– started to furnish my apartment – made some huge mistakes – learned what real love is
– turned back into the man I used to be – almost died and ended up with a cast on my hand – tried to atone the past – had a wonderful summer
– didn’t buy that many tshirts
– developed a slight caffeine addiction
– redefined friendship
– matured 10 years worth of life – lost big time – initiated an educated risk – became a decent macroeconomist
I try to convince my economist (and non-economist) friends all the time that the world’s current deep economic slump is a simple demand problem. We just don’t have enough demand. Or in other words, we just have way too much saving. You can talk about debt, you can talk about structural changes, you can talk about demographics, you can talk about all these things, and they may be valid, but these are all things that market economies can deal with as long as the macro picture is stable. What we desperately need right now is more spending and less saving.
I know, it sounds paradoxical, but it’s true. Trust me.
But the question is, why then don’t we just spend more and make all our problems go away? Good question. Let’s play a quick and dirty game that demonstrates why we’re stuck where we are.
For way over a year now, I’ve been convinced that the euro as a currency was in its last days. Without a central fiscal authority, or a central bank willing to print unlimited money to buy government debt, I could not and still cannot picture any scenario where the eurozone will survive. I tell people this constantly. I kick and scream and I tell them how bad the situation is, what needs to be done, and what will happen if not. I try to make a difference, one person at a time.
And the reason I become so passionate when I talk about this topic is because this stuff matters. It’s not just economics. It’s not just unemployment. It’s not just struggling families. It’s not just quality of life. It really really matters.
Depressed economies create societies where extreme non-tolerance thrives, violence against minorities is accepted, freedom and liberty are eroded, and fascist parties take power. Usually I’m told that I’m being sensational, but we are already seeing this. Look here, here, here, and here. It’s truly scary.
By my count, if the euro falls I will have 5 bets to cash in on. And I’ve done well in the markets by betting against the euro’s survival.
But I hate the idea of profitting off something that is so so so horrible, that I am hoping doesn’t actually happen.
But if I really think it’s inevitable, what’s a brother to do?