Discussion in 'Economy' started by Kevin_Kennedy, Aug 18, 2009.
Deflation Theory Is Lemon We Have All Been Sold: Matthew Lynn - Bloomberg.com
Good article, but a point that is no doubt lost on those who aren't capable of thinking outside the box.
Would deflation correlate with a loss in wages? But I am sure its still possible to see increases in real wages. And of course things such as your mortgage payments, car payments, student loan payments, or any debt one has will increase in real terms.
Deflation and inflation in moderation are both a healthy economic adjustment. Either one in excess is a sign of major economic problems, but probably not a cause in and of itself(s).
A major cause of economic problems is excessive actions to directly prevent either one. The obsessive anti-inflation actions taking throughout the past 30 years have caused us to get into this economic hole -now it's such a mess that we're in a deflationary period. Now their screwing up the economy with anti-deflationary actions.
The problem with economists is that they focus almost entirely on the hording of capital and capital assets. They don't give a damn about the real underlying economy.
Anti-inflation actions of the past 30 years? What were those?
Yeah Richard, what "anti-inflation actions" got us into this hole?
Because as I see it, it was INFLATION actions that got us into this hole. It has become almost common knowledge at this point that there was too much money created, and too loose of credit, that led to this current mess.
How else could a bubble of this magnitude form? You don't get bubbles from "anti-inflation actions". That's preposterous on so many levels.
Deflation is occurring, only in small doses.
Without the massive intervention by the government, I believe deflation would have gotten much worse.
Now, however, we are going to have inflation. Not consumer price inflation, but asset inflation, like we did with housing, only it will likely be with other real assets such as gold and silver.
Is it possible we're seeing asset inflation right now in equities?
Probably. But it is likely to go significantly higher if I am correct.
When I look at the monetary base graph, I can't help but wince.
Just imagine the horrible possibilities.
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