"Wes" wrote in message
...
"Ed Huntress" wrote:

Getting back to my original point, the growth model isn't working. This
isn't an empty
country with huge resources to exploit. The export market isn't as big
as
it once was. We
need to figure out how to live within the reality that the growth model
is
getting just as
tapped out as the oil patch.

There are non-growth models of economics, untested and hotly debated, that
are promoted by the green/sustainable/leftish crowd. There are fundamental
issues with such models that upend some of the precepts of capitalism
itself. If I were a student now I'd be interested in studying them.

While I don't count myself amoungst the g/s/l crowd, I do think they have
some valid
points. The question is when they are going to start making sense to a
sizable majority
of the population.

The question is how you make capitalism work without growth. This is a very
old question that's been bantered around for at least a century. There are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.

Or they did. Maybe they have something new up their sleeves. The whole
subject is a good one for thought and discussion, and they do that in
undergrad economics. But it's too involved for a nominal metalworking
newsgroup. d8-)


I wonder how traditional things like home sales are going to far when the
boombers start
dying off. How a drawdown of investments will affect the market as they
pull out funds to
live on. In addition to the current mess, I already had worries about the
next 15 years.

Well, demographic shifts insert another dynamic into the equation, and
you've just made the final exam essay really complicated. I wouldn't want to
have to tackle it. Keep in mind, though, that when we boomers take out our
savings as a retirement annuity, we spend the money. It doesn't disappear
and it will wind up accumulated somewhere again, where it's available for
investment. It's a zero-sum game at that point, where we're no longer
producing things, but the money doesn't go down a rabbit hole. It keeps
popping up when it gets spent.


But back for a moment to deflation -- do you follow the basic idea? Growth
models or not, that's the way the system works now. Slowdowns can be
handled. Declining prices are not necessarily bad. But put the two
together,
and pass a tipping point of low interest rates with negative growth, and
you're in a deflationary spiral. And those scare economists far more than
inflationary spirals do.

I'm still trying to wrap my head around it but I do see sense in what you
are saying.

Just so I'm not giving the impression that it's *likely*. It's not likely at
all. The economists who run the Fed and the Treasury are wise to that game
and will act in plenty of time to prevent it. We hope. g But don't assume
that because the shell game of high finance caught them flat-footed that
they can't calculate an interest rate. That's their meat.

I have a feeling this Christmas season is going to be hard on retailers
since they typically
make most of their profits during the holliday season. Credit card
companies have pulled
down limits on credit cards and hiked interest rates to reduce exposure
and I have a
feeling there are more people this year that are scaling down purchases
for the holiday
season.

Well, that's a recession for you. It's just reminding us that Greenspan
didn't find a cure for the business cycle after all. But it isn't recession
that's the scary thing out there. Helplessness, like the helplessness of
deflation, and a financial system that's out of control because nobody knows
what the hell is going on -- those are the scary things.


I was really hoping to avoid living in interesting times. ;

One thing is sure, I believe: Trying to hold it back, resisting change and
dragging our feet over necessary responses because they're ideologically
difficult to swallow, will only let them get worse, and maybe get out of
hand. McCain and his advisors have a streak of Hoover in them. They'd take
too long to recognize the things that should be obvious.

But I've already voted, so it's no use arguing with me. d8-)

--
Ed Huntress