Quote:
Originally Posted by mookiemookie
Hah! Well this also has to do with economics. Since economics is my job, I take a special interest in it. When someone screams about "omg hyperinflation! buy gold now!" I just have to shake my head - deflation is the problem they're trying to stave off now.
|
Is it? I'm not so sure. Shortage of liquid assets is the problem they're trying to stave off now. I think you're equating deflation with remedies for insolubility, which is incorrect. Money is only worth what the goods, investments, and services associated with it are worth. What Washington is doing now is trying to pump money into the system with nothing to back it up in the hopes that the additional supply of currency will galvanize the market, which is pure Keynesian stupidity. Even worse, there are number of state programs recieving that new currency, and as we all know, the state never turns a profit on
anything, ever. If deflation was the problem there would be GDP growth accompanied by a reduction in currency supply, which hasn't happened in quite some time. Rate of inflation has been fluctuating between .25% and 5% over the past few years, while real GDP and GDP growth have shrunk.
For the time being, the comparitive weakness of foreign markets (which we ruined through sheer economic pervasiveness) has held the US and the dollar aloft, but sooner or later it will be time to pay the piper. That currency is going to have to be reconciled with some kind of economic product sooner or later, and when that time comes, there will be nothing to exchange. Thus, the currency will lose value.