With QE3, we are essentially being bought out with our own money...and unemployment is being used to facilitate this process in a very clever manner. Monetary inflation is currently being offset by labor deflation. The way you avoid collapse is by printing money and stealing assets. The way you avoid inflation is with labor deflation.
Catherine Austin Fitts
The basic prescription for preventing deflation is straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place.
The Fed is pushing a variety of workarounds that would inject trillions in new money into the economy while bypassing the banking system altogether. Time will tell whether or not this will succeed. Meanwhile, a serious danger lurks around the corner. Once the recession is over, the lending will start again. With fractional-reserve banking and limitless supplies of cash on hand, we will likely see the overall price trends reversed, from deflation to inflation to possible hyperinflation.
The U. S. is headed toward a period of business depression... beginning within the next two years, which may exceed that which preceded the War. ... The only thing that will save us is a new gold policy or the discovery of a new process or additional gold fields. If the fall [of gold production] is not prevented by design or accident we shall throttle business, wringing out all profits and experiencing all the evils of deflation.
This law represents a cornerstone in a structure which is being built but is by no means completed--a structure intended to lessen the force of possible future depressions, to act as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy--a law to flatten out the peaks and valleys of deflation and of inflation--in other words, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.
Franklin D. Roosevelt
Significant changes in the growth rate of money supply, even small ones, impact the financial markets first. Then, they impact changes in the real economy, usually in six to nine months, but in a range of three to 18 months. Usually in about two years in the US, they correlate with changes in the rate of inflation or deflation." "The leads are long and variable, though the more inflation a society has experienced, history shows, the shorter the time lead will be between a change in money supply growth and the subsequent change in inflation.
Economics also has to become a fundamentally monetary discipline-from the consideration of how individuals make market decisions through to our understanding of macroeconomics. The myth of "the money illusion" (which can only be true in a world without debt) has to be immediately dispelled, while our macroeconomics have to reflect a monetary economy in which nominal magnitudes matter, precisely because they are the link between the value of current output and the financing of accumulated debt. The dangers of excessive debt and deflation simply cannot be comprehended from a neoclassical perspective. The discipline must also become fundamentally empirical, in contrast to the faux empiricism of econometrics. By this I mean basing itself on the economic and financial data first and foremost-the collection and interpretation of which has been the hallmark of contributions by econophysicists-and by respecting economic history, a topic which has been systematically expunged from economics departments around the world.
Does biblical psychology, then, merely ask us to value good things a little less? Does the Bible seek a reduction of guilt by an overall deflation of the currency of moral ideals, so we can live more comfortably with an uneasy conscience? That would exaggerate a valid point. Although the Bible holds that no finite relationship is of infinite value, it does not embrace an extreme ascetic view that the source of happiness lies essentially in the reduction of desire. Some ascetic strategies try to diminish desire and reduce all valuing so as not to allow any loss to become an overwhelming disappointment. According to this view, the less one values created goods, the happier one is. In contrast, life-affirming Christianity hopes that love, desire, and appreciation of limited values can be increased or decreased to the measure of their real proportional value. Jesus does not call for a stark reduction of all finite valuing merely as a preventative measure against disappointment. He calls for a love of good things with an awareness that they exist within the boundaries of birth and death, and are therefore under the judgment of the giver and source of all value (Matt. 6:19-21).
Thomas C. Oden
Yet each disappointment Ted felt in his wife, each incremental deflation, was accompanied by a seizure of guilt; many years ago, he had taken the passion he felt for Susan and folded it in half, so he no longer had a drowning, helpless feeling when he glimpsed her beside him in bed: her ropy arms and soft, generous ass. Then he'd folded it in half again, so when he felt desire for Susan, it no longer brought with it an edgy terror of never being satisfied. Then in half again, so that feeling desire entailed no immediate need to act. Then in half again, so he hardly felt it. His desire was so small in the end that Ted could slip it inside his desk or a pocket and forget about it, and this gave him a feeling of safety and accomplishment, of having dismantled a perilous apparatus that might have crushed them both. Susan was baffled at first, then distraught; she'd hit him twice across the face; she'd run from the house in a thunderstorm and slept at a motel; she'd wrestled Ted to the bedroom floor in a pair of black crotchless underpants. But eventually a sort of amnesia had overtaken Susan; her rebellion and hurt had melted away, deliquesced into a sweet, eternal sunniness that was terrible in the way that life would be terrible, Ted supposed, without death to give it gravitas and shape. He'd presumed at first that her relentless cheer was mocking, another phase in her rebellion, until it came to him that Susan had forgotten how things were between them before Ted began to fold up his desire; she'd forgotten and was happy - had never not been happy - and while all of this bolstered his awe at the gymnastic adaptability of the human mind, it also made him feel that his wife had been brainwashed. By him.
Many moral advances have taken the form of a shift in sensibilities that made an action seem more ridiculous than sinful, such as dueling, bullfighting, and jingoistic war. And many effective social critics, such as Swift, Johnson, Voltaire, Twain, Oscar Wilde, Bertrand Russell, Tom Lehrer, and George Carlin have been smart-ass comedians rather than thundering prophets. What in our psychology allows the joke to be mightier than the sword? Humor works by confronting an audience with an incongruity, which may be resolved by switching to another frame of reference. And in that alternative frame of reference, the butt of the joke occupies a lowly or undignified status... Humor with a political or moral agenda can stealthily challenge a relational model that is second nature to an audience by forcing them to see that it leads to consequences that the rest of their minds recognize as absurd... According to the 18th-century writer Mary Wortley Montagu, 'Satire should, like a polished razor keen / Wound with touch that's scarcely felt or seen.' But satire is seldom polished that keenly, and the butts of a joke may be all too aware of the subversive power of humor. They may react with a rage that is stoked by the intentional insult to a sacred value, the deflation of their dignity, and a realization that laughter indicates common knowledge of both. The lethal riots in 2005 provoked by the editorial cartoons in the Danish newspaper Jyllands-Posten (for example, one showing Muhammad in heaven greeting newly arrived suicide bombers with 'Stop, we have run out of virgins!') show that when it comes to the deliberate undermining of a sacred relational model, humor is no laughing matter. (pp. 633-634)