Mr. B

The Deflation Debate: Why This Time Is Different

He may be right for the wrong reasons. The massive explosion of money created by the Fed will likely stop a deflationary spiral in the long-term.

Inflation subsides in any recession and the question here is how long and deep will this recession be.

China does have about 300 million people with discretionary income. Granted it is a fraction of the total population of 1.1 billion people, but it is still a large number. Everyone should hope they keep spending.

What he does point out is that the US Government is pursuing the economic policies of a banana republic. We have just witnessed the discipline of the market when too much debt relative to income/cash flow occurs.

Ultimately, the hazards of excessive government spending, inflationary monetary policy and the trade deficit will be harshly judged by the global market place. (We will see if the new Obama adminsitration is as naive as I think when it comes to even larger government programs and larger deficits.)

The rally in the dollar is temporary and the trend of US dollar weakness will resume as the current crisis fades. The US Government is debasing the dollar by defict spending to support current consumption (and a new government healthcare program will just compound this massive problem). A huge percentage of the $3.1 TRILLION federal budget is consumption spending.

The only way for the US to recover is to stop asking the government to do everything and insist that government spending (both real and as a percentage of GDP).

The US used to be the world's largest creditor nation. All of that has changed beginning with Johnson's Great Society spending. All that has done is transfer more power and influence to the federal government and it has done nary a thing for the poor it was supposed to help.

Even an economy with an inefficient, corrupt central government like China's can prosper as a creditor nation.

The Shallowest Generation

The financial house of cards began with FDR and his set of social programs, including Social Security. (SS is a Ponzi scheme and anyone in the private sector that tried it gets put in jail.) Johnson had is great society. The boomers that came of age in the 1960s are the generation of peace, love and free sex - luxury given to them by the self-sacrifice of the greatest generation.

Mr. Quinn is correct that we are up to our eyeballs in do-do. We can debate about the reasons why. Then he turns to Obama as an example of leadership? I'm sorry, but that is moronic.

Obama, who will likely be the next President, is at best an unknown quantity. His solution is to expand government with an additional $1 trillion in new programs. Tell me how this is good for America and how the progressive agenda will lead to the pursuit of life, liberty and happiness?

All Obama will do is finish the bankrupting of America. (BTW, I am no fan of McCain.) Obama is about creating dependency on government so that he and the progressives/liberals can entrench temselves in power. Why is that so hard to see?

Maybe I will discuss my ideas on how to deal with the current mess at another time. Mr. Quinn completely lost me when he held up Obama as some kind of virtuous leader. God help us all if he wins and has a bulletproof Democratic Congress.