A though provoking article..
The Frame of Mind of American Economic Policymakers, Part I
My only comment to Mark Faber's POW (prisoners of war) economy with respect to Inflation and Deflation is that in our real economy money is credit, which means that a reduction in Velocity (credit contraction) offsets some of the growth in high powered money (reserves). In plain english the money expansion goes straight to increased savings (debt repayment is also a form of savings) or demand for cash rather than into consumption or leverage. It's not all cigarettes in CREDIT ECONOMY. There will be a tipping point down the road which could flip deflation into (potentially uncontrolled <> HYPERINFLATION) Inflation.
And then in this week's ECONOMIST you read the lead article and you wonder whether politicians will really start to tell people that..
- they have to work longer,
- will have less pensions and
- less healthcare.
....and you hope and pray that the answer will be yes and that they don't care about the next election and that the time has come for change.
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