re: ["There is nothing new in the inflation/deflation dichotomy"]
Hey ecrire,
We're going to have to agree to disagree on that one,
because I think quite a lot is new.
Semantics and academic nuances aside, what we are
seeing is what I call "Stagflation 2.0."
I think everyone can agree that we have rising inflation
and a slowing economy vastly underperforming to its
growth potential. But, we also have a deflationary
asset collapse in housing, and financial instruments.
And what else is different, and much more dangerous in this
stagflationary period, is there is no wage/income rise
accompanying inflation.
Sadly, that's something the economists love to hang
their hat on... all most celebrating the fact, in
downplaying the ongoing threat of inflation.
And to a degree, they are right.
Falling real wages/income, and an existing "0" if not
a negative savings rate, along with falling home prices
(the average American's main asset) make this a very
different environment than the 1970's.
Throw in record deficits and unfunded liabilities, a dollar
that already has collapsed, and a historic banking crisis
that is vaporizing the equity capital of 100 year old firms
right and left, and still threatening to collapse the global
financial system, and I think its rather obvious, that we're
in somewhat unchartered territory.
And that's why the Fed is having such a difficult time
righting the economic ship.
Greenspan created a bubble so big, so complex, and
one that infested global markets to such a degree,
that Bernanke never really had a chance to do anything
other than be at the helm when the ship finally started
taking on water.
One day, hopefully before his death, Greenspans legacy
will be rewritten to expose him as the architect of the
largest financial collapse in history.
The POS should be hiding in exile in a Paraguayn jungle
drinking malaria infested mosquito water, not sipping
Cristal, and signing copies of his book at Manhattan
dinner parties.
SOTB |
