Boy, I tell ya — that economic recovery was just humming right along! Red hot economy, everybody running around buying stuff and then — whammo! — this deflation thing comes out of nowhere and really puts a damper on my mood.
The US, and Europe, are trapped in a tax paradigm that says TAX INCOMES, DON'T TAX PRODUCTS except on final sale to your own citizens.
So far no one has done the obvious ~ TAX EXPORTS. That way the foreigners who have not driven down prices will pay the taxes needed to operate your government.
There's no sense being the world's low cost producer in any particular product if, in fact, all the benefit is shipped overseas.
Aside from the fact that there was no “recovery”, this article is a complete overanalysis. Blame for the current economic situation lies squarely on the shoulders of an overbearing, overtaxing, overregulating government, desperately trying to turn knobs and dials to micromanage it, while also skimming as much as it possibly can from the private sector without entirely killing the goose. If left alone, a market driven economy without the government bleeding it dry at every turn would seek and maintain a healthy homeostatic state, all on its own.
I might add that even the Soviets discovered this, but too late. Some economic liberalizations and easing of restrictions allowed modest economic growth in the eighties, but eighty years of mediocrity and fudging quotas took their toll. Then when the walls finally crumbled, well placed party functionaries took control of vast industries, resulting in the billionaire oligarchs we see in Russia today.
End of “Buy now, pay later;” that’s been clear since September ‘08. I think he misses the most important deflationary factor of all, progressive demographic inversion.
Deflation, like inflation, is always and everywhere a monetary phenomenon.
Falls in price due to falls in demand are not the same phenomenon and should not be treated as such. Friedman won the Nobel Prize in part for demonstrating this empirically and theoretically, and yet many economists still don’t get it.