Zeev's Turnips Patch-No Politics (ZEEV)

[Joe Stocks]

Thanks for posting Noland's essay. I thought this was an interesting point he made.


"today’s extraordinary global backdrop increasingly places the U.S. financial sector directly in harms way. It has no alternative than to perpetuate the Great Mortgage Finance Bubble, but this entails the unending creation of massive amounts of non-productive, volatility-inducing, economic distorting debt. Regrettably, previous Credit excess has made profitable U.S. productive investment largely a thing of the past. Not only have distorted investment flows throughout Asia created enormous over-capacity, inflating U.S. wages and other costs have priced the U.S. out of the global manufacturing marketplace. And this will prove a rather tough structural sticking point for the inflationists. To sustain a level of household income growth necessary to support inflating (largely mortgage) debt levels only widens the competitive disadvantage of U.S. producers and fosters further manufacturing atrophy. While they don’t realize as much, the inflationists are fighting a losing war – fighting fevers with ice baths."