Monday, March 21, 2011

The feel bad factor

At the Gang8 today, Chris M of London writes:

I agree with both Dirk and Geoff that Japan has deep-seated problems, but I also look at the mass psychology as well - what the Bank of England in a fit of wisdom sometimes calls the 'feel good factor.'

That is the ultimate driving force in economic expansion. Do the people feel confident enough to take a positive gamble on their future? Or would they prefer to pull down the shutters, pay off their debt, stockpile food and wait for things to get better?

After that, Chris wanders into irrelevance:

Do the Japanese people at present trust their own government? Do they trust their nuclear inspectors...?

If it ain't economics, it is irrelevant.

The "feel-good factor" may be the driving force in economic expansion. But it is not relevant today; economic expansion, unfortunately, is not at issue.

Maybe math people are good at economics because we have a feel for infinity. Plain and simple, debt cannot expand forever. You will break the economy if you try. Isn't it obvious? Tell me you've not forgot. It shouldn't require even half a thought.

Why do people in Japan and all over the world prefer to pull down the shutters and pay off their debt?

Because the debt is too much. Isn't it obvious?

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