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Ludwig von Mises Institute · 62,353 like this
November 2, 2009 at 11:08am
  • ‎"You should not be afraid of deflation.
    You should be afraid of policies attempting to fight it."
    Mish's Global Economic Trend Analysis: Is Debt-Deflation Just Beginning?
    globaleconomicanalysis.blogspot.com
    Last Thursday I received an email from David Meier, Associate Advisor at the MotleyFool concerning Debt-Deflation.David asked if I had any comments on his article Debt-deflation: Just the beginning? Here is a partial listing:
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    • James Dahlberg, Rick L Spencer, Josh Habben and 31 others like this.
      • John Tate As much as I agree, that deflation has to happen, there is the simple reality behind the utter mountain of debt that has been created. It seems that inflation is going to be the only way it is ever paid for. The only other option is if the US defaults on its international creditors, which would plunge the US dollar to lows most people can't even imagine.
        November 2, 2009 at 11:22am
      • John Tate The other obvious problem that gets in the way is the minimum wage. Try getting the plebs to see that one as a bad thing.
        November 2, 2009 at 11:28am
      • Bryan Morton
        You can't pay off the debt through inflation. Our creditors have already begun to see through that trick. They're not going to continue to accept worthless paper. They will eventually demand something of value.

        As far as the minimum wa...ge goes, it's not the "plebs" I'm worried about. When people are desperate for work, they're going to accept what they can get. I know some of them who had decent paying jobs and are now looking in the job market for whatever they can get. It's the stubbornness of government I'm worried about. Will they concede that MW is a failed policy and let employees and employers make mutually voluntary arrangements, or will they continue to intervene, violate those rights and continue to make matters worse?See More
        November 2, 2009 at 11:43am
      • Salvador Solis ‎@Bryan, I think the answer to your last question is the latter lol
        November 2, 2009 at 11:57am
      • Edward A Ipser Jr Sobering...
        November 2, 2009 at 7:49pm
      • Pierre Fox Man, hard times. I'll tell you what really needs deflating though. This guys waistline.
        November 3, 2009 at 1:24am
      • Vangel Vesovski
        Sadly, my own waistline also needs a great deal of deflating.

        Mish keeps getting confused and assumes that there is no difference between commodity money and a fiat currency. His assumption that government cannot print as much as it wan...ts does not reflect the reality of history, which many of us have personally experienced. Because it does not take more resources to add a few zeros to a legal tender 'note' most central banks and governments will pursue expansionist policies that are driven by political incentives rather than logic. (I will not go into the fact that the legal tender script that people confuse with money does not fit the definition of note because this is not the place for it.)

        Mish clearly fails to see the political implications of his suggestions. Imagine foreign creditors seeing the purchasing power of their interest payments increase substantially as Americans have to sell off assets at fire-sale prices. If Mish is right, the Chinese, Japanese, Korean, and other foreign creditors will be able to step in and use the proceeds from their treasuries to purchase American commercial and residential real estate, farmland, factories, and entire companies while the former owners of those assets go into bankruptcy. How does that work when the asset owners get to vote and foreign creditors don't? America's future will look a lot less like that of Japan of the 1990s and a lot more like that of Argentina or Mexico of the past half century.        See More
        November 3, 2009 at 9:26am