There are not miracles . Bubbles have to be eliminated to allow healthy growth .

You canot just flood the market with extra money liquidity to compensate for money captive in bubbles .

If you ignore that and choose to flood the market with more and more money instead of promoting fast deflation of bubbles , your karma in the shape of stagflation will put you on your knees . Of course better than that is to prevent bubbles by estimulating investments in long term ventures with high added value .

Added value is not just profit . Sound profit is just a parameter of added value . If I put a quantum computer in the market everybody will agree that that is a real added value product because the ratio of energy and raw material consumption against the multiplying reachness effect of the product is very low .

In between , bright ideas from high qualified labour are the instruments with the necessary money investment to support the project in the initial stages . This money of course is the money that have to be stimulated .

As a society has behaved greedy enough to cause a bubble , there is no option but help fast bubble deflation to favour a "V" economic recovery through liberation of captive money as quickly as possible .

In fact liquidity is the judge .If you flood the market with more liquidity than necessary to match the size and quality ( added value ) of your GDP ( Gross Domestic Product ) you will cause escalating defficits that will require unsurmountable efforts via taxes and inflation ( loss of reachness ) during an extended period of time proportioned to your excesses .


Published in: on abril 30, 2011 at 7:45 pm  Dejar un comentario