Hi Wayne.
No, I do not believe we are headed for an inflationary period, but rather a deflationary period.
Interestingly enough, the Fed may not be printing enough money. I'm sure I'll get flamed for that statement, but there it is. However, it's not just a matter of whether the Fed "prints money" or not, but how it redistributes wealth in doing so. I am not necessarily against inflation per se, but inflation that benefits whom? The international Banking Cartel? Or homeowners that have lost their job and now face the Bank reclaiming their principal residence.
To my mind, it is a fallacy to categorically claim that Inflation is a bad thing. Inflation does this: it benefits Debtors and penalizes Creditors. Deflation does the opposite, it benefits Creditors and penalizes Debtors.
In a very powerful deflationary environment, the worst policy response in the world IMO is to be overly concerned with Inflation. Rather, Inflation is precisely what is required - but done fairly. That is to say, there is a powerful societal need to redistribute the wealth of Creditors to that of Debtors. BTW, in a normative economy, you would not want to do this, as it does truly amount to confiscation of wealth from Creditors to Debtors (though such Creditor wealth may have been unfairly obtained). But in a strongly Disinflationary period - i.e. in the collapse of a Kondtratief-type Credit bubble - you are facing the risk of massive dislocation and disintegration of the very fabric of a society. The primary policy imperative is to mitigate the social and economic disruption of an aggregate demand shock.
To my understanding, the Keynsian Economics of Roosevelt's New Deal were inflationary in this way. But the Creditor class eventually accommodated such policies, because the alternative was too painful.
A post saying that Inflation "can", under exceptional circumstances, be a good thing ... this may be an unusual position for a post on a "Money Supply & The Federal Reserve" thread. But that's where I'm at at present.
BTW, such Inflation should absolutely still be "transparent" inflation. The Inflation that really pi**es me off is the non-transparent variety of inflation that bails out JP Morgan Chase and the Banking Cartel out of view of public visibility and accountability.
Regards,
Glenn |
