{"id":2919,"date":"2008-10-31T20:55:48","date_gmt":"2008-10-31T20:55:48","guid":{"rendered":"http:\/\/zenpundit.com\/?p=2919"},"modified":"2008-11-02T03:18:53","modified_gmt":"2008-11-02T03:18:53","slug":"congrats","status":"publish","type":"post","link":"https:\/\/zenpundit.com\/?p=2919","title":{"rendered":"Congrats!"},"content":{"rendered":"

To Fabius Maximus<\/a><\/strong> for being crossposted at RGE Monitor<\/a><\/strong>. A snippet:<\/p>\n

Causes of this crisis<\/a><\/strong><\/p>\n

These\u00a0financial shocks are byproducts of deeper trends, in my opinion.\u00a0 The world has begun a process of regime change, as the foundations of the post-WWII geopolitical order decay.\u00a0 Here are some of the major trends\u00a0forging a new world.\u00a0 Each of these has played a role in bringing us to this point; some will play an even bigger role forcing events during the next few years.<\/strong><\/p>\n

(a)\u00a0 The transition from a bipolar (or unipolar) world to a multi-polar world.<\/strong><\/p>\n

(b)\u00a0 Entering the transition period to peak oil, as global oil production peaked (not necessarily the <\/em>peak) in 2005.\u00a0 Since then biofuels have provided most of the growth in liquid fuel consumption.\u00a0 Rapid GDP growth (almost 5%) required high prices to match ex ante demand with flattish liquid fuel production.<\/strong><\/p>\n

(c)\u00a0 The replacement of the US dollar as the reserve currency (by what we do not yet know), after 30 years of foreign borrowing – 30 years of increasing current account deficits.<\/strong><\/p>\n

(d)\u00a0 The exhaustion from overuse of monetary and fiscal policy.\u00a0 Persistently too-low interest rates yielding serial investment bubbles.\u00a0 The long decline to near zero of the marginal elasticity of GDP with respect to debt.<\/strong><\/p>\n

(e)\u00a0 Structural weakness:\u00a0 Funding long-term\u00a0businesses with “hot” (aka liquid) capital, from the disintermediation of household savings.\u00a0 Money\u00a0shifted from vehicles where institutions\u00a0bear the risk (insurance, annuities, CD’s, etc) to direct participation (owning stocks and bonds either directly or through mutual funds).\u00a0\u00a0 See <\/strong>this post<\/strong><\/a> for an explanation.<\/strong><\/p>\n

(f)\u00a0 The Thomas Kuhn-type paradigm crisis in Keynesian economics, by which the world economies have been steered for fifty years.\u00a0 The aggregate debt level of an economy is not a significant variable; attempts to integrate into orthodox theory by radical Keynesians (e.g.,\u00a0Hyman Minsky) were unsuccessful.\u00a0 Sometime after 2000 we reached and broke though\u00a0the edge of the “operating envelope” of Keynesian theory.\u00a0 We ran like Wile E. Coyote off the cliff and beyond – a few\u00a0exhilarating years – and now we fall.<\/strong><\/p><\/blockquote>\n

Read the rest here<\/a>.\u00a0<\/p>\n

From small wars to global economies.<\/p>\n

Addendum:<\/strong><\/p>\n

Vimothy<\/strong> is correct – FM informs me that RGE Monitor<\/strong> has covered 45 of his posts, in particular:<\/p>\n

Financial crisis – what’s happening? how will this\u00a0end?<\/a><\/p>\n

Peak Oil and Energy<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

To Fabius Maximus for being crossposted at RGE Monitor. A snippet: Causes of this crisis These\u00a0financial shocks are byproducts of deeper trends, in my opinion.\u00a0 The world has begun a process of regime change, as the foundations of the post-WWII geopolitical order decay.\u00a0 Here are some of the major trends\u00a0forging a new world.\u00a0 Each of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[332,198],"tags":[],"class_list":["post-2919","post","type-post","status-publish","format-standard","hentry","category-economics","category-fabius-maximus"],"_links":{"self":[{"href":"https:\/\/zenpundit.com\/index.php?rest_route=\/wp\/v2\/posts\/2919","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zenpundit.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zenpundit.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zenpundit.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zenpundit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2919"}],"version-history":[{"count":0,"href":"https:\/\/zenpundit.com\/index.php?rest_route=\/wp\/v2\/posts\/2919\/revisions"}],"wp:attachment":[{"href":"https:\/\/zenpundit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zenpundit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zenpundit.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}