming, as early as this week's regular Fed policy meeting.
"It is important to achieve further progress, particularly in the
labor market," Bernanke said. "The Federal Reserve will provide
additional policy accommodation as needed."
Maintaining steady job growth is half of the Fed's so-called "dual
mandate," the other being inflation control. Based on Friday's
monthly jobs report
<http://economywatch.nbcnews.com/_news/2012/09/07/13728411-weak-jobs-growth-beyond-governments-control>,
showing fewer than 100,000 new hires in August, the Fed has a lot
more work to do.
All of which has Wall Street convinced it's a pretty sure bet that
the Fed is about to fire up its money machine once more, forcing cash
into the system by buying hundreds of trillions of dollars' worth of
bonds.
"That employment report kind of nailed it," said Michelle Girard, RBS
senior economist. "The Fed laid out the criteria: we need to see a
sustained and substantial improvement. And that labor report didn't
show it. So the Fed is going to have to make good on their intentions."
But roads paved with good intentions don't always lead to good
places. Though investors have bid up stocks on the theory that
another massive wave of cash has to go somewhere, there's widening
doubt that another money flood will boost growth or create more jobs.
"What central banks everywhere are doing is trying to make sure
people are not focused on the world breaking apart," said Dinakar
Singh, CEO of TPG-Axon Capital. "Ultimately I don't think lower rates
make that much difference anymore. There aren't that many people left
that haven't borrowed money -- companies or people -- but would if
rates were lower. "
On top of another massive money drop, the Fed may extend its stated
promise to keep interest rates ultra-low further into the future.
Some market watchers, and a few Fed policy makers, have expressed
concerns those moves could do more harm than good.
Even as low rates have failed to spur growth, they're penalizing
savers. Insurance and pension funds have been hit hard by record low
returns needed to fund long-term obligations. And, at some point, the
Fed will have to start selling its massive holdings in bonds, forcing
rates higher and producing a drag on growth. Discussions about that
"exit strategy," frequent following the Fed's first round of
bond-buying, have all but disappeared from recent Fed deliberations.
Europe's central bank, meanwhile, is also embarking on its second
round of bond buying to try to head off a deepening recession. But
the ECB's easy money efforts appear to have had even less impact on
the eurozone crisis than its American counterpart.
Central bankers there face a different, and thornier, set of
problems. So far, they've been badly hampered by restrictions on
their mandate preventing them from intervening to help bail out
specific countries in trouble.
They've also been hamstrung by politics, as wealthier northern
nations led by Germany have opposed the kind of big-money stimulus
pioneered by the Fed.
*Further action could be hampered by a German high court ruling
expected this week on the constitutionality of a key bailout fund. No
matter which way the court rules, central bankers in Germany's
Bundesbank -- along with millions of that country's voters -- will
likely oppose further ECB proposals to flood the continent with
money, much of it coming from Germany.*
*"The Bundesbank is now becoming the voice increasingly of
conservative Germany," said Jim O'Neill, chairman of Goldman Sachs
Asset Management. "It's the early stages of heading toward what
ultimately will be some referendum in Germany on a closer euro in
which Germany, as part of its DNA has to support the others."*
ECB intervention to drive down interest rates could worsen the crisis
by protecting free-spending governments from the financial market
punishment needed to enforce tighter budget controls.
"Its massive support may well discourage profligate governments from
meeting their fiscal objectives," said David Rosenberg, chief
economist at Gluskin Shiff. "Italy is already backsliding on this front."
Central bankers in China, trying to revive a slumping economy by
pumping more money into the system, face yet another set of problems
this time around. Following a series of monthly data showing China's
once-hot growth winding down, Beijing last week announced a series of
new infrastructure projects to try to reverse the downturn.
But the measures are much more limited than the massive stimulus
undertaken following the 2008 collapse. That spending spree left
China with more roads, bridges, airports and rail lines than it
needs. Now, as growth has slowed again, inventories of raw materials
and finished goods are piling up.
Additional government lending and spending risks igniting another
round of the kind of consumer inflation that swept through China in
2010, forcing up food prices and inflating a rapidly expanding real
estate bubble.
Chinese consumer price inflation appears to be moving higher again,
bumping up to annual rate of 2.0 percent last month from 1.8 percent
in July, and is likely to rise above 3 percent early next year,
according to Mark Williams, chief Asia economist at Capital Insight.
"This won't prevent further stimulus if the economy remains very
weak, but it does make large policy moves less likely," he said.
Faced with an ongoing global slowdown, though, central bankers around
the world are loathe to do nothing. Despite the limited impact of
dumping more money into the economy, even easy-money skeptics at the
Fed will likely go along with another round, according to Neal Soss
CSFB chief economist.
"Even those who doubt the efficacy of monetary policy under current
circumstances may well feel obliged not to disappoint financial
markets," he said. "First, do no harm."
Jim McCaughan, Principal Global Investors CEO, explains why further
Fed easing is not the best policy decision.
/*More money and business news:*/
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