Posted by Curmudgeon on January 25, 2015 at 06:15:08:
My hero of the hour is Professor Antal Fekete (www.professorfekete.com).
Prof Fekete may well be the only person in the world right now who can clearly explain why the following prophecies are about to come true:
"The Kings of the earth, terrified at her torment, will stand far off and cry -
'Woe! Woe O great city, O Babylon, city of power! In one hour your doom has come.' " (Rev 18:10)
"The merchants will weep and mourn and cry out -
'Woe! Woe O great city, dressed in fine linen, purple and scarlet, and glittering with gold, precious stones and pearls. In one hour such great wealth has been brought to ruin!' " (Rev 18:16)
Here is the Professor explaining something politely:
"The central bank does not keep interest rates low. In fact it pushes them low through open market purchases of government debt which increase the bond price. The other side of the coin is the simultaneous decrease of the rate of interest. Of course the purpose of the exercise, on a Quantity Theory argument, is the fomenting of inflation, not deflation. The problem is that the central bank does not know what it is doing. It sows inflation but reaps deflation. Its monetary policy is counterproductive, to put it politely."
Here is the professor expressing the same view impolitely:
"A more accurate way of describing the above is that current monetary policy reflects a peculiar madness inflicted on a gang of imposters and usurpers of unlimited power, who are trampling on the US constitution
and causing unprecedented pain to society. When their system collapses, as John Law of Lauriston's did almost three hundred years ago, then they will have to escape from Washington in female garments, as John Law escaped from Paris."
Professor Fekete admits that he is in a minority of one when it comes to explaining why efforts to produce inflation are instead producing deflation. He admits that his explanation of how a regime of falling interest rates causes capital destruction in otherwise healthy businesses, is counterintuitive. But he stands by the mathematical logic of his explanation.
Keep an eye on the headlines for further news of deflation appearing around the world!