Take it for granted , the problem is stangflation .

Gallup has just come out with a poll that shows that real unemployment in the U.S.A. is 10.2 % .

As you try to recover from a big bubble , what really matters is stangflation .

The bubbles occur out of speculation and speculation causes among other things a strong loss in added value of the GDP .

That causes in turn a very important loss of purchase power and unemployment that sends demand down beyond the already weak level caused by the bubble ( bubbles basically mean the rise of a tremendous gap between prices and purchase power ) .

Those circumstances cause a weakeness of the currency and consequently a costs inflation that adds to further weakeness of the demand . That is stangflation . Costs inflation with reduced demand .

Trying to solve the situation by easing lending is the worst you can do because it will just inflate the already existing problems .

The only way to overcome a bubble is austerity together with a strong effort in increasing the added value of the GDP by means of incentivated investments in areas with reduced energy and raw materials consumption which through latest technologies produce services and products very competitive with high added value .

In other words nothing of what republicans or democrat are trying yo sell and regretfully nothing of what is nowadays taught at most universities .

The solution is therefore new to what history tells .


Published in: on febrero 15, 2011 at 10:56 am  Comments (1)  

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