Jesse on Flation

Jesse at Jesse's Cafe Americain has a 22 June 2009 post debunking some fallacies about inflation and deflation, link: http://jessescrossroadscafe.blogspot.com/2009/06/some-common-fallacies-about-inflation.html. Read Jesse. Even though not named, the "Princeton Three" (PT), Zimbabwe Ben, Paul Krugman and Alan Blinder should read this. Hey, PT, "In a pure fiat regime, the swings between inflation and deflation are almost always the result of policy decisions, with the occasional exogenous shock. ... Our own view is that a serious stagflation with further devaluation of the US dollar as it is replaced as the world's reserve currency is very likely, after a period of slackening demand and high unemployment". I agree.

Jesse follows up on 23 June 2009 with this: http://jessescrossroadscafe.blogspot.com/2009/06/postscript-on-inflation-and-deflation.html. Jesse's thinking so closely parallels mine, that I anticipated his words as I read them. "It is this very arbitrariness that is the goal of the central bank and statists whose preference is aggressive financial engineering". Absolutely.

Gary North (GN) disagrees with Mish over deflation, noting Mish "is implictly arguing that in a time of incomparable economic crisis, Congress will abandon Keynesianism, monetarism, supply-side theory, and rational expectations economics in favor of Austrianism. Congress will do this, despite the opposition of 99.9% of all economists and business school professors. Meanwhile, the voters will not cry out for more government money. The voters will demand budget cuts, a balanced Federal budget, and the abolition of the [Fed]", GN, 24 June 2009 at: http://www.garynorth.com/public/5115.cfm. Yes, GN and pigs will fly.