Nowadays, the globe economy especially US economy is seems like suffering a "pestilence" - sink into a boundless asset price bubbles trap and it has caused a mass credit fault and bubbles and the inappropriate policy has worsen the condition that we facing now.
Once our financial structure is unstable and into booms and busts cyclical, all participants in the economy must recognize the fact that: using any monetary and budgetary policy to ameliorate or eradicate any deflation phenomena is not a probably and an unreasonable action. Instead, the central bank on this planet should back to its core value - to regulate the proceeding of credit creation meanwhile, foster up the high pressure combat mechanism, be sure so not to obey to the government and private sectors needs to continue the expansionary credit easing to accelerate the unhealthy economy activities. If the expansionary credit creation persists, pernicious business cycle will not only unbounded but it also will encumber our world's economy.
I personally believe that our financial system is not operate on the basic of Efficient Market Hypothesis(proposed by classical economist), but it will collapse follow with the main classical economy theories. The Efficient Market Hypothesis has suggested that our financial market was like a tractable animal, it will calm once you ignore it and it will reach an equilibratory condition automatically. In fact, our financial market's nature is unstable; no any equilibrant force can we rely on; instead, it has its inertia force which will prompt up the booms and busts cyclical to disrupt our economy structure. What i would like to emphasize here is only credit creation regulation imposed by central bank will able to control its unstable nature. Unfortunately, the historical experience has proven that the monetary policy implemented by central bank was probably changed along with time, and has enlarge the booms and busts cyclical, waver our economy health structure.
I would like to take this opportunity to blame on the expansionary monetary policy which implemented by US Federal Reserve (Fed), it has lead US fall into a consecutive expansionary credit cycle. I bold to say, if US still deem that they are in the right way of making a proper decision in order to move the economy onto recovery path, it will harm and alter the US as a world economy leading position.
Once our financial structure is unstable and into booms and busts cyclical, all participants in the economy must recognize the fact that: using any monetary and budgetary policy to ameliorate or eradicate any deflation phenomena is not a probably and an unreasonable action. Instead, the central bank on this planet should back to its core value - to regulate the proceeding of credit creation meanwhile, foster up the high pressure combat mechanism, be sure so not to obey to the government and private sectors needs to continue the expansionary credit easing to accelerate the unhealthy economy activities. If the expansionary credit creation persists, pernicious business cycle will not only unbounded but it also will encumber our world's economy.
I personally believe that our financial system is not operate on the basic of Efficient Market Hypothesis(proposed by classical economist), but it will collapse follow with the main classical economy theories. The Efficient Market Hypothesis has suggested that our financial market was like a tractable animal, it will calm once you ignore it and it will reach an equilibratory condition automatically. In fact, our financial market's nature is unstable; no any equilibrant force can we rely on; instead, it has its inertia force which will prompt up the booms and busts cyclical to disrupt our economy structure. What i would like to emphasize here is only credit creation regulation imposed by central bank will able to control its unstable nature. Unfortunately, the historical experience has proven that the monetary policy implemented by central bank was probably changed along with time, and has enlarge the booms and busts cyclical, waver our economy health structure.
I would like to take this opportunity to blame on the expansionary monetary policy which implemented by US Federal Reserve (Fed), it has lead US fall into a consecutive expansionary credit cycle. I bold to say, if US still deem that they are in the right way of making a proper decision in order to move the economy onto recovery path, it will harm and alter the US as a world economy leading position.
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