I agree with "almost" everything you say. (What fun would "everything" be?)
Especially that capatalist economies need contractions to clean out the excess of the expansions.
We were due for a contraction in 1994, but although the Fed increased rates, they stayed loose enough to keep things afloat, rather than allow the cyclic cleansing needed.
I'm guessing that our Prez had read enough history to know that a working constituency is a happy one, and applied the right pressure.
Ahhhh, the beauty of those accidental FBI files.
Let the next guy worry about how to put it all back together again.
I'm worried that a world currency will become the "salvation" for our coming troubles.
Much as the Welfare State and UN came out of the Great Depression and WWII.
Indeed inflation, even at the levels we have today, isn't healthy, except in comparison to the last 25 years.
But my chart of prices shows deflation in the 1920's followed by serious deflation in the 1930's. No argument that since 1935 or so it's been more or less unrelieved high prices of one type or another, although the 1950's and early 1960's were more or less benign.
That's why I say that the peak in 1980 was a very long term peak. Barring dollar weakness beyond what would be considered unacceptable, we are likely (IMHO) to continue on a downward trend.
Probably even into outright deflation at some point.
4% inflation would be horrible, you're right.
The currency weakness could be a catalyst to higher prices, but I note that the weak dollar we had in the late 1980's, through the mid 1990's, didn't keep the price levels from drifting downward. Trending toward lower inflation, that is.
It should be an interesting time to be alive, the next few years.
Regards,
Dwight (I don't mean that in a good way) |
