Sunday, November 27, 2011

Inflation vs Deflation II

Inflation vs Deflation II
Andre Willers
27 Nov 2011
“I expected this , but not so soon.” Epitaph on a tombstone.
Synopsis :
A 1930’s style deflation (ie a Depression) has already started . It is gaining momentum . Why ?
Summary :
We have been in a deflationary cycle since 2008 , but it has been hidden by disguised debt creation .
The deflationary aspects will come more sharply to the fore as the debt-creation is curtailed .

Discussion :
1.First establish that deflation in consumer prices is happening .
1.1USA Oct 2011
“The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.1 percent in October on a seasonally adjusted basis, the U.S.
Bureau of Labor Statistics reported today.”
1.3South Africa : new car prices .
“Assistance” of about 20% upfront in cash is given to a new buyer . This is a personal loan disguising the deflation of about 15% in the new car price .
I presume this is going on everywhere .

2. The Quiet Deflation .
Disguised by hidden debt creation .
3.But why ?
What is really going on ?
It is easy to blame Greed , the Bankers , Capitalism , Over population , etc.
4. A Modest Proposal :
It is an Accounting Effect .
Environmental costs were dumped into a Commons Account .
The costs of cleaning the air , the water , sewerage, pollution used to done free by Gaia .
But as populations and usage increases , it reaches thresholds where the society has to take steps . This costs money . But the accounting systems were not designed to reflect this .
This is one leg of the argument .
The other is the decrease in the cost of manufactured items .
This is already plunging through the floor with 3D –printing fabs .
The Nitty-Gritty
What seems to be self-destructive , greed driven system is actually one that is trying to balance a drastically reduced cost of production , with a large increase in the accounting for future and present environmental effects .
Deflation is winning (2011) , because the inertia of production systems are far smaller than that of accounting systems . These last are essentially political systems .
See my post on Peak Resonances in Human Systems .
Expect major deflations as all those over-exuberant mark-ups evaporate .
Euro-breakup .
Irrelevant , except to many fat-cat Eurocrats in Brussels and the poor suckers in PIIGS countries that believed them
An example:
An Advertisement in the near future :
Top of the line BMW , newly printed : $800 . Road and environmental fees : $8 000 . Fuel costs $30/Km
Oh , my bicycle !

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