Chicken licken is back

8th December, 2008

My piece in today’s Guardian, The Credit Crisis Myth, was resoundingly rubbished in many of the comments. Reminds me of when my book, The Coming First World Debt Crisis came out in 2006… Then it was: Chicken Licken – The sky is falling!

Read the article (and comments)

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5 comments to Chicken licken is back

  • James Bruges

    I agree but my non-economist mind mind likes to think of it in this way. When a mortgage is taken out the bank creates two kinds of

    money: the money that goes into circulation (the previous owner of the house spends £300,000 on all sorts of things and it gradually diminishes)

    and negative money – £300,000 debt. Scientists say that entropy is a universal law, a coat decays, a tree grows to a certain size then decays but a

    negative coat or tree is only a mathematical concept. Negative money is also a mathematical concept that should not be mixed with money in

    circulation. But banks call negative money a ‘financial asset’ that is not subject to natural laws, it can grow indefinitely and, with their

    ‘vehicles’ can be multiplied. Paul Mason says that “the world’s total stock of financial assets is three times as large as global GDP”. Debt (like

    your mortgage) has to be repaid with money from the real world of enterprise. But it can’t. There is not enough real enterprise. The trouble is not

    too little money but too much fictitious money. Boom and bust alternate. The end of these cycles is revolution, war or, if you are very lucky, just

    economic collapse.

  • Nicholas Colloff

    I always thought comprehensive rubbishing was what the ‘comments’ section on CiF was designed for:) The curmudgeonly of the world

    roll out of bed, douse themselves in coffee, and begin tapping…

    More seriously, I am struck by how people seem mesmerised by ‘the base

    rate’and have failed to notice that like the ‘average’ rainfall (that never happens) the ‘base rate’ is the interest rate no one in the

    ‘real’ world economy ever pays!

    Here in Russia where the central bank rate is effectively negative, depending on whose inflation figures

    are credible, no bank is quoting less than 30% + fees to a commercial company (even when willing to lend).

  • ann

    Thanks both for these comments. James your comments are positively Aristotelian….and Nicholas thank you for the comment

    about rates in Russia…extraordinary.

    Ann

  • Ernest Werner

    Ms. Pettifor is a highly intelligent writer-economist & favors government spending at present.
    A pro-Keynesian writer (I

    forget who) has recently urged that governments spend heavily even when banks are awash in money but not lending. What I fear as a layman is a

    ruinous inflation when once the economy gets rolling again. As one who depends on savings (no longer earning) I think that a government-induced

    inflation (if that happens) is nothing less than organized theft. Not so?

  • ann

    Ernest, thank you for your comment. The government is having to deal with the aftermath of a long period (about 30 years)

    of high inflation (see the graphs in the ‘facts’ tab of the rise in inflation after 1970) – and with it high real rates of interest, and reckless

    borrowing, which has effectively bankrupted the economy. The government can either stand by and allow the economy to be liquidated – which would be

    no good for you or your savings – or it could try and inject some life into it. Few of us alive today – and not living in Japan – have experienced

    the horror of a debt-deflationary spiral, which is what we are living through today…..

    My understanding too, is that savers get all kinds

    of tax breaks – and therefore are quite a privileged section of the community…compared at least to debtors, many of whom are now unemployed.

    Ann

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