Perry Glasser

DEFLATION NIGHTMARES

In Business, Economics, Economy, EDUCATION, Finance, Personal Finance, Politics, Wall Street on August 11, 2011 at 7:00 am

Next to Deflation, Inflation is the Arch-Angel Michael. Citizens have for so long been trained to think that the Great Economic Satan is Inflation,  Dollar$ is hard-pressed to find friends who understand the opposite.

And it is far worse.

Monetary policy already has limited social and economic impact, but on August 9 the Fed pledged to keep interest rates at or near zero for two years, an extraordinary event for an organization that meets monthly and ordinarily speaks in terms of annual quarters. Two years?

The Fed has kinda, sorta, confessed they are running out of ideas.

The immediate response by Wizards was a shout of joy. The Dow soared 400 points in minutes. But then the news rippled around the world, more sober markets in Asia and Europe digested mulled it over, and as Dollar$ writes (11 am 8/9/2011) the Dow is being slammed,  down 445.

The Bank of Japan has held interest rates in what was the world’s 3rd largest economy at 1% or less since 1995. That’s nearly 20 years.

Look how much good low interest has done the Japanese.

In that time, the Japanese stock market has decline 75%. Think about that. If you opened a 10,000 yen college fund plan for your newborn kid in Yokohama in 1996, by the time the kid was ready to start school you’d have 2,500 yen.

That’s what Deflation can do. Inflation erodes your savings; but deflation washes them away.

Now it is our turn.

America is being revalued.

The Depression

The last time Deflation sharply hit world economies it was called the Great Depression. The apple that cost a citizen a dime in 1928 in 1933 cost a citizen $.01.

Same apple, same labor, same dirt.

You could not sell your orchard: no buyers.

You could not employ pickers: no revenue.

If you borrowed money against the orchard on the hope things would turn around….the bank got the farm.

Unemployment in the US hovered around 30%.

There are social costs. People who see no way to feed or educate their children first become frightened, then become surly, and finally they become angry. Angry people want culpability and take action; convinced their elected Weasels are lying unprincipled scum, they elect extremists who refuse any and all compromise.

In Germany, they elected Adolf Hitler.

Parallels

American housing is off peak by 30% in 5 years–same house, same land, just worth less.

American unemployment stays a stubborn 10% and promises to get worse.

American Citizens are listening to extremists called Tea Partiers. They proudly will not compromise. They are being met by mush-headed weasels who move toward them rather than make a stand on principles.

from Reuters

In England, surly youth, 20% unemployed, having no hope of a future, having had their financial aid for education sharply curtailed, have taken to new technologies to gather flash riots.

A Modest Proposal

Forty-three percent of the WORLD’S military budget is reportedly spent by the United States. It buys us only munitions and weaponry, items that only bring profit to defense contractors. That’s $700 billion per year.

We just might be able to maintain our position as the strongest nation in the world on half that. That’s a mere $350 billion. That would erase the national debt in 10 years. The dollar would be worth something. Businesses might engage the risks of new investments knowing Citizens would have money to spend. We might get crazy and educate youth to think–as a matter of pressing national security!

End warfare that in no way makes America more secure.

Write to your Weasel.  Don’t just sit there. DO IT!

If you do not give a crap about yourself, at least save my ass!

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  1. […] August 11, Dollar$ pointed out the scary parallels between the US and Japan on the verge of 20 years of […]

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