The New Wrong Direction

Here is an erudite article about the potential Gains and Risk of Deflation. I remain a prime Deflator on the basis of theory, knowing Currency stability must include the provision of Risk, in order for Value to restock in the currency; pure Economics insists that any Product cannot be set by Market forces, if measures are taken to artificially support the Product price–impacting Currency as seriously as any other Product. The most serious fault with such Protection comes from excess liquidity, which compounds what inflationary pressures are existent. Giving Consumers more and cheaper Money is not the Means to fight Inflation.

I am most offended by the Concept of making Debt too onerous to repay. Debt should be hard to repay, it being the sole inhibiting force forestalling Spendthrift policies. The Fed may take the Credit for the loss of Savings in this Country; educating an entire Generation to live on Credit Cards and Mortgages until the Debt is so preponderantly great that it is time for Bankruptcy. Everything is today organized to empower Everyone to Spend until they literally Drop, without any recourse to establishing financial reserves. We now have a Government which has the lowest Taxes but greatest Debt, the greatest instability of Low Income and High Debt coupled to a lack of financial reserves, and a continuous need to refinance Debt obligations. There once was a Time when a new House cost about 3 years Wages; today, 70% of Labor will retire with outstanding Mortgage debt still existing on their homes.

There are Economists who exclaim that this Condition holds no impact on Prices. There is underutilization of Product throughout the Market; how many empty Business facilities exist, solely to gain the Tax advantage of Mortgage Costs, such new facilities ever more elaborate and expensive to increase the Tax deductibility. All Product prices increase due to the transfer of the financial costs of financing Sales to the initial Price offering; this is no mean thing, which can generate 30% of the total Cost of the Product. Garbage Dumps are filled with last year’s Christmas Gifts and PCs, most still in fairly good operating condition.

Thanks to Mike Moffit for the link to the article. lgl