Inflation, Deflation, Loves Me, Loves Me Not (Updated)

This debate keeps cropping up.  Now the Canucks are getting into it.

Being economic/monetary opposites, you would think there could be little doubt regarding which of the two we are in danger of experiencing.  Yet there is.

Bringing that famous Canadian ambivalence, reserve  and reticence furiously to bear upon the question isn’t likely to clarify anything, though.

Update:  As if on cue, from the Casey Daily Dispatch.  Truthfully, I don’t have much intellectual capital in this inflation-deflation fight, though I’ve posted about it a few times.  My guess it’s that it’s an ongoing issue because a deflation can turn around and become an inflation right quick, for the simple reason that either, when it becomes extreme, is simply signaling lots of instability and disruption in the monetary system.



Filed under financial crisis, Striking lawyers

4 responses to “Inflation, Deflation, Loves Me, Loves Me Not (Updated)

  1. jubilee


    Productive asset inflation/hyperinflation with unproductive asset deflation. e.g. the beach/lake house will deflate and the prime arable land with good water sources with skyrocket (if they are even for sale).

    Simultaneously, since local production of the necessities of life in most areas of the U.S. has been destroyed, and presuming even intrastate commerce becomes more difficult to carry out, then demand outstrips supply and prices inflate/hyperinflate.

    Thus, what we need inflates/hyperinflates, and most speculative assets deflate…with maybe the exception of one of kinds (art,artifacts) which would be used as a hyperinflation hedge by those with lots of dollars.

    TPTB attempt to fight the deflation of speculative assets by throwing dollars at the speculators, offering 0% loans…then with 0% loans and loan guarantees.

    This creates a general lack of trust in the future value of dollars.

    The spiral continues.

    Some communities would opt to have a local currency to enable more stable intracommunity trade. Those with skills to transform and repair locally available resources will be in demand. What will they accept as payment?


    • Very interesting thoughts. You’re pointing to distortions in the prices of things that have occurred as a result of (I think) the messed up monetary system. You’re suggesting, whether you know it or not, that even if no one does anything there will be a wealth transfer from Wall Street back to Main Street, in a manner of speaking.

      You might be right.


  2. jubilee

    Wall Street and Corporate wealth is a fiction propped up by institutions ( political and legal) that have vested interest in keeping the status quo and pretending that debt-based growth is sustainable. Thus, Wall Street doesn’t have “wealth” to transfer.

    If by “wealth” you mean power, then yes even if nothing is done, some Main Streets will absorb power from centralized State Capitalism. There are many Main Streets though, and some will abuse the power because we have a history and culture of predatory behavior that is hard to overcome.

    Some Main Streets will recognize the need for cooperation and sustainability and reorganize based on local production. Depending on the ability of outside forces to interfere, some of the communities will thrive.

    This process of relocalization is messy. One can argue that if current institutions started to voluntarily give up their acquired power, there could be a more controlled relocalization and the central government could utilize its power to control predatory behavior, rather than support it.

    The jubilee and/or universal basic income would be a step in the right direction.


    • I’ve often said – not that that’s important – that we are entering an era of de-centralization after about two centuries of profound centralization following the industrial revolution. It wasn’t only government that became centralized, but certainly government deeply reflected this trend.

      Perhaps ironically, the centralization trend was largely technologically driven, and the de-centralization trend appears to also be technologically driven. The internet, for example, strikes me as being a very de-centralizing medium as compared to, say, network television.

      I think the decentralization trend is very encouraging. Centralization had a lot of problems, such as great big conflagration type wars and wild economic distortions. I also think centralization to that degree was very anomalous historically, so the current trend in the opposite direction is like a return to normalcy.


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