Thursday, October 11, 2007

Marines and Deflation

The Marines want to move on Afghanistan, and leave Iraq to the Army; a genuine Troop shift for obvious Purpose. Concentration on Afghanistan would allow the Marines to bring their own equipment to the Country, maximize their effort, and minimize their potential Casualties. The first benefit for the Marines is the separation of Marine and Army performance, highlighting the fact that Marine performance has been superior to that of the Army; the Army lacking the orientation to military virtues, even the Reserve and National Guard elements have been showing better military factor Readings. Marines are winning their war in Iraq, against a more determined force than faced by the Army. The Marines expect they will face less disciplinary problems in Afghanistan, where they will patrol traditional terrain of Operations, unlike the urbanized setting they face in Iraq. Combined Operations in Afghanistan will give them an Edge, one which is lost in the chaos of Iraq where multi-factions join with splintered Command to defeat coordinated effort. It would be a very good Move for the Marine Corps, if the U.S. Army can be convinced to accept responsibility for Iraq, where the Army has shown the same disorientation as once expressed by itself in Vietnam.

Tim Harford asks a question which I have asked for years: Why not eradicate Inflation? I take it even further, Why not engineer a Period of Deflation? The most obvious answer consists of the increased effort necessary to pay off Debt. No one likes the Thought that their Debt load will be higher, and take more effort to pay off. Most Economists stop at this Point, not desirous of explanation of any benefits to Deflation. They are present, though, and should be explored. The paramount benefit is an actual smaller Debt load level, and lower Interest rates servicing that Debt; this due to the greater Supply of funds for Debt provision. Most Business Costs would be paid before actual Price reductions, eliminating an obvious element of overall Business Cost. Debt Service Costs would decrease faster than the Deflation rate itself. Government would enjoy higher Taxes in relationship to Expenses, without raising Tax rates. Government economic policy would be cheaper to finance. Business would pay less in Performance Raises to Salaried personnel, a Situation without disadvantage to Employees, but advantageous to Consumers. The Economic bias against Deflation holds less water than always claimed.

One may ask how an Economy can incite Deflation in the first place, only Japan giving a good example of modern Deflation; Everyone still avoiding definition of its exact causation. The Answer to Deflation provision is simple, though almost all Economists would disagree with this Estimate. Japan has its Deflation because it has not taken the Marginal Tax rate route of Western economists. Economists will all claim that Japan has widely engaged in deficit spending at all levels, so this cannot be the Answer. The fact remains, though, that Japan has did almost nothing to alter the basic Tax package demanded of Japanese Taxpayers, and their individual Debt levels and Savings rates have remained relatively stable. Japanese Production schedules are still based upon Japanese Purchase patterns, and Japanese Business basically transfers their inflationary pressures into their Exports. Economics will eventually catch up with economic practice. lgl

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