kingaj12

Consumer-Driven Deflation? Not Even Close

Algren is doing an enormous disservice in this rant. He fails to analyze the reason why smart people believe "we must fight falling prices with everything at our disposal".

You almost got it: Consumers stopped spending "...because he’s out of credit, he’s unemployed...". But why, Paco? Why is the consumer out of credit? Why is he unemployed?

This is almost the problem that Keynes set for himself in writing "Theory of employment...". Go and read it Paco. It is all there. It begins with an explanation of inflation as a monetary phenomenon. It then asks the question: "why doesn't that work?". His answer: if businesses see no potential for profit, they won't invest.

So, if the consumer has no credit -- how is the businessman's expectations of profit going to germinate?

And finally: what is the point of gold in such an environment? Does it help people get back to work and start spending? Perhaps it would if you buried it and hired people to dig it up....

What's Another $1.15 Trillion?

This is a good move. The numbers match the scale of the subprime lending fiasco. The Fed is stepping up to the plate.

But I still wonder why all the C-level geniuses (and their captive boards) who created this mess are keeping their jobs. Is this how capitalism is supposed to work?