Posted on 06/19/2012 6:51:42 AM PDT by TigerLikesRooster
What is globalization?
/snip
In the article I extended one of the arguments I made in my book, The Volatility Machine, that the globalization process is driven primarily by monetary expansion and the consequent increase in risk appetite. What was new in this piece, because I hadn’t realized it when I wrote my book, is that every period of globalization coincided with a stage of the industrial revolution in which accompanying the expansion in international trade and capital flows is a major technological boom, driven also by monetary expansion.
After re-reading the article I thought it might be useful to republish it on my blog with a couple of comments while waiting for the next entry (which should come out this week). I think the point it makes about the process in which globalization is reversed is still worth considering.
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Will Globalization Go Bankrupt?
“Only the young generation which has had a college education is capable of comprehending the exigencies of the times,” wrote Alphonse, a third-generation Rothschild, in a letter to a family member in 1865. At the time the world was in the midst of a technological boom that seemed to be changing the globe beyond recognition, and certainly beyond the ability of his elders to understand. As part of that boom, capital flowed into remote corners of the earth, dragging isolated societies into modernity. Progress seemed unstoppable.
Eight years later, however, markets around the world collapsed. Suddenly, investors turned away from foreign adventures and new technologies. In the depression that ensued, many of the changes eagerly embraced by the educated young — free markets, deregulated banks, immigration — seemed too painful to continue. The process of globalization, it seems, was neither inevitable nor irreversible.
(Excerpt) Read more at mpettis.com ...
P!
Both ways.
“driven primarily by monetary expansion and the consequent increase in risk appetite.”
So all we need to do to continue the expansion is to develop trade with Mars....
Fascinating - thanks for posting.
redistribution of ‘our’ wealth.
redistribution of ‘our’ wealth.
redistribution of ‘our’ wealth.
pfl
Foreign worker visas are not as necessary although middle management still thinks they are needed to “lead” such workers via desktop shares. They too can be replaced with foreign staff.
nice concise summary.
It’s when Russia, the ChiComs, and a substantially weaker, socialistic, US set up a system of global governance.
Globalization is all about weakening the United States and undermining its sovereignty. They are well on the way to accomplishing those goals, facilitated by factions within our own country.
Technical services, for instance.
Good luck if you can get an American (or even someone with a comprehensible accent) on a help line.
Customers are patched over to India, whereupon the person on the other end robotically repeats "The Checklist" which guides the customer through doing his own repairs. Failing that, the traveling tech repeatedly replaces the motherboard and hard drive (with "refurbished" parts) until the customer gives up and purchases another unreliable lemon, built of parts sourced out to a multitude of disconnected low bidders, then reassembled into a semi-functional whole.
The gobalist business model: Churn and market junk at a more rapid rate than your competition. Product reliability and customer satisfaction no longer relevant. Just shift your junk-selling efforts to a different market.
There is one thing that is missed in all of this. Subsequent to WWII the US owned the world's reserve currency and so could finance itself on the seignorage (look it up) of printing the currency which other countries stuffed into their central bank vaults as reserves against which they could issue their own currency. In exchange for these "bank reserves" they gave us cameras, high end sports cars and cheap wine and cheese.
But what worked for the US, preying off the rest of the world, cannot work for everyone. Indeed what we are seeing latterly is not monetary expansion, printing the green stuff and then spending it, but rather debt expansion, printing the green stuff, providing it as banking reserves, against which the banks make cheap loans. It is worse than currency inflation, since money is money and buys something. Debt is a different animal entirely because it has to be repaid at interest, meaning you print money, and someone else lends it out hoping to live off the interest.
Either one monetizes all this debt - pays it off with printed money - causing an explosion of inflation - or one allows the wholesale default on all of that debt. One way or another rebalance has to happen.
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