Cash Is King

…in a deflation.  Lots of people over the last few years have been debating whether inflation or deflation is here, or in the offing, or whatever.  It’s odd that such a thing can be in question.  Empirically speaking, they are basically the opposite set of monetary conditions.  Inflation and deflation shouldn’t resemble each other in the slightest.

It all looks like deflation or disinflation to me, not that I’m all that committed or or even interested at this point.  But there are signs that I have some company.

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3 responses to “Cash Is King

  1. Zarepheth

    Both are occurring. It just depends upon where you are on the economic pyramid. If you’re at or very near the top, there is inflation – and since they control the news media and the politicians, they are busy fear-mongering about inflation. On the other hand, the remaining 90% of the population is living in a deflation as all the money at their level gets vacuumed to the top and hoarded there. As a result, we have many people feeling, justifiably so, that we are still in an economic depression even has others are claiming that hyper-inflation is just around the corner. Of course, if any one makes any real moves to fix things, those at the top will turn hyper-inflation into reality for everyone else by unloading their hoarded cash into the market place.

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    • Nice to hear from you, Z.

      But I have to question your reasoning here. If those at the top are experiencing inflation then they shouldn’t be hoarding cash, they should be getting rid of it, but the point of the linked article is that it’s the former. Hoarding cash is practically the definition of a deflationary environment. Thus the title of the post.

      I suppose there might be an element of self-fulfilling prophecy to all this, of course: anticipating deflation, the well heeled are helping to bring it about through cash hoarding.

      In any case, it seems to me as a society we’re just more or less sliding along the path of least resistance to whatever destination that takes us. Nobody in a position to do anything knows what to do other than look out for themselves on the way down. The rest of us who aren’t in a position to do anything don’t even agree on what course of action should be taken. I have my opinion and you have yours, for example.

      Speaking for myself, I feel like I’m out of ideas on this and I’m too tired to get anything done even on the ideas I have already floated. I’ve done what I can, at least for the present.

      Of course if past is prologue the whole situation resolves at some future point in revolution, upheaval, etc., and it’s usually not very pretty. That could happen 20 years from now or tomorrow, so far as I know.

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      • Zarepheth

        Yes, I think you’re right about society. I don’t feel like I have any influence over our society. I have no idea how to reach people so they can see things from my perspective. When I talk to others about macro-economics and how our monetary system, our division between public and private, or anything else related to economics the responses I usually get vary between polite head-nodding and outbursts of “You must be a socialist! We all know how that worked in the Soviet Union!”. I never seem to get anyone to argue on the merits, they just blindly accept whatever they’ve previously learned and recite it back.

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