Monday, February 8, 2010


It is theft and taxation. Modern economics, not Austrian school of course, demands 2-3% inflation to be comfortable and enslave, sorry motivate, economic units, ie labour. Political systems promise "continual growth" and increases in wealth to voters. To deliver, someone must lose and those lose via inflation. It encourages treating the home as an investment.

Deflation, therefore prevalent for some time now in Japan, is an enemy of this political system. Everything that can be done will be done to reinstate inflation.

One of the best ways to do this is to undergo rapid and rampant deflation, increased by fiscal policy, the very opposite of "normal" ie desired policy. Ireland has started on this course. Another way of doing the same thing is to engage in a very destructive war. Another, lesser, one is to create a large arms industry or engage in a race for space. Or build pyramids. The idea is to create work that has no value...... I am not a fan. It merely reflects poor planning and some desperation. Eventually, the over production of credit primarily, is overcome and the modern consumer model resumes. Inflation is then re-discovered.

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