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See my recent post. We are definitely moving towards deflation. Uncle Benny is trying to stop it however.
"definitely" any gov't that wants to produce inflation can create it. history is not on your side or on the side of deflation.
Agreed, but a case can be made for the classic: "This time it's different". When is the last time we had record levels of poverty, food stamps, fiscal deficits, public demonstrations, banksters, etc. ? In addition, there can be no sustainable inflation without commesurate wage gains. That's not happening.
We have HUGE deflationary forces in our economy... low-wage competition from Asia/Latin America, excess population looking for well-paid work, excess housing (thanks to prior bubble), excessive debt. Trying to "inflate our way out" of these forces is more damaging that to just "let them happen and take our medicine". America would survive* the "deflationary adjustment"... we will NOT survive the hyperinflation created to stave off deflation. *It's not that "America" won't survive (the dirt will still be here)... it just won't survive in its present construct. IOW... America will become owned by outsiders.
Yes, it really IS! Politicos won't acknowledge the fact, and all of Bernanke's efforts are destructive rather than constructive.
Your reality is apparently different. For most of us, the reality is that we have "inflation without commensurate wage gains" and it is being sustained. We'll let you know when our perception of reality changes to match yours. There is not going to be deflation in the overall economy for the foreseeable future -- if you persist in your thinking long enough then you might get to say, "see I was right" post revolution. (I will grant you that there has been some wage deflation measured in constant dollars, but not nominal dollars, at the lower wage end. There has been deflation in the housing sector, but it hasn't been enough to overcome inflation in other sectors. The Fed and their army of green-visored economists keep track of this sort of thing, and they are very good at not letting the nation slip into deflation. The Fed does not consist of a bunch of bozos running around with their zippers open, as Lyndon Johnson would have put it.)
"For most of us, the reality is that we have "inflation without commensurate wage gains" and it is being sustained. " your statement, while true for workers in the private sector, doesn't apply to the worthless workers in the gov't sector who continue to get undeserved wages increases. the US needs a healthy dose of deflation to wipe out the previous excesses. the fed may not be bozos but they are political hacks who will lead the US to economic ruin. most lefties prefer inflation to wipe out the debts arising from their misbegotten social programs.
If you got a healthy dose of your deflation you might find the cure worse than the disease. Raising interest rates on the entirety of existing U.S. debt, public and private, which in effect is what deflation would do, might not result in the happy ending you had hoped for.
Of course....the pain will be IMMENSE but (here's the key) it won't last beyond a year or two. In deflation, creditors win, debtors lose. The US dollar will tank, but then our exports will eventually be incredibly attractive. Many companies will go out of business as the price of their goods and services decline. Only the strong will survive and that will be the basis for the next boom. With the current props (QE1,2,3) in place to elevate the price of everything, we'll be in a constant state of funk in the economy....just oscillating between malaise and below-average growth. The US is fast becoming the "Les Miserables" of the world economies.