The Chattering Wind

Thursday, October 23, 2008

Inflation to come, War

With Central Banks pumping in so much money because they perceive it to be liquidity problems which instead should be about debt problems, and factories cutting down production, why wont it lead to inflationary times?

Factories around the world are scaling down labour, and that scaling down leads to high unemployment. With that, the people wont be able to buy, and the vicious cycle goes.

Next, there will be so much money floating in the system. It is like a sink with the pipe choked. There are alot of liquidity in the sink, but the water cannot flow because the pipe is choked. What would happen if the plumber finally unchoke the pipe and cause a large flow of water down the pipe?

Although the US dollar now is becoming stronger due to demand rather than on the fundamentals of the economy, its long term trend is most likely down. If it continues to strengthen, wouldn't the value of their debts be more expensive than before?

As countries are now becoming more self protecting, globalisation is stalled and diminishing. Could this turmoil turn out to be a sign of war in the coming years?

Because of the so called economic interdependence between countries, this does not mean that the probability of war is zero. If it is close to zero, why do countries allocate a significant amount of expenditure is weaponry?

Days of impossibility will be come possible. Impossible is nothing.

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