Comments on: MONDAY’S MUST READS http://pragcap.com/mondays-must-reads-52 Fri, 25 May 2012 21:48:55 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Axios http://pragcap.com/mondays-must-reads-52/comment-page-1#comment-21187 Axios Tue, 06 Jul 2010 21:00:39 +0000 http://pragcap.com/?p=23519#comment-21187 Your title on deflation here is the exact title of an article I wrote last week. Gross fails to make the simplest connection in his article when talking about "good" deflation and that is that the fed did not really exist for the majority of those times. During the 20's is when they really started to do their damage and brought the Depression of the 30s along. I've argued for some time that what we are seeing today is mean reversion for prices that got out of hand. It's not really deflation in the classical/traditional sense. If the Fed and Uncle Sam would get out of the way and let businesses fail we would see inventories decline appropriately, we'd see slack tighten up, and we would purge ourselves of many of the excesses we are currently keeping on life support. Your title on deflation here is the exact title of an article I wrote last week. Gross fails to make the simplest connection in his article when talking about “good” deflation and that is that the fed did not really exist for the majority of those times. During the 20′s is when they really started to do their damage and brought the Depression of the 30s along.

I’ve argued for some time that what we are seeing today is mean reversion for prices that got out of hand. It’s not really deflation in the classical/traditional sense. If the Fed and Uncle Sam would get out of the way and let businesses fail we would see inventories decline appropriately, we’d see slack tighten up, and we would purge ourselves of many of the excesses we are currently keeping on life support.

]]>