Deflation or Inflation

Okay. So the US economy is in a recession. However, the $64,000 question is: Will the future bring inflation or deflation? I believe that there will be deflation in certain areas of the market (i.e. housing, derivatives, etc.) and inflation virtually everywhere else. This is because the dollar is no longer linked to gold and central bankers will print as much as they can. Bernanke himself has said that he will do whatever possible to stave off a deflation. Helicopter Ben to the rescue.

With $110 oil and $920 gold it is hard to argue for deflation.

Here is an interesting quote from Woodrow Wilson, after he enacted the Federal Reserve:

I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.

No market is free with a central bank. The idea that a central bank can intervene and establish the correct interest rate is laughable. With inflation currently running at around 10% or 4.3% if you believe the government lies, how does it make sense that the Fed Funds Rate is around 2%. And the rate cutting cycle is still not over. Not for a second. Bernanke will make sure that this Wall Street party keeps going. The billionaires will have plenty of more free lunches. Well not exactly free, they will be wholly subsidized by you and me, via the inflation tax. Remember, the big J.P. Morgans and Rockefellers get to play with the fiat money first. They don't have to worry about inflation.

And here is what Jefferson thought about central banks. This view was also held by Andrew Jackson, one of the few common man Presidents this nation has had.

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, (i.e., the "business cycle") the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

But of course the big banking establishment won in the end with the tacit approval of Congress. After all, if you are a politician it is a lot easier to get elected by running up huge deficits, making billions in promises, and inflating away, all the same time as you deny any fundamental fiscal problem and cover up the scam.