David Shemano wrote:
>Doug Henwood wrote:
>
>------------------
>>For those interested, my supply-side gurus are taking the position that the
>>world economy is suffering a severe monetary deflation, mainly caused by
>>errors at the Fed.
>
>...because, as every supply-sider knows (and every monetarist too -
>this is one point they agree on), problems in capitalism only emerge
>from bad state policy, never from within private market relations.
>
>-----------------
>
>If you could explain to me how monetary deflation can arise from private
>market relations and not the actions of a central bank(s), I would be very
>interested.
Well, just to take one convenient example, in recent years the U.S.
enjoyed one of the great speculative manias in human history, with
wild stock valuations leading to the squandering of billions on
ludicrous IPOs, innocent civilians trusting their retirement
portfolios to utterly inappropriate mutual funds, corps and
households borrowing recklessly (partly emboldened by the vigorous
stock market and the ludicrous New Economy discourse), etc. You could
argue that the "Greenspan put" laid a public sector foundation under
the bubble, but generally, blaming the central bankers conveniently
gets the private actors off the hook.
Doug
