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[cem_devecioglu]

and can you explain why worlds largest economy (capitalist) is having the largest debt while it can print globally accepted  currency ?

[Sir Tigger KC]

"The difficulty lies not so much in developing new ideas as in escaping from old ones."   John Maynard Keynes

[Dishevelled Den]

"The difficulty lies not so much in developing new ideas as in escaping from old ones."   John Maynard Keynes

Aside from the economic tenor of that quote - a subject I am clueless about - I would say that in general terms any transition from the old to the new, and the perceived benefits to those who will be subject to the new order, will depend upon who is generating such new ideas, their purpose (and intent) for doing so and the willingness of those people exposed to that new order to accept it with good grace and use it constructively as a means to benefit the many rather than the few.

Has the Keynesian ethic helped to provide a practical and sustainable answer to the question of where we go from here - in terms of the present economic practices now being subject to so much stress?

[Rods2]

Keynes always stated that as there are so many variables for successful economic policy then solutions have to be constructed to for the current times and problems with solutions for other times not being appropriate.

http://www.mindfulmoney.co.uk/13310/investing-strategy/beyond-ideology-what-is-the-right-approach-to-fixing-the-economy.html

[Rods2]

Hi Cem,

An English proverb: If it looks like a duck, has the feathers of a duck and quacks like a duck, it is probably a duck. 

Have a read of these:

http://en.wikipedia.org/wiki/Chinese_economic_reform

From the wiki page:

"The economy was heavily disrupted by the war against Japan and the Chinese Civil War from 1937 to 1949, after which the victorious Communists installed a planned economy.[3] Afterwards, the economy largely stagnated and was disrupted by the Great Leap Forward famine which killed between 30 and 40 million people, and the purges of the Cultural Revolution further disrupted the economy. Urban Chinese citizens experienced virtually no increase in living standards from 1957 onwards, and rural Chinese had no better living standards in the 1970s than the 1930s.[6] One study noted that average pay levels in the catering sector exceeded wages in higher education."

"The economic performance of China was poor in comparison with other East Asian countries, such as Japan, South Korea, and even rival Chiang Kai-shek's Republic of China. The economy was riddled with huge inefficiencies and malinvestments, and with Mao's death, the Communist Party of China (CPC) leadership turned to market-oriented reforms to salvage the failing economy."

"China's economic growth since the reform has been very rapid, exceeding the East Asian Tigers. Economists estimate China's GDP growth from 1978 to 2005 at 9.5% a year. Since the beginning of Deng Xiaoping's reforms, China's GDP has risen tenfold.[26] The increase in total factor productivity (TFP) was the most important factor, with productivity accounting for 40.1% of the GDP increase, compared with a decline of 13.2% for the period 1957 to 1978—the height of Maoist policies. For the period 1978–2005, Chinese GDP per capita increased from 2.7% to 15.7% of US GDP per capita, and from 53.7% to 188.5% of Indian GDP per capita. Per capita incomes grew at 6.6% a year.[27] Average wages rose sixfold between 1978 and 2005,[28] while absolute poverty declined from 41% of the population to 5% from 1978 to 2001.[29] Some scholars believed that China's economic growth has been understated, due to large sectors of the economy not being counted."

http://en.wikipedia.org/wiki/Economy_of_Vietnam

I afraid to me Lenin / Marx socialism is like perpetual motion a great idea is theory but impossible to achieve in practice. As a practical Scientist / Engineer I'm only interested in practical solutions to problems that work.

When I was a student a lecturer used a joke to illustrate the differences between theoretical and practical scientists. A beautiful girl was standing in the middle of a room with the practical and theoretical scientists. They were both told that with each move they could half their distance to the girl. With that the theoretical scientist walked out saying he would never get to touch the girl, the practical scientist started moving towards the girl, saying, no nor will I, but within 5 minutes I will be bloody close.

[Rods2]

and can you explain why worlds largest economy (capitalist) is having the largest debt while it can print globally accepted  currency ?

Because they are the worlds biggest economy and for historical reasons. The way that the current socialist president is burning through money setting up the UK equivalent of the NHS and other social programs, if he gets another term, the US will be about as economically sound as Argentina, the UK, Italy, France, Spain and Greece. A much better solution would have been radical reform of their current health system with patients only being able to sue for poor treatment outcomes where there is clear medical negligence. This would have dramatically reduced the cost of treatment, where they have to consistently work to make sure they don't create any liability for an army of no win, no fee lawyers to latch on to. This would have also considerably reduced the medical staff's insurance premiums.

Anyway I digress, back to currencies:
At that point it will either change to the Chinese currency or more likely be based on an artificial trading currency with which all countries will have a floating exchange rate. This second idea has already being proposed by several BRIC countries. I can't see America voluntarily giving up their reserve currency status as it would also mean more competition where they have grain and other global market trading mechanisms due to their reserve status.

[Dishevelled Den]

Keynes always stated that as there are so many variables for successful economic policy then solutions have to be constructed to for the current times and problems with solutions for other times not being appropriate.

http://www.mindfulmoney.co.uk/13310/investing-strategy/beyond-ideology-what-is-the-right-approach-to-fixing-the-economy.html

I quite enjoyed reading that MM piece - based on the concluding remarks, I fear that the answer may well be that there is no answer. 

The unhappy realisation that there may indeed be no well measured or well developed answer to this vexed question of the need for a sustainable economic policy may not necessarily have had any great impact around the world in times past.

Sadly, in the present (and future), the absence of answers to the questions many are now posing about how we proceed on the path towards economic stability and growth, may well have catastrophic consequences for everyone in this increasingly globalized society where the immediacy of information, the bellicose nature of the many who make up its number and the availability of weapons of mass destruction presents a threat to mankind hitherto unseen in such a potentially far-reaching way.   

[cem_devecioglu]

and can you explain why worlds largest economy (capitalist) is having the largest debt while it can print globally accepted  currency ?

Because they are the worlds biggest economy and for historical reasons. .

Hmm.. as said the evil hides in the detail- the last 2 words..  why dont you tell that the whole American society dont have their very own Central Bank and the right to print money..  Instead they borrow their own money as a loan.. becuse FED is not their property.. and a whole nation is captured by a few..
 
and this is your famous system

[cem_devecioglu]

Now some comment related to other posts..
 
Rods, you are repeating capitalist's classical mistake..
first you accept capitalist propositions as true then you start a debate on it..
second you give various tables as examples (like GDP-PPP ) than you start commenting on it..

just have a look at this list
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

and please tell me what you see..   if you compare apples and pears you wont get a meaningful result..

Why ?
 
they cant/dont measure many factors which will bring wrong results..
 

Of course if we are talking about success of systems we must be able to measure some values.. yes..
but for you to compare two different systems realistically , you must take into account their starting points, country factors , regional factors,internal/external trade capacity,population etc etc..  and the list goes on and the solution becomes more complex.. which is far from the calculation abilities/opportunities of economists 
 
 
However, there is a simple measure.. which uses the country itself as a measure.. growth rates..
just have a look at this list and tell me where are your countries

http://www.indexmundi.com/g/r.aspx?v=66
http://www.indexmundi.com/g/r.aspx?c=xx&v=78
 
 
 
 

[cem_devecioglu]

while looking for some pages I have found this page.. I hope you enjoy it
 
heading is "viagra and the wealth of nations"
http://web.mit.edu/krugman/www/viagra.html

[Rods2]

while looking for some pages I have found this page.. I hope you enjoy it
 
heading is "viagra and the wealth of nations"
http://web.mit.edu/krugman/www/viagra.html

Good article I enjoyed that.

I don't disagree that GDP and PPP are statistical measurements that are subject to the quality of data. They are empirical rather than absolute values. But as Krugman said, they are the best tools we have currently got and the best estimates we can manage. All Governments consistently fiddle inflation rates with the items in the basket. Our last Government was particularly bad for this where they changed several important measures.

Why is that important? Because: GDP growth = (new GDP / 1 + inflation rate) - old GDP. The lower you fiddle inflation the higher the apparent growth.

But one thing I have learnt is that prices for most internationally traded commodities and items are about the same. In fact in poorer countries they are often slightly more expensive due to being sold in smaller quantities and that they less efficient distribution systems. So the higher a countries PPP, the more affordable goods are, which is why that is important and wealth gives you a wider range of choices on how you choose to live your life.

Frames of reference:

I'm sure like me, you studied this in collage, where if you are on a train, you speed compared to the person sitting next to you is zero, but the person on the platform sees your speed as that of the moving train etc.

Yes, I do view things from a Western standpoint as that is the framework that I have built up to make comparisons on things.

Quality of life, happiness, fairness, equality are all meaningless words, they only having meaning within a frame of reference and context.

Quality of live:

1. A multi-Millionaire who is in poor health and spends part of his vast wealth good health treatment, but is always in much pain, will probably say he has a poor quality of life.

2. A poor person in good health with a good family, who is very happy with his lot, may say he has a good quality of life. As his good family more than make up for lack of material things.

Fairness:

1. Rich person: I think it is grossly unfair that I'm taxed at over 60% of my economic output to subsidize a large section of society that prefers not to work.

2. Benefits Claiment: I think it is very unfair that rich people are only taxed at 60%, where I could do with more money. Why don't you get a job? Because it pays less than benefits.

Freedom:

Now if you want to live in a marxist state like North Korea or set up a collective cooperative, so everybody from you as the MD to the cleaner get paid exactly the same, your business you run it how you want, I don't have a problem with that.

I like small government with as few rules as possible to make a cohesive society and so I'm free to apply you own philosophies to how I live my day to day life and how I wish to apply my personal economic philosophies to how I earn a living as an individual or as part of a collection of individuals where people can sell their labour for me to use at a mutually agreed price and terms. Marxism does not allow this freedom and nor does increasingly the EU, which is why I have a fundamental problem in continuing to live in a EU country.

Where I do have a big problem is people imposing arbitrary systems upon me and telling me that is how I have got to live me life. Why can't I decide on the small Government basis? You could answer, because we think it benefits society as a whole. Who says? Because I don't. History has shown such decent is not allowed in Marxist countries, so I would be off to the local political correction centre.

[Rods2]

Keynes always stated that as there are so many variables for successful economic policy then solutions have to be constructed to for the current times and problems with solutions for other times not being appropriate.

http://www.mindfulmoney.co.uk/13310/investing-strategy/beyond-ideology-what-is-the-right-approach-to-fixing-the-economy.html

I quite enjoyed reading that MM piece - based on the concluding remarks, I fear that the answer may well be that there is no answer. 

The unhappy realisation that there may indeed be no well measured or well developed answer to this vexed question of the need for a sustainable economic policy may not necessarily have had any great impact around the world in times past.

Sadly, in the present (and future), the absence of answers to the questions many are now posing about how we proceed on the path towards economic stability and growth, may well have catastrophic consequences for everyone in this increasingly globalized society where the immediacy of information, the bellicose nature of the many who make up its number and the availability of weapons of mass destruction presents a threat to mankind hitherto unseen in such a potentially far-reaching way.

There are some very good solutions for the UK and Europe but they won't happen as politicians would have to implement the unthinkable which would throw away much spent political capital and dogmas and it would mean many of their public office cronies losing their jobs, through the exposure of their total incompetence or they being surplus to requirements.

UK:

The cast DC - Prime minister, GO - Chancellor, NC - Deputy prime minister,  MK - Mervyn King head of BOE.

1. DC: It is politically much easier, while you are in office to borrow or tax to spend other peoples money to provide an electoral feel good factor.

2. GO: I'm raising taxes to help our spending plans, that should put more money in the electorates pockets, especially as the money raised will be spent in Brussels on their budget increases and any third world country where the local despot needs help with his retirement fund from our ever increasing over overseas aid budget. I must make sure I pluck the tax feathers, where the electorate are unlikely to notice. How about a tax on hot pasties?

3. GO: Its not working. MK: I can either drop interest rates to even nearer zero and / or print lots of money or use QE to debase the currency through higher inflation. GO: You know I don't understand economics, so whatever.

4. GO: Still not working. MK: No, the inflation rate is higher than wage rises, so wages are dropping in real terms and inflation is higher than interest rates so savings are devalued. GO: Apply some more QE, that will fixed the bond markets, so I can borrow oddles more for next to nothing. MK: It will rasie inflation. GO: Who cares we've both got inflation proofed pensions.

5. GO: Keep going on the QE as the capital debasement on house prices will minimize their drop and bank losses. This will help our mates the banksters and of course us politically where we largely own a couple of them.

6. DC: We will implement minority rights and political reform legislation, as we might get a few extra votes and it will distract people away from where we haven't got a clue what to do on the economy.

7. DC: Let throw as much money as possible at the new modern religion of Climate Change and anything with "Eco" in the title, we might pick up a few votes here, and of course it will help our land owning relations, where they can rent plots for some of the wind mills. MK: What about the energy bill increases to pay for this, people will suffer. GO: No we won't, me and DC have rent free all the bills paid accommodation.

6. DC: Lets huff and puff on how we are going to repatriate powers from Brussels and do some supply side reforms, which is probably currently one of our best hopes for growth, while doing the exact opposite by nodding through more EU directives and treaty changes and making our industry even more uncompetitive. This should help our growth.

7. NC: We can go for growth by selecting the ideal candidate through the coalitions Buggin's turn rules. So what if have an anti-business anti-enterprise, anti-entrepreneurial, anti-profit business secretary, who does nothing but moan about business ethics, its his turn. There you go that should get the private sector booming in no time.

8. DC: We will go for growth though infrastructure projects by banning a third runway at Heathrow, so we don't fly to tiger economy destinations, where we could be doing export deals. Instead lets build the politically easier un-needed duplicate railway. There you go, you trust us to make the difficult decisions for the good of the economy.

9. GO: Help 0.7% GDP drop. DC: Try a distraction, this is ideal, we are holding an expensive International sporting events on our home turf, is always a good one, especially if the local mayor gets into the swing things and adds a few of his own stunts

10. GO: It's still not working, I'll blame the Euro, opposition, bad weather, good weather, Jubilee holidays, anybody but us where we are doing such a very good job.

DC, GO, NC and MK: We might be stuffed at the next election, but economically so will the electorate and you haven't been getting our MPs and ministers salaries, expenses or our inflation proofed gold plated pensions. Ha, Ha. Toodle pips, Were off to my new jobs in Brussels as Eco, Climate Change, Equality, Gender Awareness Outreach Commissioners, on a mere value for money €300k each, tax free.

Anybody for a celebration hot pasty.

[Rods2]

Hi Cem

You might find this company's organisation interesting.

http://www.mindfulmoney.co.uk/13446/investing-strategy/getting-rid-of-the-boss.html?utm_source=Newsletter&utm_medium=07%2F08&utm_campaign=2

[cem_devecioglu]

Hi Cem

You might find this company's organisation interesting.

http://www.mindfulmoney.co.uk/13446/investing-strategy/getting-rid-of-the-boss.html?utm_source=Newsletter&utm_medium=07%2F08&utm_campaign=2

quite interesting Rods. thanks