What plan for the upcoming inflation?

msj · August 15, 2009

The system was problematic "many" years ago. Division of the populace, wide swings in voting patterns to elect the lesser of evil rather than the best leaders to govern. These are a few symptoms. Obama, Bush II, Clinton, Bush I - each one elected to avoid the consequences and fill the holes left by the earlier administration.
It is an historically myopic view to be blaming recent administrations for what can only be termed systemic rot, the onset of which coincides with governments increasing intervention in the economy and it's dream of omnipotence.

I wasn't clear enough.

My blame goes back decades and, in particular, to "Reaganism."

Sure, we can probably trace it back to 1933 or 1906 or some other time, too.

Pliny · August 15, 2009

We haven't had anything like the depression for awhile. I think it has more to do with governments not planning ahead in good times and then taken by surprise in bad times.

We have never had anything like the depression. I don't know if you around in the late seventies and early eighties but that was a pretty bad time. I think Reagan saved the day on that one the re-election of Carter would have seen a worse depression than the thirties. He was an economic nightmare. The election of Obama now is rather foreboding since he, like Carter, wishes to create a socially just society, an ideological utopia, at any cost and to hell with economics.

We are headed into who knows what - the fabric of society is unraveling. I am not saying that to fear monger. Out of the ashes a new day will dawn. Perhaps a more rational society.

Oh... governments were taken by surprise alright but they like to proudly take credit for booming economies while they blame the market or capitalism for economic catastrophes. They can create booms but in doing so create busts.

Pliny · August 15, 2009

I wasn't clear enough.
My blame goes back decades and, in particular, to "Reaganism."

Sure, we can probably trace it back to 1933 or 1906 or some other time, too.

You do feel that government does control the economy then? And Reagan purposely sat the economy on it's ass.

The facts show economic hard times were exacerbated by Carter's interventionist fiscal and social policies and eased under Reagan's less interventionist policies. If you are complaining about not as many green stamps under Reagan as opposed to Carter I agree. Too many socialists ignore economics in the construction of their utopia, Carter and Obama are of that stripe in my view.

Topaz · August 15, 2009

You do feel that government does control the economy then? And Reagan purposely sat the economy on it's ass.
The facts show economic hard times were exacerbated by Carter's interventionist fiscal and social policies and eased under Reagan's less interventionist policies. If you are complaining about not as many green stamps under Reagan as opposed to Carter I agree. Too many socialists ignore economics in the construction of their utopia, Carter and Obama are of that stripe in my view.

Would you agree that the mess the US has is partly of Bush's spending on the war, his handling of their social programs, were he drained some of the programs especially for the seniors? World leaders have to take responsibitity for their part in this recession. It's just too easy for them just to "make " money to keep things going. I think also, in Canada, we should make it a law were before an election, the books are open and we should know how well or bad they have handled our tax dollars.

Machjo · August 15, 2009

They can create booms but in doing so create busts.

Exactly. A boom is not a time for politicians to pat themselves on the back. A boom is the time to raise taxes if necessary, sell crown assets if feasible, and reduce or cut spending if possible. No, none of these remedies is popular to the electorate, but a responsible politician would not just give the people what they ask for, but convince them to accept the right thing. In a boom, we should be fighting inflation, debt, and interest rates with the same vigour with which we fight recessions. But we never do, and that's why we always end up with the vicious recessionary cycles.

Machjo · August 15, 2009

You do feel that government does control the economy then? And Reagan purposely sat the economy on it's ass.
The facts show economic hard times were exacerbated by Carter's interventionist fiscal and social policies and eased under Reagan's less interventionist policies. If you are complaining about not as many green stamps under Reagan as opposed to Carter I agree. Too many socialists ignore economics in the construction of their utopia, Carter and Obama are of that stripe in my view.

Reagan borrowed his way through the Cold War. He was the model fiscal liberal if ever I'd seen one. By borrowing, all he was doing was postponing and worsening hard times. Clinton managed to deflate the deficit a little, thugh the Bushes simply went along with the Reaganomic borrow and spend regime. Finally, it all blew up in our faces last year.

Machjo · August 15, 2009

Would you agree that the mess the US has is partly of Bush's spending on the war, his handling of their social programs, were he drained some of the programs especially for the seniors? World leaders have to take responsibitity for their part in this recession. It's just too easy for them just to "make " money to keep things going. I think also, in Canada, we should make it a law were before an election, the books are open and we should know how well or bad they have handled our tax dollars.

I'd say it started long before the Bushes. As mentioned above, Reaganomics was all about cutting taxes, borrowing and spending. The best way to win votes but the worse way to manage the economy.

Also, I'd say even more to blame than politicians is the electorate. After all, what option do the politicians have to to give in to every selfishwhim of the electorate?

A responsible politician when not in a recession woudl be preparing for recession through possible tax increases, spending cuts, or a combination of them. Not the most popular politician, but the kind I'd vote for.

Pliny · August 16, 2009

Would you agree that the mess the US has is partly of Bush's, his handling of their social programs, were he drained some of the programs especially for the seniors?

I agree there is a mess. I agree Bush contributed to the mess. How ever we do not agree on what the mess is. A mess for you is when government is not increasing the supply of "money" for social welfare. Of course terms like "funding" and "resources" are substituted but boiling it down, your mess is simply lack of government money for special interests. N'est-ce pas?

You are saying that Bush and his policies devastated the economy basically. So you have to admit that government can and does wreck economies. Does that mean they control the economy? If so why would they wreck an economy? Why do we have recessions? Why do we have booms?

Probably because there is too much freedom in the market, right? But the market is part of the economy and government controls the economy. Maybe it isn't all that black and white? Maybe there is part of the economy the government doesn't control and that is why we have booms and busts. Is it the underground markets, maybe?

Usually, our government likes to say we have a free economy. They don't like to say, at least to the entrepreneurial business community, that they are going to control their business. They usually tell them they are going to regulate as little as possible and cut red tape. I suppose the left would feel they are really saying, "Be as greedy as you like, boys. Have some fun!"

Anyway, each leader is doing what he feels is in the best interests of the country according to what the people want from it. The right wants wants security from terrorist threats the left wants social welfare. Both are calling for a government that syphons the wealth out of a society and can only bankrupt a nation.

I happen to think that the individual feeling he is secure in person and property is conducive to him being co-operative and productive and utilizing his skills to the benefit of the common good. Conversely, an individual without that security of person and property has no incentive to produce and develops skills to disrespectfully and coercively (legally and/or illegally) live off the avails of others.

World leaders have to take responsibitity for their part in this recession. It's just too easy for them just to "make " money to keep things going. I think also, in Canada, we should make it a law were before an election, the books are open and we should know how well or bad they have handled our tax dollars.

How should they take responsibility?

I agree it is too easy for them to just "make" more money. I notice you call it "money". Isn't it just borrowing and thus a debt? Maybe if they couldn't go into debt.....?

The government will tell you when they are collecting from you that they are not "your" tax dollars. Those tax dollars are theirs. When they are spending it they say it is your tax dollars.

Of course, anyone spending someone else's money is usually asked to account for where it went. Isn't there a way they could earn their own money?

Pliny · August 16, 2009

Reagan borrowed his way through the Cold War. He was the model fiscal liberal if ever I'd seen one. By borrowing, all he was doing was postponing and worsening hard times. Clinton managed to deflate the deficit a little, thugh the Bushes simply went along with the Reaganomic borrow and spend regime. Finally, it all blew up in our faces last year.

You have to remember the President doesn't just do what he wants. Governmental powers in the US are divided for the specific purpose of keeping it from being concentrated in one body.

The Democrats controlled the congress at the time and since they couldn't see any political fallout from cutting taxes, which is what the majority wanted and was calling for, they voted with him on that but they wouldn't vote in favour of any of his proposed cuts to spending. This would have offended a large portion of people that form the base of the Democrats, and they wouldn't alienate them and face the political fallout.

I believe it isn't too far off the label to call him a fiscal liberal since politics sits to the left of centre in the USA. Politics isn't like in Canada's where the Leader of a majority party, demanding the party line be held, can just push through whatever he wants.

As for deficits,

Deficits always go up in a recession. Government revenues go down and spending is deemed neccessary to go up. I think that is obvious.

So recessions were created by the previous administrations, obviously and then they left. It may appear their term in office was all pie in the sky but ended in recession so the deficit rises.

When Reagan took office and when Bush took office they started in a recession. The indicators of their fiscal policies would trail their administration. Their fiscal position at the time their policies were implemented would be the result of the previous administrations policies.

It looks like Bush did nothing to change the result of Clinton's policies and the deficit soared under his Presidency. The war in Iraq and Afghanistan could explain a lot of that deficit. But when the Democrats took over Congress in 2004 and put the accelerator on the housing boom the result was a bust, a deepening of the "recession" and a deficit we haven't seen since WWII. Notice the deficit keeps going up under Obama? His policies haven't had a chance to work yet but I am of the opinion that at the end of his first term it won't even have slowed down because he plans to spend a lot of money, not slated for economic recovery as he'd like you to believe, but for his social utopia.

Pliny · August 16, 2009

Also, I'd say even more to blame than politicians is the electorate. After all, what option do the politicians have to to give in to every selfishwhim of the electorate?

Definitely a problem of a "social" democracy. Not necessarily a problem of democracy when government has a limited mandate only when it comes to social engineering. A national government needs to stick to a general and broad service that more than the majority, say 80% of the people can agree with. When it starts dealing with "special interests" it is lost and the snowball of socialism starts rolling. It can't start writing laws that favour one group over another. It shouldn't be devisive by legislating favor for one group over another. It favours rich over poor or poor over rich, men over women, and women over men. Right now they deny employment opportunity to a certain group. It's a sad state of affairs. This to me is a mess.

A responsible politician when not in a recession woudl be preparing for recession through possible tax increases, spending cuts, or a combination of them. Not the most popular politician, but the kind I'd vote for.

"Responsible politician" is a bit of an oxymoron since they are never held accountable.

Actually, ummm....tax increases create recessions. Spending cuts do contribute to a stronger economy but I believe you are thinking they could be saving money. Governments don't generally save money they would be chastised for overtaxing.

Jerry J. Fortin · August 18, 2009

Definitely a problem of a "social" democracy. Not necessarily a problem of democracy when government has a limited mandate only when it comes to social engineering. A national government needs to stick to a general and broad service that more than the majority, say 80% of the people can agree with. When it starts dealing with "special interests" it is lost and the snowball of socialism starts rolling. It can't start writing laws that favour one group over another. It shouldn't be devisive by legislating favor for one group over another. It favours rich over poor or poor over rich, men over women, and women over men. Right now they deny employment opportunity to a certain group. It's a sad state of affairs. This to me is a mess.
"Responsible politician" is a bit of an oxymoron since they are never held accountable.

Actually, ummm....tax increases create recessions. Spending cuts do contribute to a stronger economy but I believe you are thinking they could be saving money. Governments don't generally save money they would be chastised for overtaxing.

Over taxing? I have been saying that as long as I have been filling out forms for Revenue Canada, thats 47 years now. Yet the problem is one which I have struggled to understand for almost as long. I have concluded that the problem is a result of the "great system" of things. These systems were designed by man to aid them in their endeavours but have since been proven to have changed into mechanisms that men serve instead.

Our problems will not be solved by trying to isolated them into their basic components, because that opens the door to special interest groups and their self serving agendas. What we are talking about is a paradigm shift in terms of society. You simply can't alter a political concept and have it function as an economic tool. Nor can you modify an economic concept and have it function as a political tool, without large implications to society. The society we have created is very complex.

What we need is systemic change, a pervasive all encompassing shift of concepts and objectives that becomes a national will, a desire to achieve something far beyond our present abilities. We need to define what it is that we want and become fixated upon its realization.

The way must be found to incorporate both capitalism and socialism into a single cohesive means of governance that provides individual freedom and responsibility in conjunction with private venture productive efforts within a regulated framework designed to protect society from itself.

Machjo · August 19, 2009

You have to remember the President doesn't just do what he wants. Governmental powers in the US are divided for the specific purpose of keeping it from being concentrated in one body.

Agreed.

The Democrats controlled the congress at the time and since they couldn't see any political fallout from cutting taxes, which is what the majority wanted and was calling for, they voted with him on that but they wouldn't vote in favour of any of his proposed cuts to spending. This would have offended a large portion of people that form the base of the Democrats, and they wouldn't alienate them and face the political fallout.

Though I'd generally prefer reducing government spending to maintaining high taxes, I'd also be responsible enough to oppose any tax reduction without any commensurate reduction in spending. On that Front, Reagan waas still partly to blame for having pushed for tax cuts without first ensuring spending cuts. A responsible government would ensure spending is reduced and that the debt is paid off before venturing into blind tax reductions.

I believe it isn't too far off the label to call him a fiscal liberal since politics sits to the left of centre in the USA. Politics isn't like in Canada's where the Leader of a majority party, demanding the party line be held, can just push through whatever he wants.

You do have a point there.

As for deficits,
Deficits always go up in a recession. Government revenues go down and spending is deemed neccessary to go up. I think that is obvious.

Not necessarily. In the event of a 0% bank rate alongside overall deflation (which is really the only time counter-deflationary spending is necessary so as to counter the threat of a deflationary spiral), a government could get away with 'printing a moderate amount of money to spend. This would be a way of increasing revenue and spending without necessarily having to go into debt, inflation, or high interest rates sicne it's essentially aiming at simply countering deflation. Granted the pre-conditions are stringent and not often encountered, but within the realm of possibility none-the-less.

So recessions were created by the previous administrations, obviously and then they left. It may appear their term in office was all pie in the sky but ended in recession so the deficit rises.

Again, the deficit does not necessarily need to rise, depending on circumstances. Though granted taxes may have to increase so as to hedge against the extra printed money so as to brace for the possibility of inflation later.

When Reagan took office and when Bush took office they started in a recession. The indicators of their fiscal policies would trail their administration. Their fiscal position at the time their policies were implemented would be the result of the previous administrations policies.

Granted. But each one had the option of increasing taxes, reducing spending, or both, but failed to make that decision owing to the fear of losing votes.

It looks like Bush did nothing to change the result of Clinton's policies and the deficit soared under his Presidency. The war in Iraq and Afghanistan could explain a lot of that deficit. But when the Democrats took over Congress in 2004 and put the accelerator on the housing boom the result was a bust, a deepening of the "recession" and a deficit we haven't seen since WWII. Notice the deficit keeps going up under Obama? His policies haven't had a chance to work yet but I am of the opinion that at the end of his first term it won't even have slowed down because he plans to spend a lot of money, not slated for economic recovery as he'd like you to believe, but for his social utopia.

This is not a Republican vs. Democrat issue. I agree that Obama's borrow and spend strategy will do no more than postpone the hardship. In the end, he really has no choice but to reduce spending, increase taxes, or both. If the problem is with deflation, then he's certainly free at that stage to print however much money is necessary to counter the deflation and use that to pay off the debt, thus killing two birds with one stone by paying off the debt and putting more money into the economy at the same time. With the government as indebted as it is, there is not much more he can do.

When I'd pointed out Reagan, it had nothing to do with his being a Democrat or Republican, but just him.

Oleg Bach · August 19, 2009

There is no plan for me. I have been surviving on nothing other than cunning for a few years now..so inflate all you want - I am conditioned and will survive no matter what. Just don't come to me for advice after you recieved your bail out cash. Cos' I don't work for free anymore - I'm going pro! :lol:

Machjo · August 19, 2009

Actually, ummm....tax increases create recessions. Spending cuts do contribute to a stronger economy but I believe you are thinking they could be saving money. Governments don't generally save money they would be chastised for overtaxing.

I agree that a tax increase takes money out of the economy and so serves a counter-inflationary, or even deflationary role, which is not a good move per se in a recession. However, in a bubble economy, a tax increase combinedd with spending cuts can be beneficial in cooling the economy down.

In a recession, it depends. On the one hand, the government wants to put more money into the economy. On the other hand, it wants to keep a balanced budget. I could see various options there. One option is, if the government is debt free, to reduce taxes and engage in counter-deflationary printing and spend that money. Or if it does have a debt, cut taxes if possible, or increase taxes if necessary to pay the debt, but counter its effects through counter-deflationary printing of money and use that to pay off the debt, thus killing two birds with one stone.

Pliny · August 19, 2009

Over taxing? I have been saying that as long as I have been filling out forms for Revenue Canada, thats 47 years now. Yet the problem is one which I have struggled to understand for almost as long. I have concluded that the problem is a result of the "great system" of things. These systems were designed by man to aid them in their endeavours but have since been proven to have changed into mechanisms that men serve instead.
Our problems will not be solved by trying to isolated them into their basic components, because that opens the door to special interest groups and their self serving agendas. What we are talking about is a paradigm shift in terms of society. You simply can't alter a political concept and have it function as an economic tool. Nor can you modify an economic concept and have it function as a political tool, without large implications to society. The society we have created is very complex.

What we need is systemic change, a pervasive all encompassing shift of concepts and objectives that becomes a national will, a desire to achieve something far beyond our present abilities. We need to define what it is that we want and become fixated upon its realization.

The way must be found to incorporate both capitalism and socialism into a single cohesive means of governance that provides individual freedom and responsibility in conjunction with private venture productive efforts within a regulated framework designed to protect society from itself.

The society is complex, I agree. It needs some simplification. Capitalism is about the economy. Socialism is about controlling the economy. Socialism is the attempt to bring about a single cohesive means of governance. Government should be about not interfering in the economy.

Honest money would go a long way to making honest government.

Pliny · August 19, 2009

Though I'd generally prefer reducing government spending to maintaining high taxes, I'd also be responsible enough to oppose any tax reduction without any commensurate reduction in spending. On that Front, Reagan waas still partly to blame for having pushed for tax cuts without first ensuring spending cuts. A responsible government would ensure spending is reduced and that the debt is paid off before venturing into blind tax reductions.

On that front Reagan failed. He also said he would get rid of the Department of Education which he never did.

Not necessarily. In the event of a 0% bank rate alongside overall deflation (which is really the only time counter-deflationary spending is necessary so as to counter the threat of a deflationary spiral), a government could get away with 'printing a moderate amount of money to spend. This would be a way of increasing revenue and spending without necessarily having to go into debt, inflation, or high interest rates sicne it's essentially aiming at simply countering deflation. Granted the pre-conditions are stringent and not often encountered, but within the realm of possibility none-the-less.

How does the government print money without going into debt? I'll answer that myself.

All the money it prints is debt. It cannot print money to gain prosperity.

Deflation is not a terrible thing for the average person. It is more foreboding for big business, corporations and governments. The average person experiences lower prices and in a free economy would experience lower wages. It's a balancing act. Smaller more flexible businesses do better than big corporations and of course deflation means that there is less "money" for government coffers.

Over time, a slight deflation is better than a slight inflation.

Government spending might prime the pumps but it keeps the spending occurring where spending should not be occurring. This is wasteful and inefficient spending. Keeping production up for the sake of production is an exercise in futility. It's like working all day to avoid working.

Again, the deficit does not necessarily need to rise, depending on circumstances. Though granted taxes may have to increase so as to hedge against the extra printed money so as to brace for the possibility of inflation later.

Again, in a recession where the economy is down, government revenues must drop, and that produces a deficit. So deficits always rise in a recession. Raising taxes is one thing that an unwise government will do in the face of declining revenues. It must cut spending but in doing so it always alienates some special interest who raises the roof. Cuts to their budget in order to have an effect have to be significant. They usually choose to just ride out recessions but foolishly prolong them with their policies.

This is not a Republican vs. Democrat issue. I agree that Obama's borrow and spend strategy will do no more than postpone the hardship. In the end, he really has no choice but to reduce spending, increase taxes, or both. If the problem is with deflation, then he's certainly free at that stage to print however much money is necessary to counter the deflation and use that to pay off the debt, thus killing two birds with one stone by paying off the debt and putting more money into the economy at the same time. With the government as indebted as it is, there is not much more he can do.

Print money to pay off the debt? I think I'll try that for my debts.

When I'd pointed out Reagan, it had nothing to do with his being a Democrat or Republican, but just him.

Reagan was, in my view, one of the best US Presidents of the 20th century. He failed to accomplish as much as he would have liked to but he stemmed the tide of socialism for a brief instant.

Pliny · August 19, 2009

There is no plan for me. I have been surviving on nothing other than cunning for a few years now..so inflate all you want - I am conditioned and will survive no matter what. Just don't come to me for advice after you recieved your bail out cash. Cos' I don't work for free anymore - I'm going pro!

The government has a plan for everyone, Oleg. Fail, and they will serve you up as an example. Win, and they will demand their pound of flesh.

bush_cheney2004 · August 19, 2009

....You have to remember the President doesn't just do what he wants. Governmental powers in the US are divided for the specific purpose of keeping it from being concentrated in one body.

Specifically relevant to budget deficits in the USA, fully 60% of the federal budget is not discretionary spending.

http://useconomy.about.com/od/fy2008budget...8_Mandatory.htm

Machjo · August 19, 2009

Deflation is not a terrible thing for the average person. It is more foreboding for big business, corporations and governments. The average person experiences lower prices and in a free economy would experience lower wages. It's a balancing act. Smaller more flexible businesses do better than big corporations and of course deflation means that there is less "money" for government coffers.

Ideally, we want predictability, and that would mean fighting both inflation and deflation simultaneously. Just as inflation encourages excessive spending in a race against prices, deflation risks discouraging spending in the wait for better prices. Ideally, we would want people to not worry too much about price fluctuations beyond the ordinary. Sure prices for individual items may fluctuate owing to shifts in supply and demand, but we would still want overall prices in the economy to remain more or less flat so as to allow for predictability and long-term planning, not only for government, but also for family budgets.

Over time, a slight deflation is better than a slight inflation.

You might be right on that. But in the end, even deflation is still harmful. For instance, it could exacerbate a person's debts owing to drops in salary or profit but no commensurate drop in the debt. Of course we don't want inflation to help him pay his debt as that would encourage him to borrow some more. But a flat rate of inflation would reflect the real cost of the debt.

Government spending might prime the pumps but it keeps the spending occurring where spending should not be occurring. This is wasteful and inefficient spending. Keeping production up for the sake of production is an exercise in futility. It's like working all day to avoid working.

Now you

re making the assumption that all government spending is just to 'rpime the pumps'. Some government spending is in fact legitimate, such as for compulsory education, etc. But I do agree that a government taken by surprise by a recession and with no previous planning is likely to fly by the seat of their pants by spending on all kinds of make-work projects as we're seeing now in this recession. And that of course risks inflation later owing to that spending not being an investment of any kind, unlike education for example. As a result, it's unrecoverable money spent to be paid back later as the economy picks up again with little to show for that spending.

Again, in a recession where the economy is down, government revenues must drop, and that produces a deficit. So deficits always rise in a recession. Raising taxes is one thing that an unwise government will do in the face of declining revenues. It must cut spending but in doing so it always alienates some special interest who raises the roof. Cuts to their budget in order to have an effect have to be significant. They usually choose to just ride out recessions but foolishly prolong them with their policies.

I agree that a government need not respond to a recession (in fact, I'd like to do what Sweden does by not having a legally mandated minimum wage so that workers could adjust). But I do believe that governments need to counter deflation with as much vigour as they do inflation. It's just a shame that they don't counter inflation with the same vigour as they do deflation, and I think that's part of the problem as it causes an imbalance.

Print money to pay off the debt? I think I'll try that for my debts.

Governments have been printing money for centuries. Nothing new there. And currency is an efficient tool for international commerce, so I have no problem with the existence of currency, and it can exist only if government produces it. As for printing money to pay off the debt, no, I would not normally encourage that. But under special conditions, it could be used to counter deflation, as long as the government is prepared to reel that money back in if necessary to counter inflation later.

Reagan was, in my view, one of the best US Presidents of the 20th century. He failed to accomplish as much as he would have liked to but he stemmed the tide of socialism for a brief instant.

Are you kidding? His military expansion was the most expensive welfare statism the world had ever seen. Can't find a job? Join the army.

Machjo · August 19, 2009

I've never understood how government spending on education is socialist yet government spending on the military is not.

If we define any government intervention in the economy as socialistic, then military spending is just as socialist as education spending, isn't it? I've never understood how military welfare has always been an oximoronic sacred cow to so-called capitalists who are often more socialist in reality than even some self-proclaimed socialists, whereby the self-proclaimed socialist might intend to increase education funding by a little while the 'anti-capitalist' intends to blow the top off the budget for the military.

M.Dancer · August 19, 2009

The upcoming inflation certainly must be around the corner...if only because the deflation is here now.

http://www.theglobeandmail.com/report-on-b...article1256827/

Machjo · August 28, 2009

The upcoming inflation certainly must be around the corner...if only because the deflation is here now.
http://www.theglobeandmail.com/report-on-b...article1256827/

Now's the time to plan for it. Inflation may not be inevitable, but certainly possible. Does it not make sense for a responsible government to have a plan just in case? Lok at how we were cought off guard this recession.

Pliny · August 28, 2009

The upcoming inflation certainly must be around the corner...if only because the deflation is here now.
http://www.theglobeandmail.com/report-on-b...article1256827/

Deflation is not here now. Some prices are being corrected downward but mostly on speculatively driven overpriced goods. Deflation is a shrinkage in the money supply. A general drop in prices all around is an indication that the money supply has shrunk.

Deleveraging is indeed trying to occur in the private sector, that is; the money supply is trying to be downsized but the government is acting to counter that with it's stimulus packages and encouragment of banks to make credit available. It will only prolong the correction process and priming the pump is inflation, if they continue to prime the pump then price increases will reach double digit rates.

I read an interesting article about the now defunct Lehman Brothers. they weren't given any bailout money but the market quickly took care of their assets. what was good was purchased by other companies and what was bad is gone. Perhaps as it should be instead of extravagant government bailouts.

Pliny · August 28, 2009

Now's the time to plan for it. Inflation may not be inevitable, but certainly possible. Does it not make sense for a responsible government to have a plan just in case? Lok at how we were cought off guard this recession.

If you know what the government is going to do you can plan for the consequences.

About your signature.

Sterilization was a legally sanctioned practice in several provinces during the thirties and the Alberta sterilization act wasn't repealed until 1972.

It is interesting to note that it was enacted as a preventative measure to the expensive warehousing of mental patients, derelicts and such. Eugenics was a popular science especially among governments during the first part of the 20th century. Socialism, in all it's collectivist forms, and engineered societies were all the rage. It is true many people were abused by the system.

So they were just trying to prevent bad genes from being passed on and curtail future burdens to the State.

This is an example of what socialism is about. Do you think it is wise to support a centralized power that can be abused where the "cures" for societies ills are more than often worse than the disease?

Machjo · August 29, 2009

Deflation is not here now. Some prices are being corrected downward but mostly on speculatively driven overpriced goods. Deflation is a shrinkage in the money supply. A general drop in prices all around is an indication that the money supply has shrunk.
Deleveraging is indeed trying to occur in the private sector, that is; the money supply is trying to be downsized but the government is acting to counter that with it's stimulus packages and encouragment of banks to make credit available. It will only prolong the correction process and priming the pump is inflation, if they continue to prime the pump then price increases will reach double digit rates.

I read an interesting article about the now defunct Lehman Brothers. they weren't given any bailout money but the market quickly took care of their assets. what was good was purchased by other companies and what was bad is gone. Perhaps as it should be instead of extravagant government bailouts.

I understand what you're saying about bailouts, and fully agree. If an industry is outdated, let it fall. As for the human costs, we can always retrain the workers for new industries, but there's no point in maintaining the horse and buggy industry just to preserve jobs.