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<p>[QUOTE=&quot;medoraman, post: 968389, member: 26302&quot;]Well I would say simply that traditionally economies were more closed, providing all basic materials internally. Therefor it was easy for Country A to have inflation, and Country B to have hyperinflation and Country C to have deflation simultaneously. There was trade but it was at the margins and didn&#039;t affect most transactions. With more Internationalization the Central Bank in any country has less power to control its internal economy since the international pressures are too great. Look at Japan in the 1990&#039;s. Without International trade their deflation would have much more severe. However, since it was moderated by international inflation buying their goods, their deflation was much more prolonged than it should have been.</p><p><br /></p><p>Before such a rise in Internationalization, I would agree somewhat with Keynesians. Keynes wrote that the Central bank of a country could control the economy through monetary policy, demand side economics as it were. With massively more trade, that simply is just not possible anymore, since there are way too many pressures that the Central bank cannot control. They still have power, but not absolute power. International financial markets can actually completely override all but a few countries Central bank decisions. The 1990&#039;s devaluation of the British Pound is a glaring example, but there are many more. I would say only the US, German, Japanese, and Chinese Central banks are large enough to not be ruled by the International financial markets, and maybe not the Japanese and German banks. The Chinese can since the yuan is not really convertible freely. I would say in ten years the US could not survive a no confidence vote in the dollar from the financial markets.</p><p><br /></p><p>I am trying to make it brief. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" />[/QUOTE]</p><p><br /></p>

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