Suicide by Deflation

Off the keyboard of John Ward

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Slog on December 16, 2014

dogtailpt

Discuss this article at the Economics Table inside the Diner

CRASH2: Neoliberalism, murderer of inflation, commits suicide by deflation.

How devious geopolitics and dead-end globalism combined to eat the world economy

You have to hand it to the neoliberal fraternity – perhaps I should say patriarchy – there’s never been a belief system in history capable of breaking all its own rules one by one, and still trying to tell us it’s the best socio-economic development system on the planet.

The world’s Milt-milkers have variously demanded to be nationalised, expected to be saved, opposed any and all reform, used austerity as a form of stimulation, tried Zirp as a means of increasing spending power in a recession, produced endless monopolies of media, banking and energy, used the biggest Government market interventions of all time, and then produced the slump to end all global slumps.

I’ve read most of Friedman’s stuff, and leaving aside for a second its narrow academic inability to take real people into account, I really don’t remember any of the above features being present in his work. However, one thing he did like was the idea of conquering chronic inflation; so whatever else one wants to throw at the neolibs, this you have to grant them: they have indeed wiped out inflation.

Imagine my surprise, therefore, when around five years ago 0% inflation suddenly became a spawn of the Devil. Yes – believe it or not, and frankly it’s an unavoidable conclusion – those who used Milton Friedman as their guiding light for so many years have even decided that this tenet of the Messiah’s gospel is also a false witness. (Or to use the other excuse, “Milt would never have recommended doing this”).

What we have today – and the virus is spreading fast – is deflation. So today I’d like to ignore all the other drivel that MF spewed out over three decades of abject failure in the real world, and focus single-minded on that.

Why did inflation suddenly swap places with deflation as the Great Global Bogeyman?

The answer is threeofold: politicians spending beyond their means, greedy bankers trading with each other beyond human understanding, and bourse-demanded growth insisting on consumer credit.

Succinctly, exposure to dangerous level of debt.

In an inflationary world, debt gets smaller in real terms all the time. So banking and politics have one thing that binds them together above any other: to avoid a deflationary world where debt gets bigger in real terms.

The globalist world today runs, grows, produces, swaps, and demands debt. Whereas real, entrepreneurial capitalism takes calculated risk to produce positive growth, mercantilist monopolism requires unfeasible debt just to function.

So where there is debt, there must not be deflation. And that’s why, after 2008, deflation went, with one mighty bound, from Goal of the Good to Spawn of the Devil. That’s largely why we had QE to erode currency value, Zirp to make repair easier – and specifically now, gold suppression to make it cheaper for sovereign central banks to repair past insanity in their dealings with neoliberal politicians and bonus-obsessed merchant bankers.

But the mixture of geopolitical ego and systemically flawed economic theory is a heady brew, Cynthia. Mercantilism on a global scale replaces war as the new dimension of diplomacy, and fossil-energy monopolism creates an obsession with access to it. So before you know where you are, devious tactics and greedy strategies create a maelstrom in which the urgent overtakes the important.

The circle of contradiction this involves is getting tighter with every week.

The price of oil must fall, the euro must fall, borrowing costs must fall, the Ruble must fall, gold’s value must fall. Even wages and commodity prices must fall. The result of all this is the terrible trio – falling demand, falling costs, and falling prices – followed by the tragic twosome – rising welfare costs and rising taxes.

On and on it goes. For raised taxes reduce demand still further, rising welfare costs increase debt further, and so deficits get bigger and borrowing costs get higher. This is why Osborne is in a corner, and Abenomics veers all over the place while getting nowhere.

When the Ruble falls, however, only higher rates will prop it up. When neoliberal austerity and growing wealth inequality kill economic recovery, borrowing yields spike…and another dimension now sits alongside deflation to raise the real level of debt.

I’ve been saying for three years that you cannot have a world in which everyone wants Zirp all the time: not only does that too reduce the spending power of the wealthiest age demographic, in a world where nations have competing geopolitical, social and economic priorities, it is a preposterous idea built on the hubris of distorted Alpha minds.

The bottom line is this: everything energy monopolism forces sovereigns to do geopolitically negates everything that sovereign banks need to do fiscally and financially.

Reagan and Thatcher championed the neoliberal economics of the smaller State as the way to defeat inflation. Having murdered inflation, the monopolous greed that underlies such economics has created its own murderer – deflation.

There is no way out of the cul-de-sac now, nowhere else to turn, nothing else to try. We are heading unstoppably for the sort of confluential collapse that changes everything. And the ignorant, unthinking nature of this endgame is summed up by a tweet I page-captured this morning:

repubnutGod bless America.

Knarf plays the Doomer Blues

https://image.freepik.com/free-icon/musical-notes-symbols_318-29778.jpg

Support the Diner
Search the Diner
Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D
Archives
Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

Quote from: John of Wallan on Today at 10:16:54 PM Could never figure out why you yanks cant make good beer Obviously you have not had a Deschuttes Porter, Alaskan Amber or Boston Lager.RE

Shorter of breath and one day closer to death.https://www.youtube.com/watch?v=KPSz7Lv_B_cFosters is shit, that's why we export it. Mind you warm cats piss filtered through a footballers used sock...

If they were bred to live long they probably would.  I don't see a mystery.  Selective breeding by humans is going to favor a fast turnover of generations and any organism with easy food likely has the same pressure to favor quick breeding and short li...

Quote from: John of Wallan on Today at 06:34:13 PMMy time will come. Every year I try and prepare a little bit more. Every year the conditions get worse and I get a bit older and slower. Every year the local population ...

Recent Facebook Posts

Evacuation orders lifted after Palisades Fire leaves 2 injured and burns at least 40 acres in Los Angeles

The Los Angeles Fire Department ordered mandatory evacuations Monday as a fire ripped across a hillside in the affluent Pacific Palisades area,..

3 weeks ago

US troops pelted with rotten fruit and stones as they leave Syria – video

People have thrown rotten fruit and stones at US troops as they left Syria in armed vehicles, with one man appearing to shout: ‘You liars!’..

3 weeks ago

Corporate America's Second War With the Rule of Law

Corporate America’s Second War With the Rule of Law- Uber, Facebook, and Google are increasingly behaving like the law-flouting financial empires..

3 weeks ago

Photos from Rafael Nadal's Spanish wedding show a reception fit for tennis royalty

From Business Insider:

3 weeks ago

The best toothpaste for kids

From Business Insider:

3 weeks ago

Diner Twitter feed

Knarf’s Knewz

Greenland's main airport is set to end civili [...]

230 Chileans blinded in protests as police fire pe [...]

According to Israeli Prime Minister Benjamin Netan [...]

Over 100 students staged a walkout during Israeli [...]

Diner Newz Feeds
  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Doomstead Diner Daily November 16The Diner Daily i [...]

Doomstead Diner Daily November 15The Diner Daily i [...]

Quote from: K-Dog on November 14, 2019, 07:45:28 A [...]

Quote from: Surly1 on November 10, 2019, 06:10:22 [...]

[img]https://scontent.forf1-2.fna.fbcdn.net/v/t1.0 [...]

Quote from: UnhingedBecauseLucid on March 18, 2019 [...]

CleanTechnicaSupport CleanTechnica’s work via dona [...]

QuoteThe FACT that the current incredibly STUPID e [...]

Greenland's main airport is set to end civili [...]

230 Chileans blinded in protests as police fire pe [...]

According to Israeli Prime Minister Benjamin Netan [...]

Over 100 students staged a walkout during Israeli [...]

Scientists have unlocked the power of gold atoms b [...]

Quote from: azozeo on August 14, 2019, 10:41:33 AM [...]

Wisconsin Bill Would Remove Barrier to Using Gold, [...]

Under extreme conditions, gold rearranges its atom [...]

The cost of gold futures on the Comex exchange inc [...]

Kicking off with the death of the Marlboro Man.RE[ [...]

Now UP on Global Economic Intersection!http://econ [...]

Alternate Perspectives
  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

Politicians’ Privilege By Cognitive Dissonance     Imagine for a moment you work for a small or medi [...]

Shaking the August Stick By Cognitive Dissonance     Sometime towards the end of the third or fourth [...]

Empire in Decline - Propaganda and the American Myth By Cognitive Dissonance     “Oh, what a tangled [...]

Meanderings By Cognitive Dissonance     Tis the Season Silly season is upon us. And I, for one, welc [...]

The Brainwashing of a Nation by Daniel Greenfield via Sultan Knish blog Image by ElisaRiva from Pixa [...]

Event Update For 2019-11-14http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-13http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-12http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-11http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-10http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability
  • Peak Surfer
  • SUN
  • Transition Voice

Of Warnings and their Ripple Effects"We need wooden ships, char-crete buildings, bamboo bicycles, moringa furniture, and hemp cloth [...]

"Restoring normal whale activity to the oceans would capture the CO2 equivalent of 2 billion tr [...]

Ukrainian Rhapsody"Our future will be more about artificial intelligence, cybersecurity, and non-state actors tha [...]

LeBron’s Chinese Troll Mobs"In the 36 hours after James’ delete, a troll mob with bot support sent a flame tsunami at the [...]

Soft Paths to Zero"While reducing emissions should be a priority, it is morally questionable to focus on relative [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

What extinction crisis? Believe it or not, there are still climate science deniers out there. And th [...]

My new book, Abolish Oil Now, will talk about why the climate movement has failed and what we can do [...]

A new climate protest movement out of the UK has taken Europe by storm and made governments sit down [...]

The success of Apollo 11 flipped the American public from skeptics to fans. The climate movement nee [...]

Today's movement to abolish fossil fuels can learn from two different paths that the British an [...]

Top Commentariats
  • Our Finite World
  • Economic Undertow

Don mentions dinosaurs and purports to know when man did/didn't exist, thus I feel compelled to [...]

The mistake that Greece made was to believe the "European" mirage. When things got real th [...]

How do you define Venezuela's currency? What is its problem? Should it issue more currency? Mor [...]

I agree that it doesn't make sense for nuclear to ramp up and down in response to wind and sola [...]

Here's an article: https://www.reuters.com/article/us-imo-shipping-factbox/factbox-imo-2020-a-m [...]

What is the shift away from bunker fuels? [...]

Yeah, when the water heater goes out the day after you just put new tires on one of the cars, etc... [...]

I join the chorus in welcoming you back. Any thoughts on how the shift away from bunker fuel on Janu [...]

@Front Range Mike "Most everyone I know is trying to figure out how to cut back and sell their [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction
Useful Links
Technical Journals

The effect of urbanization on microclimatic conditions is known as “urban heat islands”. [...]

Forecasting extreme precipitations is one of the main priorities of hydrology in Latin America and t [...]

The objective of this work is the development of an automated and objective identification scheme of [...]

Follow on our http://www.doomsteaddiner.net/forum/