The deflation 'ogre'

[unhappycamper]

http://atimes.com/atimes/Global_Economy/GECON-01-290114.html



The deflation 'ogre'
By Noureddine Krichene
Jan 29, '14

The deflation "ogre" is about to devour the economies of the eurozone and the United States, according to some senior officials. The solution is hyperinflation that wipes money and all debt. Amazing mountains of money being printed out of thin-air in the US and eurozone, near-zero interest rates; credit expanding at two-digit rates; stocks prices setting record highs; housing prices rising at 14%; food becoming unaffordable to increasing numbers of people and putting over 50 million Americans on food stamps - describing these conditions as "deflation" is simply insanity and falsehood.

Based on this wicked vision of deflation, we may state that Germany was battling the "deflation" ogre in 1922-23. The Reichsbank had to print money to keep prices upward and insure that the price of a loaf of bread increases from 6 trillion marks to 10 trillion marks. If prices had to fall, Germany would have been consumed by the deflation "ogre". In fact, German prices kept rising at ultra-sonic speed until German marks became useful only in fireplaces. By fighting the deflation "ogre", Germany was devoured by the inflation "ogre".

Demagogues never learn any lesson. Ben Bernanke kept fighting deflation since 2002; in doing so, he kept endlessly inflicting devastation on the US economy. The top officials who now curse deflation are perfectly immune from inflation.

They live in heavens, fly first class, are served champagne and liquor, stay at first class hotels, enjoy opulent banquets, are driven in luxurious limousines, and live in comfortable mansions; all is paid by the taxpayer. In contrast, the wage earner is being ruthlessly robbed by inflation. Every day, he puts much less food on the table for his children. Inflation demagogues made millions of workers jobless.

[Demeter]

1. This person has no understanding of what's happening at all

There was a massive deflation in paper assets following the collapse of Lehman Bros. which should have, by rights, wiped out the major banks of the US and Europe. This credit collapse only went so far, though. The job was done on little people through the mortgage fraud that robbed them of their homes, but the rich were saved. Paulson and Bernanke decided to pump up paper assets by providing unlimited credit to "rescue the banks". And so, the banks were saved, some in truth, some on paper, and by implication, the 1%.

But now, Bernanke started to turn off the credit fire hose. And the bubble, which has spread around the world, as all that created money had to go somewhere, is starting to deflate again. And the bubble had baby bubbles that are also deflating. The entire global economy, linked together through planned "globalism", is going to go down like the Titanic.

Only, if there's a God, the Rich are not going to get the lifeboats this time. The poor, wrung out of the credit markets and left hung to dry, are much more likely to come out of this, as long as they stay low and out of debt.