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Tuesday, December 1, 2015

New Deal Demoncrat on the intensified deflationary pulse


New Deal Demoncrat - intensified deflationary pulse. Two things, NDD. One, collapsing commodity prices is good deflation. Two, the Fed is concerned with what the trend will be a year from now, not what it is now: it takes that long for transmission.

But with that in mind, it'd make perfect sense for the Fed to not raise rates in December, because not only are they not going to be above their 2% inflation target in a year, but also 2% is supposed to be a target and not a hard limit. I hope Yellen has the intelligence to realize that.

And in any case, isn't this what the past 35 years of neocon fiscal and monetary policy has been aiming for? We now have zero inflation and real interest rates at zero, and all because of far more world savings than there is world debt to mop it up. Wasn't that what every decision since Volcker was aiming for? Isn't this the paradise that the capitalist elite set out to build?

And now you're trending down to zero world growth, because it's more important that you let the kleptocratic elite hide all their money in secret bank accounts in Switzerland and Florida and the Channel islands than it is to force them to reinvest that money to produce increased productivity.

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