freediver wrote on Sep 9^th, 2010 at 1:29am:



1) I asumme you mean levers and the answer is, No!
They won't STOP WORKING, but they will only work at the margins, they will not & can not stop the tide from going out on Demand and that is the issue, falling Demand!

Demand has already started to fall slightly, but as the Aging Boomer generation starts retiring enmass, Demand will decline further (as will productivity per capita), over the next 10-20 years, before the massive Boomer generation start to die enmass.

In concert with that, the Global Population Growth rate has already been slowing for over 40 years, it will continue to do so and within 20-30 years the falling Global Fertility rate will mix with the massive die-off of the Boomer generation, to produce an actual decline in the Global total Population, which will continue perhaps until the end of this century.
The combined effect of these two Population issues, will result in a massive decline in Demand for everything!

2) Which major Economies & When?
3) I disagree, the barriers involved here are real, very real and they will not be moved by Central Banks or governments!

Both Governments and Central Banks have had their opportunities & they blew it!

freediver wrote on Sep 17^th, 2010 at 8:41pm:


That's a reasonable statement!

However, I doubt that Keynes or anyone else ever thought there would be a situation, such as this, where the Central Banks levers would not be able to correct an Economic downturn, within a fairly quick period of time.

They were wrong!  

freediver wrote on Sep 18^th, 2010 at 10:36am:


Is that the one, about "the straw/man that broke the camels (Golbal Economy) back"?

freediver wrote on Sep 18^th, 2010 at 1:14pm:


1 & 2) Are you seriously suggesting that in the 1930's Keynes was aware  that the Great Depression he was then fighting,( which would finally be resolved only by a World War), would spawn the greatest Baby Boom in human history?

That he also knew that Baby Boom would repeat on humanity, some 60 years later, in the form of the Great Baby Boomer Bust?

Did Keynes also know that in the early part of this century the Global Energy Sources, which were then only just coming in, that those Energy sources would start to Decline, thus exposing the Global Economy to massive costs & productivity shortfalls?

And, did Keynes also know that following the Economic Bust of a generation that had not even started to be born, when Keynes was fighting the Great Depression, that an even great Economic conundrum was waiting, as the Global Population would decline back from around 8 Billion (4 times 1930), to around 2-3 Billion?

If you are suggesting that, then Keynes must indeed have been a unique person!

3) Ihope you are correct, but logic tells me it just isn't going to happen that way. It is likely be long, protracted & not all that pretty!

4) In fact, I have not been saying that Central Banks can completely eliminate macroeconomic ups and downs. I have been saying that CB's can make a difference at the margins, but they can not swim against the Global Macro Economic forces, particularly those now arrayed against them.

5) Yes, but that effect is only temporary and because of the Debts incurred, particularly in the USA & Europe, it may make matters worse.

6) In fact, in the USA, where it counts, I can not agree thay rates were articifially high prior to the the downturn (2007).




If anything, the US Fed held rates far to low, for far too long, after 9/11.

7) In fact, the CB's & various national governments (Pollies) were actually largely responsible these Debt bubbles, in the first place.

freediver wrote on Sep 18^th, 2010 at 7:25pm:


The whole point is -
That the Global Economy is running down, for reasons I have frequently stated and it will shortly cease to be the relatively smooth functioning Economy, that we have known for the last 60 years or so!

freediver wrote on Sep 19^th, 2010 at 9:54am:


Ok, how is this, for on topic.

You have said that, the Keynesian approach is short term, not long term and that the whole point of a functioning economy is that it can handle whatever level of resource availability becomes the reality.

Well, the reality is that the set of Global Macro Factors we are now facing, means there must be a long term delevraging of the Global Economy, as Demand WILL DECLINE, slightly at first, then building to massive levels, as this century continues.

Keynesian approaches may still be usefull, but this time to smooth the lumps on the Economic down trend, instead of the up-trend we have experienced for the last 60 or so years!

But, the Austrian approach will also have its moments! It's a little like Food, a little of this & a little of that, but everything in moderation, which is what should have happened with Global Debt!

Btw, in case you haven't noticed, it's not all about Keynes, nor you, nor me, all of these things are interlocked.

In other words, the butterfly effect is very real and it is the whole view that matters!

What Does Deleverage Mean?
A company's attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting.

So if I read this entire book I will find an answer to my simple question?