How Graphene Ping-Pong Balls will Change the World

How Graphene Ping-Pong Balls will Change the World

Steve Coulter

Nov 6, 2010

Graphene is a recently-discovered material of remarkable physical and electrical properties. It is actually found in abundance in nature in the form of graphite. Graphene is simply a single molecular layer of graphite. Graphite is common pencil lead. When you write with a pencil, you create a thin layer of graphite on paper. Apply ordinary scotch tape to that graphite, and you can pull off tiny specks of graphene.

If you had studied these specks of carbon monolayer graphene macromolecules ten years ago, you might have earned the Nobel Prize instead of Andre Geim and Konstantin Novoselov, of the University of Manchester.

Courtesy of Wikipedia, here's a nice drawing of two layers of graphene:

The most intense interest around graphene has been the potential applications in electronics. Graphene has a conductive "cloud" of electrons on each side of this sheet of carbon atoms. These electron clouds can be manipulated to form the smallest possible transistors.

Graphene-based elctronics promise enormous adavances in smaller computer size and reduced power requirements.

We will probably soon see graphene-based photovoltaic solar cells that will be able to generate electricity from sunlight with astonishingly thin, light-weight layers.

Graphene is really a crystalline form of carbon. Diamond is the more familiar crystalline form of carbon. Graphene is stronger than diamond, but it is somewhat elastic.

Crystals have a tendency to be quite stable physical forms. They can often be "grown" in the laboratory under precise conditions. This is also true of graphene, which can be formed in layers deposited on, e.g., copper.

Now consider a factory which might produce spheres of graphene the size of ping-pong balls. The stuff is stronger than diamond, but if we produced spheres of only one molecule thickness, they'd be too fragile to hold their own weight. So we're here considering spheres of sufficient thickness to have the approximate strength of ping-pong balls. One imagines these would have a thickness of thousands of layers. "Thousands of layers" sounds thick, but at atom-sized dimensions, were still talking about microscopic thickness.

These could be formed inside molds of two copper half-spheres. One side of the mold would have a tiny port for a needle-like probe to introduce the carbon substrate to be deposited on the inside of the mold.

Open the mold, and you have a graphene sphere with a miniscule hole. It would probably resembe a soap bubble of the kind you might see a child blow for fun.

Now, put that bubble in a vacuum, and seal the hole with a tiny dot of adhesive tape. There's now a vacuum inside the ball, so the tape hardly even needs adhesive to stay put. Alternatively, it might be possible to deposit more graphene at the hole to complete the sphere.

The peculiar thing about this ping-pong ball is that it's lighter than air. The whole sphere would weigh only perhaps a few milligrams and the vacuum inside would weigh nothing. The sphere would be considerably lighter than if it were filled with helium gas or hydrogen gas. But it would be far stronger than any lighter-than-air balloon.

Since the raw material for graphene is essentially coal or natural gas, it could be possible in the remote future to mass produce vacuum-filled graphene spheres for pennies per liter of vacuum.


GSVB Aircraft

Fill a few common garbage bags with these, tie the bags together, and you can lift yourself into the sky. Bring a parachute before you lift off, please.

Graphene sphere-based lift has powerful advantages over current balloon-based bouyancy using helium or hydrogen gas. Balloons have to permit expansion of gas as they rise, and cannot generally be made into structures of mechanical rigidity or stregth. Only in very large sizes can they be turned into navigable aircraft (dirigibles, or blimps).

Graphene Sphere Vaccuum Bouyancy ( GSVB ) devices offer astounding versatility and applications. You can pack these spheres into lightweight structures comprised primarily of fabric like nylon, shaped in any way you like. The dimensions don't change with altitude, the graphene spheres don't expand or contract.

So lets think about unmanned GSVB aircraft design. These things will hover without using any power. Now put solar cells on the top surface (which will soon be graphene-based and ultralight in weight), and put some lightweight batteries in the structure (which may also soon be graphene-based and ultralight in weight). Add a computer control, radio interface, and propulsion by simple electric fans.

What you now have is a lighter-than-air drone aircraft that can stay aloft for years at a time. With GPS technology, it can hover over a very precise location, at a controlled altitude of anything from a few feet to several miles high. It could be as small as a basketball or as large as the QE2 ocean liner.

Now consider almost ANY application, invention, or device that has ever been conceived of using unmanned aircraft, blimps, ballooons, dirigibles, or satellites. Most of the ideas that have ever been cooked up since the first balloon flight of 1783 can now be carried out with this new and more-versatile technology.

Since these drone aircraft are navigable, they can be released from anyplace on the globe, travel to any point on the globe, stay there as long as desired, and then navigate back to base for maintenance and refitting.

Obviously, surveillance devices would be a prime use. Espionage, security, border control, law enforcement uses spring to mind. Unlike heavier-than-air drones, these craft would be silent. Unlike balloons, they could not be easily shot down with mere bullets.

Many current applications for communication satellites could be deployed more cheaply with GSVB drones. A single communications drone a few miles in altitude might only be able to serve a single metropolitan area, but these drones could simultaneously have functions of modern microwave relay stations.

A cloud of such hovering communications drones could provide TV and internet service to whole nations with minimal ground-based equipment. Laying coaxial cable or fiberoptic lines over miles of ground could soon become obsolete.

Again, with GPS positioning and solar-powered navigation, an entire fleet of communications drones could have almost totally automated operations, carrying limitless total bandwidth over unlimited geographic range.


Shipping and Transportation

The era of lighter-than-air dirigible transportation mostly died with the Hindenburg disaster of 1937. A promising mode of transportation was probably quashed prematurely. GSVB aircraft might bring this transportation mode back.

With GSVB technology, lighter-than-air craft will be far more compact, rigid, and flight-worthy than balloon-based craft, but will still be somwhat bulky, and therefore much slower than current aircraft. It is unlikely that there will be significant demand for mass passenger travel using such aircraft.

Perhaps there might be specialty demand for airliner cruises that might resemble contemporary oceanliner pleasure cruises.

On the other hand, personal helicopter-like craft could be of use in areas where ground transportation is difficult. With automation, on-board radar, and GPS technology, this transportation mode could be pilotless. You might get into your personal GSVB aircraft, punch in your destination with Google Maps, sit back and await your arrival. In the event of mechanical trouble, you might need to be retrieved by someone, but you wouldn't plummet to the ground. Parachute optional here.

Nor is this technology suitable for freight of heavy cargo. However, relatively lightweight, high-value cargo whose delivery is not time-sensitive could be transported by this mode.

In particular, one thinks of the vast trade in consumer goods from China to the US. With unmanned, solar-powered GSVB aircraft, these items could be shippped over the Pacific -- without the fuel expense, labor expense, or maintenance cost of oceanliners. These craft could be packed in Shanghai, programmed, and launched to arrive at a Los Angeles airport in a week or two.


Ladder to Space

Regardless of how great GSVB drone craft might be, mankind will still want to send some items into orbit and then interplanetary space. Current rocket technology makes sending items into orbit very expensive. Engineers have conceived of a number of cheaper alternatives for sending up massive amounts of space cargo. Among these is the idea of a kind of cannon to shoot items ballistically from ground to space.

The force, energy, and speed necessary to deliver items to space ballistically is a daunting challenge, and the cargo so transported would be subjected to ferocious g-forces at launch. One might be able to reduce the difficulty by having a launch platform start the journey at high altitude.

It would be a relatively straightforward matter to design a very, very large GSVB aircraft to carry the air cannon capable of accelerating a payload of hundreds of pounds to near escape velocity.

More extraordinary pie-in-the sky ideas for space delivery have included a "space elevator." GSVB technology could provide the mechanical support for such a structure from the level of ground to tens of miles high.

Climate Change

If graphene spheres can be manufactured at extremely low cost per-unit, a solution to global warming could be at hand.

These spheres can be coated with white or black coatings. The spheres could be made to be heavier on one side, giving a bottom and top to each floating sphere. Put, say, a white titanium dioxide coating on the top, and a black carbon coating on the bottom. Cheap stuff, really. Release many trillions into the atmosphere.

Sunlight hitting the white side of these spheres would reflect light back into space, increasing the "albedo" of the earth to cool it. Heat radiation from the ground need not be reflected back, but would be absorbed by the dark bottom of each sphere, slightly warming the surrounding air in the upper atmosphere, which by convection would deliver the warmth above the sphere-laden layer. Effectively, we'd have a cooling blanket for the earth.

These spheres are very durable and resilient. They could surely be designed to stay aloft for years, even decades before ultraviolet rays and other radiation would break them down to the point of air entry and fall to earth. The stuff is really mere graphite, found in nature, and non-toxic.

Realistically, nobody would launch trillions of individual spheres that could not be retrieved. If we overshot the cooling or needed to turn off the system, the whole globe would be in trouble.

Really, we'd assemble these spheres into massive sheets held together to form rafts the size of multiple square miles. Around the periphery of each massive floating high-altitude raft would be solar-powered, radio-controlled aparatus to permit these rafts to stay flat and horizontal, and be kept to specific locations and permitting the sheets to be retrieved if necessary.

These navigable rafts could be brought to areas for spot-cooling of the globe. Too hot in Europe? Bring a fleet of sheets there for some shade. Areas near the equator could be cooled to become more livable. The Sahara desert could become a temperate zone while also helping to cool the globe as a whole. Saudi Arabia could become a delightful paradise. The Arctic and Antarctic could be kept cool in coming decades and centuries to save polar bears, ice sheets, fisheries, and humanity itself.

Even if the globe as a whole had misgivings about such schemes, individual nations like Saudi Arabia might choose to pursue such plans.

It may be time to start filing patent applications.....

P.S. I cross-posted this over at the half-bakery (http://www.halfbakery.com/idea/Graphene_20Vacuum_20Balls#1289342392). The brilliant minds there have kindly sought to poke holes in this apparent hare-brained scheme. Rough estimates of the strength of graphene would seem to suggest that these spheres might indeed act pretty much as I've suggested here. Actually manufacturing a prototype would be the main hurdle, but advances in handling this material have been developing at a breath-taking pace. I'm quite optimistic a prototype could be built within 2 years.

Treason for Profit, 100% Legal. Get Rich Quick !!!!!!!!!

  

Sadly, that headline can be accurate, thanks to the Supreme Court's decision last week, Citizens United Vs. FEC.  This decision, bizarrely, recognized corporations as having free speech rights under the First Amendment of the US Constitution.  

The position is fundamentally un-American.  Our founding doctrine is that rights are bestowed upon people by "the Creator," and are inalienable.  That is, they aren't granted by government or law -- government can only respect or infringe these intrinsic rights.  The Supreme Court majority seems to think that corporations can or should have rights bestowed upon them by government.  Theologically, this is blaspemy.  In terms of political philosophy, it is hubris. Pragmatically, it opens the floodgates to treason for profit.

The coporations that now have freedom to make their own unlimited election campaigns now include any group incorporated in a US territory or state.  Actually, as of today, I know of no valid law that forbids even foreign corporations from broadcasting such election ads in the US.  Traditionally, even foreigners have had unencumbered free speech in the US.  

Still, election ads are likely to still have to have the group paying for the ad to be named, and election advertising is unlikely to be effective if its byline says "paid for by The National Bank of Switzerland."  Usually, it works better to say something like "paid for by Americans for Truth and Beauty."

So a new, lucrative business plan is now possible.  I'll start up a new public-relations corporation called "Americans for Truth and Beauty, Inc."  I can incorporate ATB online in Delaware for about $100.  Then file for an IRS tax ID number online and I can be in business in a day.

I then contact the 100 largest corporations of the China stock market in Shangai.  These are, of course, generally controlled by the Chinese Communist Party.  No matter, business-to-business deals in this globalized economy is simply free trade, there's no legal reason not to do business with them.

I tell them that I'm going to produce materials to support the campaigns of candidates who:
--oppose tarrifs against Chinese goods, on "free trade" grounds
--believe we shouldn't criticize the human rights records of our trading partners
--don't think China or anyone else should have to cut down on coal-fired power plants
--favor strong unions in America, which coincidentally will make it harder for American businesses to compete against Chinese ones
--oppose a strong US military presence in the Pacific, because our Pacific allies should carry their own military burden.

I ask these foreign companies (or heck, even the Chinese Communist Party itself) for seed money to allow me to interview candidates of both parties who might be prepared to support this agenda.  I find a number of candidates who can be persuaded to promise to follow this agenda, regardless of what might be said in their "official" campaigns.

List in hand, I go back to those Chinese corporations.  They say they won't give me money directly, but that I should expect lucrative contracts from various US-based partner organizations to produce materials sympathetic to these candidates and smearing their opponents.  Millions of dollars pour into my company to fund these independent election PR efforts.

Last week, this business plan would have been in violation of federal election laws.  The Supreme Court just overturned those laws.  This business plan is 100% legal today.  Even if restrictions are placed on foreign-owned corporatons, my US corporation (discreetly working with with hidden foreign partners) can continue with this scheme legally.

Traitors to American now have a 100% legal get-rich-quick scheme to line their own pockets.  

It's not WalMart and Exxon we need to worry about.  American national sovereignty just got gutted by the Supreme Court.

We now need an amendment to the Constitution to undo this damage to our country.

Next US President? China, Inc.

  

Every American needs to read the Supreme Court decision in Citizens United vs FEC.

http://www.supremecourtus.gov/opinions/09pdf/08-205.pdf

It explicitly gives corporations free speech rights, including in electioneering, right up to election day.   A candidate's official campaign remains regulated and restricted, but any "independent" campaigning on any candidate is now unlimited.  

A constitutional amendment is now required to restore elections to a regulated activity.

Nothing in the decision limits this right to US-based or US-owned corporations.   As of today, China, Inc., or Europe's Airbus, or Russia's Gazprom can now produce and run election ads in America, to try to determine US elections.  

If anyone thought US liberals/progressives were dangerous, SCOTUS has unleashed foreign influence without any legal restriction.  Before, foreign interests had to influence elections secretly.  Now they don't even need a fig leaf.  

For an idea of what mayhem foreign organizations could cause in America, see:  
How Vladimir Putin Selected Obama:
http://stevemdfp.blogspot.com/2008/11/how-vladimir-putin-selected-president.html

Today, America has ceased being a democracy, ceased being a republic. and is now an indirect multinational plutocracy.   Thanks to the Supreme Court's "Gang of Five," rule by multinational corporations is now enshrined in our Constitution.

Heaven help us.

Read more: 

http://tinyurl.com/CitizensVsFEC

  

Some Doctors Are Poopy-Heads: Influenza Immunization, Reticent Healthcare Workers, and the current H1N1 Swine-Flu Pandemic

Medscape is a popular site for medical professionals. They run a closed forum for doctors and nurses. There should be no surprise that some discussion concerns the response of the medical community to the current pandemic crisis. A few recognized authorities have posted matter-of-fact pieces about the importance of doctors and nurses getting immunized, so as not to spread influenza to vulnerable patients.

You'd think that doctors and nurses would be almost unanimous about getting the flu vaccine to ensure they don't inadvertently expose vulnerable patients. You'd think they'd expect their peers to roll up their sleeves for the good of the profession's image as well as sound patient care. You'd be wrong.

It's a closed forum, so I won't reveal the words or screen names of other participants. If you happen to be a medical professional, however, you can join in the fray here:
http://boards.medscape.com/forums/.29f68ec3/27

To summarize, the discussion starts with a video clip of Paul G. Auwaerter, MD discussing New York State's recent decision to require healthcare workers to receive this year's influenza vaccines, and urging his peers to roll up their sleeves to get on board, even those not legally required. It's here:

http://www.medscape.com/viewarticle/709580
(for access to this, you just need to register for the site. It's only the professionals' area you have to be validated to join).

The professionals' closed debate about this video clip begins with 18 comments--all decrying the vaccine, the concern about pandemic, and the "state tyranny" of requiring physicians to receive it to continue seeing patients. This is unanimous condemnation of doctors being expected to put up with a tiny inconvenience and a remote personal risk in order to protect their own patients. So, I contributed the following:

#19 of 28, Added By: SteveMDFP, MD, Family Medicine, 9:55PM Oct 07, 2009

The comments here currently are quite hostile to the idea of mandatory immunization for healthcare workers. I have to disagree with a couple of issues, but agree on one significant point.

Required immunizations for the public would be a violation of rights. For a licensed healthcare worker, however, the question is different. Retaining the PRIVILEGE of legally treating patients could reasonably include ensuring that these licensed individuals have minimized the possibility of transmitting influenza to frail individuals. There may not be double-blind placebo-controlled clinical trials to prove that immunizing healthcare workers reduces risk to patients, but it's not hard to make the argument based on current (imperfect) knowledge. I think the New York State decision is a bit intrusive, but not entirely unreasonable.

I do have a concern about the H1N1 vaccine, however. I think trace mercury or tiny amounts of aluminum pose no credible risk. However, the possible use of squalene as an adjuvent in this somewhat novel vaccine may reasonably raise serious concerns. "Gulf War Syndrome" has been epidemiologically linked to troops receiving the military anthrax vaccine (which contained squalene). Injected squalene causes an auto-immune syndrome in lab animals. If squalene is used in this vaccine, there is no possible way to demonstrate that it is "safe" from causing an autoimmune syndrome that may not become apparent for months, and could cause devastating, progressive injury for years. See:
Antibodies to squalene in Gulf War syndrome.
Exp Mol Pathol. 2000 Feb;68(1):55-64.
http://www.ncbi.nlm.nih.gov/pubmed/10640454/

Personally, I won't be taking the injected H1N1 vaccine, unless I'm certain it does not contain squalene. I would not hesitate, however, to take a FluMist version.

You'd think pointing out that the thrust of Auwater's encouragement to be vaccinated is all about protecting their own patients would shift the tone of the remaining debate among my peers. No, more direct language is needed. The next response asserts that physician transmission of influenza is vanishingly rare, and that the respondent has never taken the vaccine and never transmitted influenza virus to a patient. Good golly, high school health students know you don't have to already be sick to be able to pass respiratory viruses around. But sometimes even experts need to be reminded of the basics. My reply:

#21 of 28, Added By: SteveMDFP, MD, Family Medicine, 2:59AM Oct 08, 2009

xxxx,

See also extensive discussion here:
http://boards.medscape.com/forums?128@@.29f60079!comment=1

You write, " [essentially, two decades and half a million personal encounters did not result in a single transmission of flu, and xxxx doesn't take the flu shot. --- actual words removed for confidentiality] ..."

I'm sorry, this just doesn't hold up. Influenza is roughly the most contagious disease known. Maximum viral shedding begins *before* onset of symptoms. Most infections are undiagnosed, and some are experienced as simple colds or are totally asymptomatic.

Published studies do demonstrate reduced risk of patient death when health care workers get the flu vaccine. It's entirely plausible that you had asymptomatic influenza many times and exposed dozens or hundreds of patients, several of whom may have then died of pneumonia without "influenza" being diagnosed in them or you, or anyone else. Or perhaps the number of avoidable influenza-related deaths from your work really is zero, but maybe the first avoidable nosocomial death will be this January in a patient of yours. If a doctor taking flu shots for a whole career prevents only a single avoidable death in a vulnerable patient, would that not be plenty reason to take the vaccine every year?

That link refers readers to another discussion thread, in which the originating essay calls physicians who refuse immunization as "Dumb Asses" because of their ignorance of the issues at hand and needless risk to their own patients. Most physicians responding denounced the indignity and outrage of such ungracious language and disrespect of peers.

I am reminded of Semmelweis, who discovered that hand-washing by obstetricians could save the lives of ten percent of women who had deliveries performed by doctors. His evidence was incontrovertible. Physicians' resistance to the innovation was stubborn and unreasoned. In the face of ongoing needless patient deaths and irrational obstinacy by his peers, Semmelweis called his disbelieving colleagues murderers. This is a tad stronger than "Dumb Ass." Today, he is regarded as one of medicine's truly great heroes and pioneers.

Finally, one contributor pipes up that we should, indeed, act to avoid infecting our patients, and protect their health, even if there's a very small personal risk by taking the vaccine.

You'd think that reminding a doctor of the biology of disease transmission and the vulnerability of some of our frail patients would settle the matter. You'd be wrong. The original respondent to my first contribution then casts doubt about virus shedding during infections, and on the existence of influenza infections that cause no obvious illness in some individuals. Sigh. I do teach medical students, and I expect such questions from some of them. Not from a highly-experienced peer. So, I was forced to carry coals to Newcastle:

#25 of 28, Added By: SteveMDFP, MD, Family Medicine, 7:47AM Oct 09, 2009

xxxx-

There is nothing new or esoteric about the knowledge that infections with influenza virus can display a range of symptoms from severe to asymptomatic, including viral shedding by asymptomatic individuals. Reference to these issues is here:
http://www.ncbi.nlm.nih.gov/pubmed/18230677

That you or I have had influenza SYNDROME rarely does not mean we haven't had influenza INFECTION many times.

You simply cannot know with confidence whether you have had an influenza infection in any given winter, or whether you have exposed frail patients. There is no way to know whether you've infected a patient who then develops pneumonia 5 days after the last time you saw him/her.

You want more than one peer-reviewed published study to demonstrate that health care workers getting influenza vaccine reduces death rate of patients? Most of what we do as a matter of clinical practice standards has no such level of support. Where's the evidence that performing a physical exam on a hospitalized patients improves outcomes? You won't find such a study. But what would you think of a doctor who simply never uses a stethoscope or touches a patient, or looks at a patients body?

Similarly, can you find a randomized controlled trial to show that wearing sterile surgical gloves for surgery reduces post-op infections more than simple handwashing, with surgery done with bare hands? I'd be shocked if you could find a study to support this. But what would you think of a surgeon who did surgery with bare hands?

The rationale for expecting health care workers to receive influenza vaccine is straightforward and commonsense. The risk or inconvenience of this is far less than the risk of seeing patients with infections. The potential hazard to frail patients from unimmunized healthcare workers is substantial, in the minds of the best-regarded clinicians who have examined all the available evidence.

The burden of proof here should be on those who say health care workers needn't be expected to be vaccinated (absent a decent contraindication).

Sigh. The collective response is then two more posts citing side effects of the vaccine and envisioning doctors being crippled en mass. Sigh. As if these were syringes of plague, not vaccine. These are doctors. I swear, the vetting to get access to these forums is rather rigorous. This is like having to introduce an SAE-certified auto mechanic to an exotic instrument known as a socket wrench. Yes, socket wrenches can hurt you, the ratchet mechanism could fly apart and a fragment could hit you in the eye. Your arm could slip and hit a hot exhaust pipe. It could fall and hit your toe. People have died from using socket wrenches, I'm sure. But auto mechanics use them because its part of the job they signed up for. Sheesh. Then my colleagues cite a lack of randomized, controlled trials to prove that influenza vaccination of doctors saves patient lives. My reply:

#28 of 28, Added By: SteveMDFP, MD, Family Medicine, 2:44AM Oct 11, 2009

This is misleading. "Lack of evidence of efficacy is not evidence of lack of efficacy." Readers would do well to look at the actual article referenced:
Influenza vaccination for healthcare workers who work with the elderly
http://www.cochrane.org/reviews/en/ab005187.html

There is published research showing a significant decrease in patient mortality when healthcare workers are immunized. See:
Influenza vaccination of health care workers in long-term-care hospitals reduces the mortality of elderly patients.
http://www.ncbi.nlm.nih.gov/pubmed/8985189

Again, this is far stronger evidence than we have for supporting other clinical practice standards. Can you find comparable evidence to support wearing sterile gloves for surgery instead of just a hand scrub? But what would you say of a surgeon who only washed his hands, and then performed surgery with bare hands?

Level of evidence ethically necessary to prescribe a treatment is different from the level of evidence ethically necessary to mandate a practice standard among practitioners. It's unnecessary and unethical to insist on such a level of evidence before implementing a standard of professional practice.

Level of risk to a practitioner in being immunized is infinitesimal in comparison to the level of risk suffered by a patient cared for by a practitioner shedding influenza virus. We really should try to kill as few patients as possible, and insist that our peers do likewise.

http://www.cdc.gov/flu/weekly/weeklyarchives2008-2009/images/picurve36.gif

India's 'Untouchables' and the West's Addicts

_________________________________________________________

The "untouchable caste" of India, the "Dalits," are culturally in much the same position as addicts in the West. They are commonly viewed with fear, disdain, hate, and revulsion. Their lives, human value, and sufferings are typically discounted. For example, when a Dalit dies, the event is often treated with little concern, a mere footnote on society's functioning.

See:

http://www.dalitnetwork.org

Some in India have come forward to address the plight of the Dalits. Progress has been made, but at a slow pace. Mahatma Gandhi championed this cause decades ago. He successfully freed India from British colonial rule, but made only small progress in addressing the plight of the Dalits. Political and legal problems, even on a global scale, are easier to fix than cultural attitudes.

If one imagines a service program designed to help the plight of a population of Dalits in India (perhaps an educational, nutritional, or legal aid program), one can envision predictable issues which need to be considered.

The biggest issue would be staff attitude. Many or most might be expected to approach their duties from an enlightened stance, having examined and worked through their prejudices. But others would be expected to approach their employment with a residual attitude of superiority, condescension, and even hostility. The obligations of duty of care and other ethical standards can be forgotten in the face of such prejudice.

A rational service program would have to be carefully designed to detect poor staff attitude or poor program policies and procedures, with vigorous mechanisms for correction. The centerpiece of such quality control would need to be systems for concerns and grievances of clients to be solicited, listened to carefully, and addressed with respect and compassion.

It would be utterly inadequate to require client grievances to be submitted in writing; this is difficult for many on psychological grounds, and often impossible on literacy grounds. It would be utterly inadequate for grievances to be heard first only by the supervisor of an employee. In any organization, supervisors and subordinates ALWAYS develop interdependent relationships which hamper the freedom of a supervisor to address client grievances objectively. Superiors and subordinates generally anticipate a long relationship in which easy relations are essential to be able to work productively and effectively. In essence, there can be a real conflict of interest for any supervisor to be the primary mechanism of hearing of grievances by any client in ANY service organization.

It would be utterly inadequate for such quality control measures to depend upon client questionnaires being distributed and handed back to program personnel. Any client feeling fear (rationally or irrationally), would not want that questionnaire to be seen by program personnel, and would tend to self-censor or "whitewash" any concerns in any such document.

A rational system would have to be designed with an independent ombudsman or "office of the client advocate" who could hear grievances in any form and investigate, with resulting recommendations to be addressed at high levels.

Most organizations with active internal quality control mechanisms employ "exit interviews." Most commonly, exit interviews are given to employees leaving a business as a way to raise and address problems which current employees may not feel free to bring up, for fear of retribution. The same kind of process can, however, be employed with clients of service organizations. These need not necessarily be face-to-face interviews with every exiting client. The process could be carried out by phone or written questionnaire, and might be done with only a statistical sampling of clients. As with exit interviews for employees, an effective approach would not be to question only those leaving in good standing, but also those who are fired or quit.

Any kind of service organization without vigorous quality control procedures in place can be expected to suffer characteristic aggravations. Clients who do not feel able to have grievances and concerns listened to within organizational channels will tend to carry their concerns elsewhere. Such unanticipated and less-effective channels can include public word-of-mouth, stories in the press, reports to outside governmental authorities, malpractice suits, and even criminal complaints to law enforcement. When one sees a service organization having clients raise concerns in unusual venues, such as within advisory councils, the primary lesson to be gleaned, I think, is that effective internal quality control measures are deficient.

Calling the Bottom

Remember nine months ago, when economists were marvelling over an exceptionally well-performing world economy? Though energy and commodity prices were high, the overall picture seemed rosy. Consumer confidence was good, and all sorts of productive technologies were coming into application all over the globe. Steady increases in productivity, fostered especially by almost magical information technology, promised rising prosperity and increases in economic activity the world over.

What happened? The real estate speculative bubble burst, and the resulting jitters sent essentially everyone all over the globe to execute a generalized "run on the bank." Investments and assets of all kinds were suddenly being cashed-out. The fall in asset values across the board was thus the very definition of a deflationary crisis. An incredibly rapid contraction of the money supply thus fed this self-reinforcing spiral.

The crisis has been answered with reassuring speed and vigor by concerted central bank actions to re-expand the underlying money supply. Have the credit conditions been responding appropriately? Yes. The single best measure of the liquidity and health of the credit system is probably the "TED-spread." This is the difference in interest rates between Federal Reserve debt obligations and highest-quality commercial obligations for the same term. Effectively, Federal Reserve obligations are the working definition of zero-risk debt. The perceived risk of bonds of the highest quality, then, is effectively a good measure of overall economic confidence in future growth and ability of the entities to repay their obligations. If the spread between these two rates is small, there is confidence globally in the health of the global economy, and thus a willingness and ability to lend to good borrowers for good purposes. Though still rather high by historical standards, the spread as of today, November 11 is 1.75, falling very rapidly indeed from its mind-blowing, absolutely unprecedented peak of 4.64 on October 10, 2008.

By this TED-Spread measure, the current crisis started on the ironic anniversary, 9/11, when the spread stood at 1.21, already moderately high. One week later, it hit a new peak, 3.13, which was completely unprecedented. It had never in its history exceeded much over 2.0. Just another three weeks was needed for this to reach the mind-boggling peak of 4.64. See:
_____________________________________________________________________________________

_____________________________________________________________________________________
[courtesy of Bloomberg.com,
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND]


For a broader perspective, look at this measure over five years:


_____________________________________________________________________________________
From the perspective of the credit markets (where this crisis originated and demolished the financial pillars of the "real economy"), the credit "crisis" is now just a moderate credit "crunch" and may well be back to fairly normal range within a week.

So, looking forward, what are the prospects for resumption of brisk growth? Excellent. Although willingness of consumers to spend may be dampened for some months, there is great benefit to having that income saved and re-invested rather than simply consumed. The underlying engine of economic growth--technology and it's inventive application to productive uses of all kinds all over the globe--never took a breather through this crisis. Great plans and ideas are sill on the drawing boards in every country on earth. Computing power and information transmission and processing capabilities are better now than they were a year ago.

There is one advantage right now that the global economy didn't have a year ago. Energy and raw materials are much cheaper. With access to capital for sound infrastructure investments, all those wonderful plans sitting on drawing boards can now be funded and carried out at substantially lower cost than they could have just one year ago. When in the history of economics have such investment opportunities existed before? Never. Never.

What we went through over the past two months is comparable in intensity to what happened during the Crash of 1929 and the Great Depression. The fairly mind-boggling difference is that we went from good times to abyss and now solidly on the way to recovery in two months rather than ten years.

How could this be? Simply, most money exists as information, not physical currency--account balances, ledger entries, contract obligations and the like. This is simply data. In this electronic information age, this data can be transported, recorded, verified, and exchanged all over the globe in the blink of an eye, in quantities that defy the ability of the mind to comprehend. The "positive feedback loops" of money creation and destruction now can now develop and reverse in days to weeks rather than months to years.

As long as the central banks can respond rationally, quickly, and vigorously, these self-reinforcing cycles of money creation and contraction (inflationary spirals and deflationary crashes) can be corrected with breathtaking speed. The central banks today sit at the tiller of a supersonic speedboat, instead of the great wheel of a stately steamship. Through the first eight months of 2008, they didn't realize the economy was drifting towards a deflationary crisis. Once the picture became clear, however, their actions were brisk, vigorous, rational, and concerted. Over this time, the central bankers look first pretty incompetent, and subsequently brilliant and courageous.

This morning, the economic future looks exceptionally bright. The "real economy" however, will surely take a few more months to reflect this reality; it hasn't had time to fully reflect the emergency (and near-catastrope) that has already happened in the financial markets.

In summary, Warren Buffet is surely correct that equity investments today represent an opportunity that may be of unprecedented value in the history of finance. It is time to invest.

How Vladimir Putin Selected President Obama

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If you were a foreigner watching the unfolding US election, had a stake in the outcome, and had a few hundred billion dollars to spare, what would you do?

How many people have been in such a position in the current election cycle? Three: Vladimir Putin of Russia, President Hu Jintao of the People's Republic of China, and King Abdullah of Saudi Arabia.

Recent figures show dollar reserves of these three nations have been enormous, and rising briskly. Russia's dollar reserves recently stood at $260 billion. Saudia Arabia has banked over $800 billion. China holds over a trillion dollars. In all cases, current trade surpluses ensure that these reserves are guaranteed to increase briskly for some time to come--none of these autocratic rulers has any reason to be shy about using these funds for any reason of national importance.

Who would these powers prefer to win the US election, and how badly? In all cases, Obama, very badly. In Saudi Arabia's case, there are conflicting considerations. A McCain presidency might be viewed as more friendly to oil interests around the globe, not just domestic US oil company interests. McCain has had a long history of voting against alternative energy initiatives; Obama has supported vigorous support for alternatives to fossil fuels. As long as the US remains dependent upon oil for its transportation needs, imports are inevitable, regardless of how much "drill, baby, drill" unfolds. At first glance, McCain might be the preferred candidate for the Saudis.

But Saudi Arabia's rulers have interests more pressing than just keeping the oil money pouring in. The monarchy has never been entirely politically secure. Religious extremists within the kingdom routinely call for its downfall; al Qaeda has repeatedly called for an overthrow of the regime. More than anything else, the Saudi royal family needs to have political stability in the Middle east. From their perspective, a long-term presence of US troops in Iraq would likely continue to radicalize "the man on the Arab street," threatening the regime's security.

There is also the consideration of Iran. There is no love lost between the Sunni Saudis and the Shi'ite Ayatollahs of Iran. But a McCain administration would seem hell-bent on confrontation with Iran, quite plausibly leading to military strikes. Under such circumstances, the perception of an epic struggle between Islam and the Christian West would tend to overide narrower sectarian concerns; Sunni and Shia would unite in their fear and rage, and the Saudi royal family, being widely perceived as allied with US interests, would be at imminent risk of being deposed.

In contrast, an Obama administration promises a prompt (but not precipitous) withdrawal from Iraq, and dialogue with Iran that seems most likely to avert military conflict, while tending to keep Iran's potential influence in the region relatively reigned-in. This approach couldn't be more appealing to the Saudis if they'd written the plans themselves.

China's considerations in the election are similar, and possibly similarly compelling. On China's border sits North Korea, a nation of 23 million impoverished souls. McCain has publicly advocated a "get tough" policy with North Korea, opposing its removal from the US list of state sponsors of terror. McCain has also joked about engaging in military strikes against North Korea. The prospect of a renewed Korean War involving the US on its border must fill President Hu Jintao with dread. If nothing else, a war on its border would have a devastating effect on foreign investment in China. China would strongly favor a win for Obama.

The case with Russia is more compelling still. McCain has been a vigorous proponent of expansion of NATO within the borders of the former Soviet Union. McCain was especially bellicose during the recent war between Russia and Georgia. The tone of the McCain's commentary seemed to suggest the use of US troops to repulse the Russian invasion. The risk of such conflict between two nuclear powers might alarm the entire world, but nobody more than Vladimir Putin.

So, we have a list of suspects, we have established motive and ability. What would be the modus operandi for this detective mystery? The approach is straightforward. Beginning over a year ago, these three leaders would understand that a US economic downturn would tend to favor the Democratic challenger running against a Republican administration. It would also be obvious that Democratic campaigns have always been under-funded compared to the more wealthy and business-friendly Republican Party.

Two basic, simultaneous approaches would almost guarantee the desired outcome: funnel hundreds of millions of dollars into the Obama campaign, and engineer a severe economic downturn in the US.

Engineering the downturn would have been primarily accomplished by the Saudis. All they had to do (and did) was to dial down the spigots of oil output. Petroleum demand, being inelastic, promptly resulted in marked increases in prices. Overall, this strategy was no sacrifice for the Saudis...their reward for flat or decreased oil pumping was higher net revenues. With additional billions being pumped out of the US economy by oil imports, and with higher costs for economic activity, it is surprising that the economic downturn in the US didn't happen more quickly.

But all those vast holdings of US dollar-denominated assets could be used to push the economy down as well. Federal Reserve data has shown a fall in M3 "money supply" beginnning about a year ago, and accelerating since the summer. This could reflect cashing out investments, and holding currency in reserves in vaults or secured warehouses. There is a process of "money creation" in which currency in circulation expands many-fold as account balances that exist as ledger entries rather than paper bills. If $100 in currency is withdrawn from circulation, the fall in money supply is ten times greater. This piece of the economic maniupulation might have been accomplished most easily by the Chinese. Somewhere, there may be warehouses owned by China, packed with $100 bills withdrawn from the US economy.

The sale of stock and real estate holdings would also tend to depress the stock market indices and real estate prices. A rapid deflationary death spiral was triggered, then, that has been enormously greater than the initial stress to the economy. A firecracker was thrown into a dynamite factory, in effect. Those responsible probably only expected a loud bang. The actual explosion has shaken the entire global economy. Rapid, assertive central bank actions across the globe seem to be putting Humpty Dumpty back together again fairly promptly.

The other leg of the election strategy would have been accomplished by Putin's KGB friends. The goal would have been to funnel perhaps 100 million dollars or so into the Obama campaign without the origin of the funds being detected. KGB agents have long been active in the US, and have cultivated a vast range of contacts across the country. Distributing hundreds of briefcases full of $100 bills to contacts in organized crime syndicates, unions, and selected private groups could then translate into hudreds of thousands of "individual small donors." Donations of under $200 are not then reported by the campaign and would be ultimately untraceable in any case.

If this had actually happened, we would have seen the Obama campaign receive an unprecedented number of small donations, accounting for a remarkably high proportion of an enormous total campaign war chest. Is this what happened? You betcha.

Did the three foreign rulers act in concert, or each individually? Only the leaders of the three states know for sure. Each may have pursued such strategies independently, each unaware that the others were hoping to have a similar influence on the election outcome.

Would the Obama campaign have been knowing accomplices to these actions? Not a chance. There would have been no purpose to letting Obama know that his campaign was getting a foreign boost. If the information had gotten out prior to election day, the facts would have devastated Obama's chances. He'd have remained most effective if he believed all those small contributors were legitimate, patriotic US citizens.

Is there a shred of hard evidence to back up this interpretation of recent events? No. But if the plans had been executed carefully, there wouldn't be any convincing public evidence.

This could make a great movie. Secret plots, briefcases and warehouses full of cash, word leaders conspiring, scenes of Riyadh, Beijing, Moscow, and DC. Some James Bond character jet-setting around trying to piece together the clues, hounded by shadowy KGB agents....only, he discovers the plan only at the last minute, and is prevented from reporting the truth in time....stranded somewhere as the new world order unfolds, he and a beautiful KGB agent decide to make love, not war....

Anyway, globalization may have done more than give foreign nations a stronger interest in the outcome of US elections--it may have motivated actual interventions in the political process. A concern for genuine national security might favor a system of mandatory public campaign financing. Perhaps both parties might now embrace the concept.

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Wall Street Meltdown -- thoughts on the Deflationary Death Spiral

The press has mostly been describing the current economic meltdown as a "credit crisis." Well, this is true, but the term is not particularly illuminating.

There are other terms which more clearly describe the current crisis:

-- rapid contraction of the money supply

--"run on the bank," where "bank" means all financial institutions all over the globe

--deflationary crisis

--deflationary death spiral

The last is fairly inflammatory, but may be the most accurate. We haven't seen deflation since the Great Depression.

The bit of economic data few seem to be recognizing is that ALL major items which can be purchased are falling in price, rapidly: stocks, real estate, commercial bonds, most commodities. The only things that don't seem to be falling rapidly are items that are considered essentially equivalent to currency: T-bills, gold, silver, the Japanese Yen, and the Swiss Franc. Even gold and silver aren't particularly strong.

If almost everything is falling in price, we have DEFLATION, by definition. Many will be slow to recognize the truth of this, because just a few months ago food and energy prices were increasing briskly. But crude oil prices are currently in a nosedive over the past week, and consumer price index data is pending for food.

What is a deflationary spiral all about? Loss of confidence in financial institutions results in increasing numbers of depositors closing accounts and converting balances to currency or the above dollar-equivalents.

From Wikipedia, entry for "deflation":
http://en.wikipedia.org/wiki/Deflation

There have been three significant periods of deflation in the United States....
The third was between 1930-1933 when the rate of deflation was approximately 10 percent/year, part of America's slide into the Great Depression, where banks failed and unemployment peaked at 25%.

The deflation of the Great Depression, as in 1836, did not begin because of any sudden rise or surplus in output. It occurred because there was an enormous contraction of credit (money), bankruptcies creating an environment where cash was in frantic demand, and the Federal Reserve did not adequately accommodate that demand, so banks toppled one-by-one (because they were unable to meet the sudden demand for cash— see Fractional-reserve banking). From the standpoint of the Fisher equation (see above), there was a concomitant drop both in money supply (credit) and the velocity of money which was so profound that price deflation took hold despite the increases in money supply spurred by the Federal Reserve.

Sound familar? The similarities are very close. In both cases, the contraction came at the end of a speculative investment bubble that developed in the absence of effective, enforced regulations to prevent widespread fraudulent practices.

The biggest difference between 1930 - 1933 and 2008 is that the current economy is tied together with near-instantaneous communications. News events now cause changes of capital flows in minutes to hours, not weeks to months. This means that the development of new equilibrium of prices and money supply can happen much, much faster.

Reaching a new equilibrium much more quickly means that the pace of the contraction is accelerated and the time to "bottom" is quicker. It is entirely plausible that changes which took a decade to stabilize in the Great Depression might (MIGHT) now resolve over a period of months. There is today a much clearer understanding of the role of the money supply in these economic changes, and the Federal Reserve is now probably much more comfortable taking bold steps quickly.

Crucial to understanding the current disruption is a comprehension of the usual process of "money creation." Actual currency in circulation inexorably becomes the "support" for a much larger quantity of "money." Currency that is deposited in banks is lent out. The currency lent out is inevitably deposited again, only to be lent out again. Thus, a single $100 might "support" bank account balances totalling $1000. The bank balances these obligations with loans owed to them to balance their books. But the demand accounts entail a right of depositors to withdraw cash at any time. Loans can't generally be called in on demand. Similar processes apply to essentially any kind of "account" in which money is transferred in any way that could be deposited (or invested) elsewhere.

What happens when ten different depositors all want to simultaneously withdraw the same, single $100 bill that "supports" all this economic activity and wealth? In the absence of FDIC insurance, only the first-comer gets his money, the others find the establishment is out of business. Even with FDIC insurance, ony the first-comer gets his money right away--the others have to wait to be reimbursed.

This reality is both a cause and effect of money supply contraction. A demand to "cash out" accounts and investments and then hold onto cash (and cash-equivalents) means that the ratio of currency to total wealth becomes larger. A monetarist would say that the "velocity of money" is decreased. If the amount of currency in circulation is not increased to accomodate the new ratio, wealth must necessarily decrease, as measured in dollar terms.

Consider that in a deflationary crisis, holding currency itself (e.g., cash in home safes or under mattresses) is the best investment available--these bills are increasing in value just by sitting there. All other asset classes are decreasing in value, as measured in appreciating dollars.

We can also view this deflationary process as a reversal of the money-creation process described above with the $100 that multiplies like the proverbial loves and fishes into $1,000 of wealth. In the electronic "information age," this process can reverse at very, very high speed. This is what we're witnessing this week.

Now, imagine a scenario in which the Bureau of the Mint has made a terrible mistake in printing of currency. All currency suddenly crumbles into dust. What happens to the economy? With no money in circulation, almost all economic activity stops or is replaced with barter or the like. How should this disaster be fixed? By putting new currency in circulation immediately. Fairness would dictate that the money should be distributed specifically to reimburse holders of crumbled bills. But the immediate problem of restoring economic activity will be corrected by any distribution approach that spreads these dollar bills widely. Economists speak hypothetically of dropping currency from helicopters. That would actually work in our current situation, but there are more advantageous methods of distribution.

Now, is the dollar really appreciating as fast as the stock market is falling? Almost certainly not. Banks, other financial institutions, and many businesses currently have an absolute requirement to obtain cash. With a contraction of the money supply and inexorable demands of customers to "cash out" accounts, many institutions have an absolute requirement to acquire more cash. Ordinarily, they could obtain short-term loans. But, one might note, such borrowing is currently grinding to a halt. Many, many institutions (and many individuals) have no choice but to raise cash by selling assets. When such a crisis develops quickly, liquid assets are inevitably sold before less-liquid assets. Thus, changes in value of liquid assets are going to be faster and more dramatic than changes in price of, say, say real estate, or art work, or stamp collections, etc. Essentially, stocks are now being sold "at fire sale prices." We can expect less-liquid assets to fall in price more slowly and reach their new equilibrium before falling to such low prices.

Now, if stocks and corporate bonds are truly being sold at "fire sale prices," and if we can anticipate relatively quick restoration of adequate money supply by vigorous Federal Reserve action, what does that say about the future dollar value of these over-depreciated stocks?

Yeah, this is an exceptional buying opportunity for stocks, almost certainly. This is not to say that the market has reached its bottom. Its bottom will almost certainly occur in close proximity to the bottom of the money supply contraction. Probably the best daily measure of the pace of money supply contraction is the "TED-spread." (Well, the TED-spread reflects a number of different factors, but right now, as long as it remains at historically unprecedented highs, we can be quite sure that the money supply is contracting.) See: TED-spread
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

My own hunch is that the market bottom will occur when the TED-spread reaches about 2.o. Maybe 1.0. But today, the spread appears to be at an all-time high, 4.64. Today, the money supply is probably contracting faster than ever before. This could change by Monday, though. Or not. It will change when the Federal Reserve pours currency into the economy faster than people are cashing out accounts and investments. The necessary action by the Fed is so far out of range of "normal" actions, that this institution might take weeks or months to gear up to actions of appropriate vigor.

If I were forced to guess the date of the stock market bottom and subsequent rally, I would suggest November 5. (Yes, the election. Markets hate uncertainty. The global economy would strongly prefer Obama, but I'd bet there'd still be a rally with a McCain victory.) With some ups and downs (of course) the Dow should be at 20,000 within 5 years, maybe 3. That's another wild guess. Don't sue me if the market stays in the doldrums for a decade.

Right now, I think it extremely prudent for the Federal Reserve and/or Treasury to start purchasing equity in stressed (but fundamentally sound) companies. The taxpayer will be buying low and will enventually be selling high. If the needed short-term monetary stimulus ends up causing an excessive growth in the money supply (as when all those home safes are emptied to put money back into real investments), the money supply can be quickly reigned in with the sale of those Fed-owned shares.

What should a wise individual do?

- ensure one is holding a generous supply of currency. (About the only stock to be buying is of companies that make and sell home safes.) The banks can literally run out of cash; ATMs could really stop dispensing cash.

-Don't blindly sell stock holdings. But some companies will fail in the current, deepening recession. You don't want to hold much in any individual company. Diversification is crucial.

-Diversification should be viewed very, very broadly. Not just stocks and bonds, but dollar-denominated assets should be balanced with a range of global investments in other currencies. Consider cash-in-hand as a part of a sound investment portfolio.

-Consider re-investing any substantial cash holdings into the stock market. Not necessarily right away, but soon. One could put, say, 2% of surplus cash holdings in the market each week. My suspicion is that the stock purchased over the next few weeks will be cheaper than subsequently, but nobody has a crystal ball.

-Don't have conniptions about news stories of the government dishing out vast amounts of money. Money HAS to be distributed for the crisis to end. But pumping lots of money into banks alone would be unjust. The poor, folks who have lost their jobs, and retirees who have lost so much of their holdings should get a share of this money. Remember, the restoration of economic activity right now requires that the federal government supply more currency. Only the federal government can supply more money. We actually have no problem with how spending needs are to be "paid for." There is an urgent need for the printing and distribution of more money. We actually need to have HUGE federal budget deficits for the next year or two. We currently have the luxury of funding these deficits with newly-printed money.

The truth of the last three sentences surely boggles many minds. For everyone's lifetime, big budget deficits have been considered irresponsible. How can they be necessary, or even prudent? In truth, if one can put aside preconceptions and conventional wisdom, the logic is inexorable.

A deflationary crisis can only be reversed with massive "inflationary" stimulus.

Another Thinker's Take on the Current Deflation Crisis

What follows is an anstonishingly prescient post, since disappeared from the internet.
Original URL: http://investing.rogerdeng.com/blog/blog1.php/dow-theary-august-18-2008


Roger's Investing Thoughts [I presume this would be Roger Deng - ed]
Investing for the future ....

Dow Theory - August 18, 2008 --
....
To give you a hint of what I think the combined markets are now telling us -- I believe we are on the eve of world deflation. I pulled out a headline from the August 5 Wall Street Journal headline -- "INFLATION PACE IS FASTEST IN 17 YEARS."

Forget it, this is history -- this is not what's happening in the market. From what I see, the markets are telling us to prepare for hard times, and a global spate of the worst deflation to be seen in generations. This is why gold has been sinking, this is why stocks have been falling -- big money, sophisticated money, is cashing out, raising cash, preparing for world deflation. This is probably why Lowry's Selling Pressure stays at its high, smart money is selling into the stock market, day after day. They're raising cash in preparation for the hard times when deflation is in the saddle. Deflation is ushering in the new strong dollar. Big money sees deflation and the lower rates that go with deflation. Look, if you have five million dollars and you are only receiving 2% in interest on your money, that's only an income of hundred thousand dollars on your five million.

Big money realizes that in a deflation you need a mountain of cash to keep up your lifestyle.
What I see is a coming world deflation, and I believe that's the message the markets are sending.

What's the best stance in a deflationary situation? Lots of cash, and safe, solid, investments. Two areas that fit that requirement -- US dollars and US Treasury paper. What happens to stocks during deflationary times? They're sold to raise cash. What happens to business in deflationary times? It's crushed by ever-lower prices. What happens to the average citizen who's loaded with debt during deflationary times? They're battered unmercifully, as income buys less and less and as debt crushes them. What happens to assets during deflationary times? They're worth less and less and their sale brings in fewer and fewer dollars. Isn't the price of gold and oil already telling us that?

I just finished reading The New York Times, Los Angeles Times and Barron's and there isn't a hint of what I'm writing about above in any of these publications. Unfortunately, these coming deflationary times will come as a complete surprise to most people.

Nothing Proposed Will Solve the Credit Crisis

The right terminology leads to more direct problem-solving.
Yes, we have a "credit crisis." But taking the facts from a different perspective, this is exactly the same as a "contraction of the money supply." Or, if you prefer, a DEFLATIONARY crisis. We haven't seen deflation since the start of the Great Depression, so the thinking is unfamiliar to most.

Government action can only make a given institution more creditworthy by giving it funding. Do it piecemeal, institution by institution, and you may or may not help the systemic problem, depending on specifics.

People are pulling cash out of accounts and into safes and under mattresses. A fairly small amount of this behavior can collapse lending instutions, even those well-run. The collapse of banks leads to more cash withdrawals, leading to more failures, leading to more withdrawals, and a high-speed reversal of the usual money creation process. For evidence of the current money supply contraction, see, for example:

http://seekingalpha.com/article/58199-money-supply-growth-it-s-much-worse-than-that

Vast sums of real money are disappearing from the economy. Only the Federal government can produce more. If this doesn't happen, quickly, an unprecedented financial collapse will ensue. The Federal govenment might need to literally print trillions of dollars.

One immediately hears cries "but that will lead to inflation!!" Umm, yeah. That's why we need to recognize the current problem as a deflationary crisis. One can only reverse a deflationary crisis with inflationary stimulus.
About Wall Street Crisis
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