Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Mercantilism is the strategic doctrine of maintaining a positive foreign balance in order to accumulate ForEx reserves. In a fixed-rate ForEx framework, you can improve your competitiveness by running lower inflation than the other participants in the framework. When a country with a persistent foreign surplus insists on running a lower inflation than its trading partners in a fixed-rate currency framework, it is hard to call it anything other than a mercantilist policy.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 01:58:30 PM EST
[ Parent ]
But wouldn't that be a mercantilist deflation policy?
by gk (gk (gk quattro due due sette @gmail.com)) on Wed Jan 12th, 2011 at 02:05:58 PM EST
[ Parent ]
Yes, and the ECB, like the bundesbank it inherited its brain form, has a well-known deflationary bias.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Jan 12th, 2011 at 02:14:05 PM EST
[ Parent ]
Hey, at least it's in pristine condition. There's no evidence it's ever been used...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 02:20:18 PM EST
[ Parent ]
The brain you mean, not the deflationary bias.
by Bernard on Wed Jan 12th, 2011 at 04:51:14 PM EST
[ Parent ]
Well, it's an inflation policy in the same way that unemployment policy is (hopefully) about preventing unemployment and the theory of relativity deals mostly with the things that aren't relative. English is funny that way.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 02:25:24 PM EST
[ Parent ]
Don't blame the latter on English: Einstein wrote his papers in German....
by gk (gk (gk quattro due due sette @gmail.com)) on Wed Jan 12th, 2011 at 02:29:18 PM EST
[ Parent ]
It is a mercantilism that generates deflation and pain and destroy the framework or the countries in the framework. You can not have a single monetary unit when there are very different inflation structures.

A question: Can it destroy all the participants in the framework, including the one pursuing the mercantilist policy?

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Jan 12th, 2011 at 02:27:12 PM EST
[ Parent ]
I can't see why it shouldn't. Mercantilist deflation exports part of the pain of deflation to the deflating country's trading partners. When they can no longer absorb this pain, there's only one place for it to go.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 02:40:11 PM EST
[ Parent ]
can they survive with exports to other developing countries, or not?

And I still do not get the flux identities....except one, a trade deficit between two countries using the same coin and with no creation of money must generate either public or private debt... simple balance of flux.

But.. the truth is that money is created by the banking system, which is also useful to start and increase the monetary mass in an expansion.. so, it is just a part of that debt which comes from trade deficits.. so it is:

trade imbalance= increase in the net private and public debt.

I think. So

Trade Imbalance= private+public debt is wrong, isn't it?

You can indeed have no trade imbalance and still create debt to finance some projects.. to generate money which will remain in circulation if the productivity or a new object is produced.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Jan 12th, 2011 at 04:09:31 PM EST
[ Parent ]

Display:

Top Diaries

Does anyone care?

by Frank Schnittger - Oct 10
59 comments

The Blame Game

by Frank Schnittger - Oct 8
67 comments

EU-UK Relations: Trading Blows

by Oui - Oct 8
17 comments

John Major's Encore

by ARGeezer - Sep 27
29 comments

Scamming the peace

by Frank Schnittger - Oct 2
23 comments

Wrightbus goes wrong

by Frank Schnittger - Sep 26
26 comments

Occasional Series