Quote:
Originally Posted by daepp
Tabby I've got no quarrel with you. I have been thinking the same way since I left business school.
However, I wonder if there isn't some other economic factor at play that has kept inflation at bay.
Mind you, I've no doubt that the central banks have screwed things up, but I'm trying to think outside the conventional wizzdom!
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NO the CB's have not screwed things up they are faced with a dire situation and have used the only means they have to ameliorate the situation.
The American people in particular have not wanted to face a decline in their economic hegemony that started in the late 60's. They would rather continue with the delusion of being a rich nation...
NO DEMAND IS WHAT KEEPS INFLATION AT BAY..you can not raise prices if people are living hand to mouth..and don't keep buying.
It becomes a deflationary environment where all that newly printed money just keeps the bottom from falling out. The currency equilibrium keeps the currencies stable and thus economies stable where an imbalance would cause one or the other economy to go to hyper inflation. .