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 ... Numonic- Why then during the gteraest credit crunch in American history (1930-32) did prices not rise? In fact the price level fell approximately 25% during this period. When formulating your theories, do you take facts into account? I think the situation we(US) were in in the 1930s is the same situation China is in today. We were a creditor nation making our move to become a consumer/debtor nation just as China is trying to do right now. But when the producer decides to become the consumer, this causes a paradigm shift in the credit system. Some one has to be the producer otherwise there would be nothing for the consumer to consume. Anyway other nations credit tightened more than ours(US) did. The debt for gold for us(US) in the 1930s was like the US bonds China holds today. Those US bonds will default, just like the debt for gold defaulted during the 1930's and what will happen is China's currency will appreciate against those bonds just as the US dollar appreciated during the credit crunch of the 1930s.If you want to see how our currency will do today during this credit crunch you shouldn't be looking at US of the 1930s(we were a creditor nation then), you should be looking at the debtor nations of the 1930s, those nations hyperinflated.Of course you also have to take in to consideration supply and demand and this is why i think this paradigm shift is different from the 1930's and why i think this won't be a shift but a collapse of paper money and credit all together. See back in the 1930s there were more producer nations in the world than there are today. When the producer nations of today try to reap the fruits of their labor and make the move to major consumer, they will have a problem as there won't be as much producers ready to meet this demand as they will first be focused on producing and providing for themselves. This is one reason why the US dollar rallied during the 1930's because there was enough producers to meet the US' demand. Today that's not the case for China. Today the world is full of consumers and less producers(which is why there is slave labor as people have to be forced to work for little to nothing to provide for the consumers). When China tries to make this shift from major producer to major consumer, it will have a hard time finding things to consume as the rest of the worlds manufacturing sector is like and old engine in the cold winter. Everyone's currency will suffer devaluation. Credit globally will collapse. But I have faith that we'll make it through this as we have a larger world population and production will be encouraged due to the absence of credit. With the world working together producing, we'll grow our way out of poverty. production is growth. I don't think the earth was lacking products over the decades, the world was just lacking producers and the earth is very ripe for picking and I'm sure with the greater world population what we produce will be greater than anything the world has ever produced. |
