The volitility is coming to grains

[sumdumguy]

Where did Austrian Economics come from? You been lurking on here?

[Austrian Economics]

Years ago I posted quite often, but it's been so long I forgot my old username. I ran across some interesting topics recently that brought me back on board.

[jazz]

Years ago I posted quite often, but it's been so long I forgot my old username. I ran across some interesting topics recently that brought me back on board.

I will pitch a theory. The reason why more fed intervention is needed more often, more recessions, more volatility, more flash crashes.....is globalization itself.

We now have supply chains chased off our shores that now sit 10,000 miles away across an ocean and behind a communist curtain. The system has become much more fragile, more mismatched, more just in time, more currency based etc. Thus it needs more intervention, more steering and more stimulus to correct errors.

Some economic genius thought it would be a good idea to offshore 97% of our antibiotic production to china.

[Austrian Economics]

Production is being sent offshore for a fairly straightforward reason: who's going to invest in a country in which businesses are saddled with a punishing array of useless ingredients like carbon taxes, payroll taxes and endless environmental studies to name but a few? Add to that the now constant threat of a blockade of either your product outlet or your supply chain. If we got rid of these barriers, maybe companies would be willing to invest in Canada. As it stands, they are practically being told to get lost.

Otherwise, globalization in and of itself is not the problem. Because we have adopted an irredeemable fiat currency we have also adopted a regime of unstable (and presently falling) interest rates. This instability makes economic calculation more hazardous than it needs to be. In the falling cycle, business becomes manically obsessed with just in time production. As interest rates fall, the cost of inventory rises. What happens when they hit zero? Cost of inventory rises to infinity? That won't be good.