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Old 12-28-2018, 01:59 PM
wayne.ct wayne.ct is offline
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Join Date: Jan 2011
Posts: 552
Converting deflation into inflation

The way the stock market has performed recently is indeed very interesting and it is the cause of much consternation and ink which is interesting of itself. However, the "solution" proposed by Armstrong prompts this comment.

Also, btw, I don't claim to understand or know exactly what his solution is. I just want to throw something out here in black and white regarding inflation and deflation!

It appears that governments and banks (one entity?!) would like to have inflation but at the same time conceal the cost to the economy. I believe that to be true. How to do that when so many are waking up and beginning to act?

Those people who are able to do so and those people who have no choice are able to discontinue going further into debt and even reduce their debt. This causes a major problem for govs and banks. It takes "debt money" out of circulation and to some degree "real money" as well. I would argue that this is the core of deflation, i.e. less "money" in circulation.

What if, by some means legal or deceptive, the accountants obtain the legal option of transferring part of their bad debt to the government in such a way that it "disappears". The bank's balance sheet improves and the government's credibility declines.

If you agree with that premise you probably think that is exactly what they are doing now. Anyway, if the process continues along those lines, is this not what you have?

Those who don't trust the government now will continue to not trust the government.

Likewise, those who do trust the government will continue in the misguided beliefs.

Same for banks.

Same for the legal profession and local governments.

Nothing changes!

Unless people switch sides in this battle, there can be no change in direction. This sea change is more like steering the Titanic than paddling a kayak. The public is being fed the same line they have heard every year, year after year, for a long long time now. We each have to do our part but the prospects are not bright. The public is being conditioned to believe we are just going through a "normal" economic cycle and no fundamental change is required or needed.

Therefore, don't expect a change of course. The world is going to ride this train right over a cliff while thinking "no big deal" everything is fine!
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