from Washington’s Blog:
Rather than being the Monster Under the Bed in central bank nightmares, deflation is the natural result of a competitive economy experiencing productivity gains.
That the global Status Quo is terrified of deflation is the background of every policy decision and official PR sound-bite. The reason behind this unremitting terror: deflation is the Achilles Heel of the global Status Quo. My colleague Gordon T. Long explains why in the latest of our video/slide programs.
Though central banks are constantly claiming their policies are intended to spark “growth,” their over-riding motivation is sustaining the colossal mountain of debt that is the foundation of the Status Quo’s wealth and power. If interest rates rise, the debt can no longer be serviced without ballooning deficits (i.e. more borrowing just to pay the rising interest) or the extreme pain of budget cuts–cuts that will necessarily come of discretionary government spending or entitlements.
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