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Since the general public is never exposed to the "virtuous" side of deflation, I will devote a commentary to briefly summarizing the many, powerful economic benefits, which can only be realized when the ("free market") forces of deflation are allowed to operate in our economies.
Higher Standard of Living:
Contrary to what we are constantly told by the fear-mongers, it is deflation which raises the standard of living for the general public, and inflation which destroys our standard of living. This is nothing but simple arithmetic. The fall in prices of computers and big-screen TV's has literally made us wealthier, as it takes less hours of our labors to pay for these goods today than it used to.
If the prices for food and clothing started to fall, we would get wealthier still. Indeed, this is precisely what occurred over a decade ago -- when multinational clothing manufacturers shipped their textile plants to low-wage Asian jurisdictions. The prices for most items of clothing fell significantly, and all of these hypocritical fear-mongers hailed this as a "huge win" for individuals, since it made us wealthier.
Contrarians will argue that this manufacturing exodus hurt rather than helped our economies. This isn't true. What hurt our economies was our governments bestowing "free trade" upon multinational corporations before they had begun to make any plans to re-train their workers and begun developing new, high-end sectors to attract capital and create jobs in our own economies. The result was an unnecessary exodus of jobs and capital.
In other words, it was not (directly) either "free trade" nor the "deflation," which hit some sectors, that has caused all of the economic harm here. Instead, it was the corrupt and incompetent manner in which our governments served the interests of large (Western-based) multinational corporations, while giving zero thought to the well-being of their own people.
We can suddenly see a huge schism in the thoughts and words of these hypocritical fear-mongers. When deflation benefits those at the top it is called "a good thing," but when it benefits the general public it is "the ultimate evil."
Conversely, the fact that inflation destroys our standard of living is crystal-clear when we view the economies of less-complex Third World economies. We literally see riots in the streets of many of these countries, because the rampant, global inflation triggered by Ben Bernanke's infamous
The only reason we haven't been similarly impoverished (yet) in our own economies is because our governments are borrowing and spending countless trillions (that they will never/can never repay) to shield us from the effects of their incompetence and corruption -- while they simultaneously blame the average citizen for our "unreasonable expectations."
Purges Excess From Markets:
Deflation is the great bubble-destroyer. No asset-bubble can ever withstand the economic "shock" of deflation. Again we see the hypocrisy of politicians and bankers (and the media talking-heads who parrot them).
First these individuals create asset-bubbles (through their reckless, inflationary policies). After they have created these bubbles, they confess to their own foolishness, however they still refuse to accept the "prescription" (deflation) for the "disease" they have created. Like the drug addict, these inflation addicts know that inflation is harming themselves (and everyone around them), and like the weakest junkie, they continue to refuse the "rehab" of deflation.
Reallocates Capital From Inefficient to Efficient Uses:
Part of the reason why most Western economies are careening toward total collapse is that they areOver just the last decade, the US economy has created
The result? The US economy has misallocated its capital to the greatest extreme in the history of economics, and become the world's largest deadbeat. The nation that was the largest manufacturing engine the world had ever seen (until China?) has been transformed into an anemic weakling, composed of roughly 90% wealth-draining consumption and
It should be noted that the US became the world's largest economy, the world's
Like the alcoholic, the deflation-hypocrites blame the "hangover" for their misery, not the excessive drinking from the night before. In fact, all of the US's most productive eras immediately followed deflationary episodes (unless such recoveries were delayed by war). Like the most-deluded alcoholic, the deflation-hypocrites claim that if they can just be allowed to chug ever-increasing amounts of alcohol that they need never experience another hangover.
In the real world, however, continuous drinking doesn't prevent hangovers; it causes death. Similarly, preventing deflation from healing the economic wounds caused by reckless, banker-driven inflation isn't going to lead to "prosperity," but instead this suicidal folly must lead to the "death" of all of our economies (i.e.
Even given the fact that our leaders (and the bankers who "guide" them from the shadows) are selfish, incompetent, corrupt, greed-driven hypocrites, readers must still be scratching their heads as to why these individuals display such a pathological fear and hatred of "deflation," given that deflation offers so many collective benefits. "Addictive behavior" alone, cannot explain this irrational behavior, nor the multi-decade propaganda campaign to deceive the general public about inflation and deflation.
Instead, their behavior can be completely explained through a single, immutable economic principle: the severity of any and every deflationary episode is directly proportional to the level of excess of the inflationary "boom" (i.e. asset-bubble creation) which preceded it. Thus, it is not "addiction," but naked fear which motivates these hypocrites to both avoid deflation at any cost, and lie about it at every turn.
More specifically, deflationary episodes inevitably destroy the greediest individuals of societies (since they are always the most over-extended), and inevitably expose insolvent governments. Do people now have a better understanding as to why no bankers or politicians ever tell the truth about deflation?
