Sunday, August 10, 2008

IN- or DE: Denninger reasserts his position

Karl Denninger repeats - in his rather forthright and sexualised way - the simple argument that deflation suits the bankers who run the Fed:

... In a deflationary environment the banker gets as much of your money as he can, and then he also gets the house! [...] The banker makes money in terms of real value in a deflationary environment. You, on the other hand, being debt, get rammed."

In short, cui bono?

And in the Marc Faber interview cited in the previous post, Dr Doom maintains that the drop in the price of oil shows that we're already in recession; the drying-up - the sucking back out - of excess liquidity is what will make the dollar more valuable.

I once read a short story by Brian Aldiss, in which invisible vampire aliens ravage a farmer's livestock - all one can see is the double puncture. The skin is pierced, the innards liquefy and are drained. Sturdily, the farmer accepts that he has a new class of customer.

Is this not like banking and government? Without mortgages and inheritance tax, how otherwise would almost everybody in each generation be forced to buy their living quarters anew?


dearieme said...

He assumes that the bankers will be competent enough to bring about the deflation he says they want.


Good point. As Mr Natural once said, "Is dis a system?"