Comments on: Stagflation is Here, and It is a Weapon of Mass Destruction http://dissidentvoice.org/2008/08/stagflation-is-here-and-it-is-a-weapon-of-mass-destruction/ a radical newsletter in the struggle for peace and social justice Sun, 22 Nov 2009 12:21:18 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: brs http://dissidentvoice.org/2008/08/stagflation-is-here-and-it-is-a-weapon-of-mass-destruction/#comment-26822 brs Thu, 21 Aug 2008 18:50:10 +0000 http://www.dissidentvoice.org/?p=2558#comment-26822 Paul Volcker's bashing crashed the economy and it stayed crashed. By 1991 Bill Clinton could run on the slogan It's the economy, Stupid because the economy had not recovered from the bashing it received. Neither Volcker's interst rate hikes or reagans tax cuts for the rich helped. It still has not recovered. We are living on borrowed money and borrowed time. Too much has benn shoveled into too few hands. They rich have not made productive investments with reagans and bush's little gifts. If they had companies like GM and Chrysler would be competetive and still paying decent wages. Paul Volcker’s bashing crashed the economy and it stayed crashed. By 1991 Bill Clinton could run on the slogan It’s the economy, Stupid because the economy had not recovered from the bashing it received. Neither Volcker’s interst rate hikes or reagans tax cuts for the rich helped. It still has not recovered. We are living on borrowed money and borrowed time. Too much has benn shoveled into too few hands. They rich have not made productive investments with reagans and bush’s little gifts. If they had companies like GM and Chrysler would be competetive and still paying decent wages.

]]> By: Kurtosis http://dissidentvoice.org/2008/08/stagflation-is-here-and-it-is-a-weapon-of-mass-destruction/#comment-26788 Kurtosis Thu, 21 Aug 2008 04:29:32 +0000 http://www.dissidentvoice.org/?p=2558#comment-26788 Joseph is correct, it's deflation, not inflation or stagflation. It's taken about a year for markets to catch up to that fact, but it's happening fast now: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/19/cnusecon119.xml Fundamentally, you can't originate $2.5T+ of bad, subprime-backed debt, watch it all default, and expect any kind of inflation out of that. Inflation/Deflation is not price increases/decreases, it is increases/decreases in the supply of money and credit. Price increases/decreases are only a symptom, not the definition. Joseph is correct, it’s deflation, not inflation or stagflation. It’s taken about a year for markets to catch up to that fact, but it’s happening fast now:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/19/cnusecon119.xml

Fundamentally, you can’t originate $2.5T+ of bad, subprime-backed debt, watch it all default, and expect any kind of inflation out of that. Inflation/Deflation is not price increases/decreases, it is increases/decreases in the supply of money and credit. Price increases/decreases are only a symptom, not the definition.

]]> By: Joseph Danison http://dissidentvoice.org/2008/08/stagflation-is-here-and-it-is-a-weapon-of-mass-destruction/#comment-26783 Joseph Danison Thu, 21 Aug 2008 02:38:12 +0000 http://www.dissidentvoice.org/?p=2558#comment-26783 More bad news and a timely and important snippet to be savored in all its dark simplicity. Perhaps Richard Cook should have noted also that in the stagflating economy of yesteryear that Paul Volcker tried to strangle with tough love, inflation at 14+%, interest rates at 20%, there was latent productive capacity, a healthy real estate market, and strong M1. Volcker could give the economic engine a solid bash with a big wrench of interest rate hikes with the certainty that it might stutter but would easily recover and head on down the road. That is not the case now. Bernanke cannot raise interest rates to check inflation without killing the economy for sure because the productive economic muscle has been devoured by financial cannibals. The real estate market is collapsing. M1 is falling. This is a game that hasn't been played before. This inflation does not reflect frustrated demand. This inflation is dollars fluttering home with nowhere to roost, useless speculative dollars, bubble dollars that were created without collateral to reflect real value, greed dollars issued on great expectations, great unfounded expectations of the financial class. These worthless dollars are fleeing the tumbling commodities market, the toxic bond market, the commercial paper market, etc. These are homeless, orphaned dollars, the little imaginary magic carpets of the money-for-nothing class, the class whose anti-productive financial activities accounts for 20% or more of US GDP according to Kevin Phillips. So, here's the unique feature of this stagflation: it isn't really stagflation. It is deflation. The dollar has been delinked from its productive collateral base and its inflation is unrelated to the supply/demand equation of yore. People do not have more dollars that buy less. They have less dollars that buy less. That is deflation from hell. Time for another stimulus payment! As Jamie Limon ( Morgan CEO, financial czar, and master of the universe ) implied in his chat with Charlie Rose a month or so back, this will probably be necessary. This interesting feature of the end times economy should inspire us all to leap up from our chairs and shout: "What the fu..........k?" We can see it coming. It's not the horizon, its the cliff edge, the end of the road. It's not a bad dream and we won't wake up. Denial is not a river in Egypt. Therefore, here's the solution: get off the bus. Realize that the private monetary system is a complete and disastrous failure. Radicalize! We are an inventive, resourceful people, and we've always liked the idea of democracy and two chickens in every pot, even though this has always been in the idea stage. The end times of the privatized system are upon us, so why don't we start talking about solutions and a new chapter in the American story that features real democracy and money by and for the people, not merely for the rich. I know Richard Cook knows this new story and I'd rather hear him tell it rather than join in the doom and gloom chorus. That's all you hear these days, this incessant croaking of frogs in the night. More bad news and a timely and important snippet to be savored in all its dark simplicity.

Perhaps Richard Cook should have noted also that in the stagflating economy of yesteryear that Paul Volcker tried to strangle with tough love, inflation at 14+%, interest rates at 20%, there was latent productive capacity, a healthy real estate market, and strong M1. Volcker could give the economic engine a solid bash with a big wrench of interest rate hikes with the certainty that it might stutter but would easily recover and head on down the road.

That is not the case now. Bernanke cannot raise interest rates to check inflation without killing the economy for sure because the productive economic muscle has been devoured by financial cannibals. The real estate market is collapsing. M1 is falling. This is a game that hasn’t been played before.

This inflation does not reflect frustrated demand. This inflation is dollars fluttering home with nowhere to roost, useless speculative dollars, bubble dollars that were created without collateral to reflect real value, greed dollars issued on great expectations, great unfounded expectations of the financial class. These worthless dollars are fleeing the tumbling commodities market, the toxic bond market, the commercial paper market, etc. These are homeless, orphaned dollars, the little imaginary magic carpets of the money-for-nothing class, the class whose anti-productive financial activities accounts for 20% or more of US GDP according to Kevin Phillips.

So, here’s the unique feature of this stagflation: it isn’t really stagflation. It is deflation. The dollar has been delinked from its productive collateral base and its inflation is unrelated to the supply/demand equation of yore. People do not have more dollars that buy less. They have less dollars that buy less. That is deflation from hell.

Time for another stimulus payment! As Jamie Limon ( Morgan CEO, financial czar, and master of the universe ) implied in his chat with Charlie Rose a month or so back, this will probably be necessary.

This interesting feature of the end times economy should inspire us all to leap up from our chairs and shout: “What the fu……….k?” We can see it coming. It’s not the horizon, its the cliff edge, the end of the road. It’s not a bad dream and we won’t wake up. Denial is not a river in Egypt.

Therefore, here’s the solution: get off the bus. Realize that the private monetary system is a complete and disastrous failure.

Radicalize!

We are an inventive, resourceful people, and we’ve always liked the idea of democracy and two chickens in every pot, even though this has always been in the idea stage. The end times of the privatized system are upon us, so why don’t we start talking about solutions and a new chapter in the American story that features real democracy and money by and for the people, not merely for the rich.

I know Richard Cook knows this new story and I’d rather hear him tell it rather than join in the doom and gloom chorus.

That’s all you hear these days, this incessant croaking of frogs in the night.

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