SERIOUSLY, you guys need to get off this bandwagon. There is nothing fundamentally wrong with the world enconomy. Resources are available, production is huge everywhere and rising, more and more people are entering the rich class, more and more countries are becoming industrialised, there are very few active wars right now.
We live in an unprecendented era of peace and prosperity, and this 'problem' we are observing is just a matter of numbers being pushed from one person to the other. But there is still value being produced, there is still demand for that value.
You should become afraid when you see people withdrawing their savings from the banks, and when a major hostile economic block comes up. What we're observing is just economic readjustment, it's not critical.
If in a year this situation still exists, I'll eat my hat on a webcam. You can hold me to that.
Agreed, I just don't feel that an insufficiency of economic activity is the issue right now, as compared to a few years back when it appeared the world might fall into a deflationary spiral or seize up in a liquidity crisis.
Having a normal, working financial system isn't really a global or historical norm. Very arguably we're on an isolated island of relative economic calm in both time and space, and that we should not assume these conditions will just continue forever.
Countries have been breaking the basic economic law - income >= spendings - for a long time.
There are several ways to get rid of the debt, eg inflation or nationalization. All of them are unethical and are basically stealing from all but a select few at the top.
That's what this article is about.
If things come as far as the author writes, it will affect all of us here at Hacker News. There is a lot of people here trying to create something, to enrich the others and thus to get rich. It will all be in vain if our governments decide it's time to rob us.
I could have been less emotional and more specific about this. Thank you for challenging me.
Literally no one is saying there can't or won't be downturns or hiccups - eg, two world wars definitely qualify as both. But even they couldn't stop the overwhelming, hundreds-year long global trend towards simultaneously increasing population AND prosperity. (which, btw, definitely did not have zero interest rates) But hey, don't take my word for it, see for yourself at eg https://ourworldindata.org/extreme-poverty
You do realize we've had an unprecedented growth in the economy during your lifetime? Granted you (and me both) are in the wrong generation to take advantage of it (Statistically at least) but saying that the economy hasn't been stable in the last 30 years is just plain wrong.
It's absolutely not just emerging or developing economies. This article is extremely misleading in that regard and its very dangerous.
Do some research on your own. Many if not most wealthy countries are in serious trouble including the US and China.
Take a look at what Ray Dalio says about it. He says that this is part of a pattern of long term debt cycles, it looks like 1937 and implies there is risk of a global depression, dollar losing its status and even WW III.
My opinion is that at some point there will need to be a new paradigm introduced deliberately if we are going to avoid the terrible natural conclusion of the existing one.
I don't think anyone is disputing the economy has boom and bust cycles. But despite the great depression, two world wars, the cold war, the dot com bubble, the 08 crash, insane environmental destruction, climate change etc etc the economy is growing, the global population is growing, and rather than more and more people fighting over less and less resources, pretty much everyone everywhere is healthier and more prosperous than ever, and extreme poverty is on track to be completely eradicated in our lifetimes. (this doesn't mean there aren't exceptions, or that there isn't still lots to do to address climate change, global economic and health inequality etc etc, but it does prove the peak oil doomer zero sum world view people wrong)
How can you call it unstable when it’s been pumping out a self-reinforcing fountain of money for centuries?
Just look at GDP graphs for the US, EU, and China over the past couple of decades.
You’ll see smooth upward exponential growth for US + China with a small bump in 2008. For the EU, it’s been nothing but wild gyrations, mostly trending sideways. Anyone from the World Bank, the IMF, and even tradingeconomics.com has this data.
I'm not actually arguing for much at all. (Note to crdoconner: if you really want to attack me, I'm wide open on that flank.) But I believe that the best way forwards starts with an honest acceptance of our situation now. And our situation is that a lot of chickens are coming home to roost.
I think the deflation and low growth are structural problems. Japan can't really stomach the creative-destruction necessary for a capitalist economy to thrive, and so on. I'm sure you've heard it before.
nl thinks that, if we can just hold it together for a bit longer, something will turn up. And maybe nl is right. Maybe, next week, someone will discover a wonderful new technology that will usher in 20 years of miraculous economic growth, and we'll all be saved. But I'm not counting on it.
Because it is bad. There is another major correction coming and when the second wave of foreclosures hits things are going to get much, much worse for the whole world. People know what's going on even though the powers that be are very optimistic. Every major economist has been wrong about industrial output, home sales, and GDP growth projections so far. They've been wildly off too. I don't think their employers are going to call them on it because they were all wrong. The clustering of predictions keeps people who are massively incompetent employed.
Right now the world's economy is being propped up by debt and phony stimulus money. When that party stops the reality of our situation will be exposed for what it really is: ugly.
This is bordering on delusional. You think there are no meaningful fundamental factors to the world economy and the only thing likely to cause it to go down is sentiment? Not debt? Not liquidity? Not inflation. Not money supply? It just goes down because people woke up on the wrong side of the bed?
The people believe it's going to go down because they are doing things like looking at balance sheets and tracking the relevant data. It's like saying someone got killed because a bullet happened to be moving around towards them but that it definitely wasn't because they were shot.
Here is the thing, can we appreciate that given the situation and the need to have to continuously pump liquidity into the Markets (to be the benefit of entities like the World Bank) via QE in order to artificially create the illusion of growth that this kind of model is not just unsustainable, but is entirely a machination from smoke and mirrors? It's not even real or a reflection of reality of the Economy and serves very little purpose other than to line the pockets of the investment class via the stock market.
I've come to the conclusion that nothing short of a return to the average/mean in terms of economic output and consumption habits will help us from ourselves: inflation is already here and we're already in a recession and the notable thing is that commodities keep rising, eventually we will price out a large percentage of the population as shortages continue due to prolonged and potential conflicts that were only possible because of a need to seek Russian oil or cheap Chinese labour in order to maintain this perpetual growth model.
I'm sickened that this is my generation's (Millennial) 3-4th 'once in a Lifetime' economic crisis and the last one in 2008 has yielded lower life expectancy and lower standard of living while oligarchs keep amassing more and more capital that create these bubbles in the first place.
If 70s standards of living are what are projected at least let the West decouple entirely from Russia and China and ramp up and onshore the production of renewables, and invest further into Aerospace because at least then we will have something to show for our immense amount of crisis-laden existences so that we can point to and say 'well at least we got a foundation we can build upon.'
I'm over a consumption based economy, it's pathetic and shallow way to exist which leads to ecological perils: sadly it is, along with an often fake social media presence, the only refuge for most my age for any self-validation as they deal with perpetual forms of events that destabilize them further and have robbed them of most of the hallmarks of adulthood for earlier generations: homes, children, established careers, modest savings.
Gen Z is really the one who I think will be the one to pay the price of all of this, too. If the loudest voices are to be believed they are leaning hard toward Socialism, Marxism and Communism and given what we are seeing with the CCP I think they should get some perspective of what that kind of World looks like: Tibet, Hong Kong, Macau, Xinjiang with Taiwan in the cross-hairs.
Even the World bank is making it clear that the proxy War with Russia in Ukraine is of vital importance and, can you imagine if China invades Taiwan what that will do to Global Stability:
> To reduce the risks of history repeating itself, the World Bank urged policymakers to coordinate aid for Ukraine, counter the spike in oil and food prices, and set up debt relief for developing economies.
It's alright, 'cause the historical pattern has shown how the economical cycle tends to revolve in a round of decades. Three stages stand out in a loop. A slump and war, then peel back to square one and back for more. Bigger slump and bigger wars, and a smaller recovery. Huger slump and greater wars, and a shallower recovery. You see the recovery always comes 'round again. There's nothing to worry for, things look after themselves. There's nothing to worry, if things can only get better.
There's only millions that lose their jobs and homes, and sometimes their accents.
There's only millions that die in their bloody wars, it's alright.
It's only their lives and the lives of their next of kin that they are losing.
Don't worry, be happy, things will get better naturally.
Don't worry, shut up, sit down, go with it and be happy.
Your comment is weird to read because you say it’s fine because “these things move in cycles” [created by debt, tax, and monetary policy] and the article describes why the system that generates these cycles is “encumbered” and lacking in strength.
I could imagine you may not understand the cause of economic cycles. As you say in the “real” world, you only notice the lived experience of macroeconomic policy, which is what matters from a governance perspective. That’s why politicians talk about “kitchen table” issues to keep popular sentiment but govern through a seemingly backroom set of central bank, tax and trade policies.
It’s not complicated to see that the GDP will grow proportionally to the deficit growth and shrink proportionally to deficit cuts. That extra money is borrowed from the future and injected into today, goosing GDP.
Then the debts get expensive as capital gets tight, interest rates rise and the weakest businesses go under, contracting spending and destroying money as cancelled debt, tightening capital more and consumer confidence. And them the economy shrinks again.
It’s great when the central bank is buying the drinks but the party will end when their credit card is maxed.
To be simplistic, it seems that things are quite different this time. The fundamentals of crises may be the same or similar, but the world has -never- been linked in the way it currently is, and the world population, and total consumption has -never- been as high as it currently is.
I hate to argue against an entire book with a sentence like that, but claiming that this is a "pretty vanilla financial crisis" seems to take the overall situation in a dismissive light that I don't agree with.
This whole thread is just people complaining about the demand curves moving, and the supply curve lagging, because it takes time in real life for people to see and react to the moving demand curves.
There is a little bit of pain, initially, but if they step back and compare life in an economically prospering place (rich people coming in) versus an economically declining place (rich people and opportunities to earn money leaving), they would realize they are actually lucky.
One might say well those aren’t the only two options, and I would say, yes they are. The world moves faster and faster there is no “stasis” anymore. You’re on the up or down, volatility is higher, and you need to stay on the right side of it.
"The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said."
I disagree. I don't think we're at risk at the moment of seeing a resurgence of dictatorial states. Similarly, I don't think any European powers are harboring resentment over treaties imposed on them in the last few years. Autarky isn't being pushed as a solution to anybody's economic problems (at least not on a large scale).
If we're still able to realistically talk about internet startups, we're doing better than the early 30's. I don't think anybody's facing 25% unemployment, and nobody (even the US) is setting out to cause hyperinflation to screw those demanding reparations of it.
And, please, oh please, let's get a few comments in place before tripping Godwin's Law.
We live in an unprecendented era of peace and prosperity, and this 'problem' we are observing is just a matter of numbers being pushed from one person to the other. But there is still value being produced, there is still demand for that value.
You should become afraid when you see people withdrawing their savings from the banks, and when a major hostile economic block comes up. What we're observing is just economic readjustment, it's not critical.
If in a year this situation still exists, I'll eat my hat on a webcam. You can hold me to that.
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