Paul Bogdanich

Reflation Is the Only Option

Reflation as the man calls it is the only option at this point. If one keeps the nominal value of the national debt and assets like houses stable then there are no nominal losses to write off and the debt as a percentage of GDP becomes more managable. The trick is to make sure that GDP and personal income of the bottom 80% grow in tandem with the M3 money supply. Hence all the stimuli packages. So if a house nominally costs $500,000 but cab fare from Laguardia to Midtown is $200 then $500,000 is not that much compared to current incomes. Of course retirees and people holding non-productive assets get screwed but we have no other viable alternatives given what has already happened in the preceeding eight years (doubling of the debt, wars while doling ouut tax custs etc.). The debt is already too high to be honored in full without some trickery so we reflate.