Home > General Comment, political-economy, shorter work time > Dr. Bernanke, or: How we learned to stop worrying and love deflation

Dr. Bernanke, or: How we learned to stop worrying and love deflation

December 13, 2008 Leave a comment Go to comments

bernanke_4Required reading from Ambrose Evans-Pritchard

As a scholar of the Great Depression, Bernanke does not think that sliding prices can safely be allowed to run their course. “Sustained deflation can be highly destructive to a modern economy,” he said.

Once the killer virus becomes lodged in the system, it leads to a self-reinforcing debt trap – the real burden of mortgages rises, year after year, house prices falling, year after year. The noose tightens until you choke. Subtly, it shifts wealth from workers to bondholders. It is reactionary poison. Ultimately, it leads to civic revolt. Democracies do not tolerate such social upheaval for long. They change the rules.

When it first penetrated our dulled consciousness that Mr. Market no longer wanted to play his historical role as distributor of goods and services, we felt an almost claustrophobic sense on entrapment.

It is not often the entirety of human history passes before one’s eyes as investment banks spiral into oblivion and the nation’s governmental bodies sound out the clarion call of imminent economic collapse.

Fortunately, we got hold of ourselves with the realization that collapse is not only welcomed but to be encouraged – mankind has long been pass the time when we need rely on such an imperfect and primitive mechanism as markets to distribute the necessities of life. Moreover, the mechanism of its demise was none other than the elimination of the basis for its existence: namely, the insufficiency of earlier modes of production to adequately feed, clothe and house mankind’s billions.

We should have had a clue from the very beginning: any crisis which did not include a very large object hitting the planet, yet left the thin-lipped faces of Washington power-brokers ashen and goggle-eyed had to be good news for the rest of the huddling masses occupying several continents.

In its simplest form, deflation is irreversible collapse in the prices of everything: food, clothing, houses, stocks, 42 inch, high-definition, wide-screen plasma televisions – everything, all at once, taken as a whole, and in its entirety!

Which immediately brings to mind slum dwellers of Nairobi with Direct TV earth stations atop their crude shanties – followed by the rather quick elimination of the shanties, and the entire category, slum-dweller.

Now, that is the bomb!

Deflation is, therefore, the Nuclear Option of the Poor and Dispossessed: the one stop shopping spree by mankind’s untouchables at fire sale prices during the Mall of the America’s final bankruptcy , going out of business, everything must go sale of the (untold number of) centuries.

For, to paraphrase The Christ at this 2008th anniversary of his birth: It is easier for a camel to pass through the eye of a needle, than it is to transmit the contradiction of wealth for a few and misery for billions pass the point where mankind enters the age of abundance.

To sum up then: everything you are seeing in Washington today – all the bailouts, all the talk of stimulus packages, all the endless stream of beggars in $5,000 suits and $1,000 shoes, standing hat in hand and proffering their soft, callousless palms for public charity to forestall catastrophe – is a last desperate attempt to keep the mankind’s untouchables buried in the fecal matter of modern commerce.

The danger here is not that the economy will collapse, but that it won’t.

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