This is obviously not a popular topic. But there is continuing belief that deflation is going to take over [and has taken over]. Gary Schilling on the theme: finance.yahoo.com
I'm with Big Ben and Robert Mugabe = they can produce a vast tsunami of pixelated pennies and simply buy everything and devalue US$ to 1c on the $100 if they want to do so.
If the holders of US$ won't spend them, then the Federal Reserve and USA government certainly can do and will do. The US Air Force can launch fleets of helicopters across the country and across Afghanistan and Iraq [where there are already helicopters] and sprinkle $50 and $100 notes across cities and countryside.
One thing we can be sure of is that governments just love to spend money on themselves and their friends and courtiers. Perhaps there was a time somewhere, maybe thousands of years ago lost in history, when a government did not look after Number 1.
Deflation is not a problem. It's a fantastic opportunity for governments to do what they like doing more than anything = spending opm on themselves. When inflation takes off, governments have to switch to taxing capital gains in a big way because the printing press game rapidly runs out of steam as people prefer to use dirt as a unit of money than $10,000,000 notes by the wheelbarrow.
Meanwhile, Obama and co are having a great time stimulating each other with loads of lovely loot. Not only do they get to stimulate themselves, they can even claim to be doing good for everyone, saving people from dreaded deflation.
Personally, I like it when prices go wayyyyyy down thanks to the wonders of cyberspace and the brilliance of engineers squeezing more movement out of a joule, defeating the second law of thermodynamics, and the billions of people around the world escape political repression and grinding rural subsistence poverty and can apply brain power and economies of scale to millions of problems and opportunties.
Deflation is success.
There is the bonus that tax on interest goes to zero.
Mqurice |
