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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (12946)10/6/2004 1:58:15 PM
From: orkrious  Read Replies (3) of 116555
 
Date: Wed Oct 06 2004 13:41
trotsky (Quark, 12:15) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
you wrote: "yah, but, as a consumer, deflation has been very, very good to me..."

exactly - i'm glad someone finally said it. the constant propaganda regarding the supposed 'perils' of deflation needs to be counter-acted more often. deflation is GOOD for prudent consumers ( i.e. those not up to their eyeballs in debt collateralized with deflating assets ) , and it is only the elites that profit from inflation that have to fear it ( they lose their monetary advantage vis-a-vis mere mortals ) as well as of course the government. inflation is inter alia a hidden tax, and when deflation strikes, that scheme falls flat.
so should we favor inflation, in order to satisfy the greed of bankers , promote recklessness in consumers and help the government to tax us even more?
or should we favor the natural free market state of affairs of constant mild deflation, which allows us to get a lot more bang for our buck over time?
beware of the anti-deflation propaganda emanating from the central banks and others - it is entirely self-serving.
note by the way that there is no statistical evidence proving that deflation is an inherent feature of recessions. the opposite is true - there have only been very few episodes in history when deflation was associated with depressions/recessions - usually only after the build-up of a huge private sector debt bubble.
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