Usually, deflation is defined as a contraction of the money supply. Lower prices are a consequence of that drop in money supply as there is less money chasing goods. However, there is currently a contradiction in this definition as the money supply has never been greater, but that is because practically all of that money supply growth sits in banks and shores up their balance sheets, rather than entering the mainstream economy. Western banks have chosen to hold onto that money because almost to a man, the banks are technically bankrupt already. Its like there are two pots of money - the one in the banks and the one on the streets. On the streets money is in short supply as wages flat line. The good news is that deflation will help end the euro, which is simply a gangster racket now, to enrich elites and bankers at the expense of ordinary people. Hence Greece.
Let's hope it lasts long enough to end the euro ... Let Germany eat the same crap Greece has been eating for the last 5 years. Deflation and misery should be a constant German diet until the end of time.
No comments:
Post a Comment