AgentR11 wrote:I think yall can forget the deflation thing. The Fed's already shown their hand on that one. If they have to hand deliver free cash to every American that can walk to prevent deflation, they will, and will do it without hesitation. For those betting on deflation, the scary thing is that with almost everyone being tied into the electronic banking system either by regular accounts or EBT accounts, the Fed can not only do it, but do it with just a few taps on a keyboard, nearly instantly.
Deflation is history as an issue.
The question really is how close to stable can the Fed manage to keep the currency while insuring some modest degree of inflation? I'm an optimist on this one, in that I believe our trading systems have reach the point that they are faster than human panic reactions; able to buy or sell currency or assets to stabilize the value of the dollar relative to US produced goods and real assets.
Thus, we get an economy that reports "growth" while just about everyone is feeling some kind of squeeze with regard to what they can do or consume.
In benevolent parlance, this is called, "Power Down". I call it the creation of an American feudal regime, as the top 20% experiences modest gains in comfort and power; the top 1% substantial gains, and the top 0.001% experience gains in power never before experienced by humans. A feudal regime in command of a military and industrial economy on the scale of the US should give *everyone* a moment of pause.
This form of Power Down is actually compatible with the economic structures we have now, with some concerns you might not have considered. Everyone thinks its the just-in-time system, or the trucking goods across 3000 miles system that will fail. In reality, those systems are so efficient that they work regardless of any rational price point on fuel. What doesn't work? You driving to the store to buy a few days of groceries or a case of beer. If Walmart is 6 miles away, it currently costs you about $7 to go there and back; which is OK for $100 in groceries, and annoying but tolerable for $20 of beer. Post oil'ish, if that transportation costs you $30 for that same $20 in beer; that's pretty harsh, and even for the $100 in groceries it kinda sucks. OK, I'm a cyclist, I can do it for the cost of 150g of white flour and/or sugar, or 100g cookies; and I can transport about 18kg/20k cm3 of groceries that way. Can Walmart survive if their customers are only buying 18kg of groceries per trip through the checkout line? That's the real problem. Smaller stores provide the correct consumer flow, but smaller stores fail on managing distribution costs.
If the change happens slow enough, the big box guys will have enough pricing power to pay for the required staffing changes, but increased prices on goods purchased (not exclusively) by the lower half of the population, further enhances the creation of a bound peasantry, bound by debt, as opposed to tied to land, but same deal really. Can't feed yourself outside the system, can't rise in the system, assigned an ill maintained box to shelter in, and told to show up at a meaningless exercise often enough that you don't have time to cause trouble.
So, what kind of economy will emerge (is emerging)?. Feudal system defined by debt and investment; a peasantry safely hobbled, a professional 20% operator class absolutely terrified of losing their grasp on the coat tails of their liege, and 1%/0.001% managerial and ruling classes that are empowered and protected on a scale never achieved before in the history of humanity.
The only way to get a return on that investment or higher pay for managers, etc., is for the market to grow. That means the same peasantry has to become richer.