<DrumBeat: April 12, 2007The Oil Drum

248 comments on The Case for Inflation from a Plateauing Supply

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Halfin on April 12, 2007 - 6:03pm Permalink | Subthread | Parent | Comments top

Actually I see inflation as more harmful to the "elite" than to ordinary people. Inflation primarily benefits debtors, by allowing them to repay their debts with cheaper money than they borrowed. As a general rule, the wealthy loan money to the poor, rather than the other way around. Therefore inflation will benefit the proletariat at the expense of the elite.

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davebygolly on April 12, 2007 - 7:03pm Permalink | Subthread | Parent | Comments top

"Theoretically" you are right. They lend. But with an implosion they don't get paid back at all. People are already going into default. Deflation would mean economic implosion -- far more would default.

Next, the elite lends, but not their own money. They lend the middle class's money, their pensions, college savings, etc. You don't get into the elite lending your own money -- no, no, no.

Therefore the elite borrows, borrows from us. Now I said the proletariat goes into default. But not like the elite goes into default. The elite goes into default by eliminating our pensions, by running up massive govrnmental debts that will be the excuse for tearing up all contracts with the common folk. The only contracts that aren't torn up are the tax reductions for the very wealthy. The military-industrial complex doesn't need a contract -- it's implied.

The elite can play the world's assets, unlike you and me. That's what globalization is really all about -- not trade so much as free movement of capital. That, by the way, is why the Soviet empire crumbled peacefully. The Soviet elite could not walk away from their rust belt -- it wasn't capital. They envied the Western elites. They thought they would be better off with capital. That they were outmaneuvered is another story.

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jim burke on April 12, 2007 - 7:39pm Permalink | Subthread | Parent | Comments top

This is a fascinating thread, but perhaps we should simplify it and take it a step further?

Since there is wisdom in the collective, why not do a simple poll?

"Do you think PO will result in"

a) high inflation/stagflation
b) little meaningful change
c) deflation

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btu on April 12, 2007 - 7:57pm Permalink | Subthread | Parent | Comments top

d) total chaos

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FTX on April 12, 2007 - 8:55pm Permalink | Subthread | Parent | Comments top

Hal,

I don't quite see it as debtors vs creditors, but more as the prudent vs imprudent. For example, the creditors and debtors in the New Century collapse are very much on the same team when it comes to pressure for a Federal bailout.

The irony of all this is that that the majority of TOD members seem to believe that an inflationary scenario is the most likely outcome. Well, that means that when the credit meltdown comes, those with debt are going to be bailed out by those without debt.

...in which case all those following Westexas' ELP maxim are going to get a big fat bill demanding that they pay for the financial recklessness and profligacy of others.

Not a comforting thought.

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ET on April 13, 2007 - 1:14pm Permalink | Subthread | Parent | Comments top

But...but... then the already slave-level wages of the poor person become worth even less. Wages of the lower percentages of the working poor have declined in recent decades. The rungs keep coming off the ladder.

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