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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (268335)	1/30/2015 11:25:54 AM
From: Steve Lokness	Read Replies (1) \| Respond to of 540944

From your link; The reason behind the subdued inflation is as man-made as the QE medicine: too much capacity* in virtually everything that is made and mined.* (My bolding) BINGO!! So by constantly stimulating the economy, you build in more and more capacity. Some of that capacity is inefficient. That is Krugman's idea, that is to never allow the economy to readjust. ..............What needs to be flushed out for a healthy economy are those inefficient malinvestments. Think of the incredibly energy dependent means of extracting energy; tar sands and fracking. Sooooooooo as we are seeing now the price of the commodity - oil - is coming down because of over production. People will stop investing in energy companies and instead put their money in banks. ...........That's Austrian; but this time around the constant QE and other stimulus plans make it unrealistic to put your money in a bank since the interest is zero. Soooooooo instead the poor investments continue leading to ever more over capacity.