Wikinvest Wire

Deflation dementia

Monday, November 24, 2008

Saner heads are definitely not prevailing in the increasingly dark and damp discussion of one of the hottest economic topics of the day - deflation.

In fact, a sort of dementia now seems to be manifesting itself in some of those individuals who utter the word "deflation" - a condition where the utterer undergo changes in their brain function, sometimes becoming disoriented about time and people, oftentimes believing they have been transported back to an era of sound money when deflation really mattered.

Nowhere was this dementia more noticeable than with Senator Dick Chuck Schumer (D-New York) when he appeared on ABC's This Week yesterday.

The following comments were made when discussing the danger of providing too small of an economic stimulus package with deflation already at our doorstep:

I believe we need a pretty big package here. First I think that Congress will work with the President-Elect starting now and we'll have a major stimulus package on his desk by inauguration day. I think it has to be deep. In my view it has to be between $500 and $700-billion dollars and that's because our economy's in serious, serious trouble. You look at unemployment, you look at consumer confidence, you look at the stock market.

We're on the edge of deflation. Once you get into deflation you almost never get out of it. That's what the Great Depression taught us, that's what Japan taught us.

So a strong shot in the arm, just the way Barrack Obama has conceived it - infrastructure, green jobs is what is needed and most economists say, to make this work, you need about five percent of GDP which would be $700 billion. It's a little like having a new New Deal, but you do it before the Depression, not after.
The dementia was plain to see as Schumer delivered these lines, moving one flat, extended hand horizontally in front of the camera to depict being on the "edge" of deflation, then making sharp downward movements with that hand to demonstrate "getting into" deflation.

The screenshots below from the video at ABC demonstrate this sequence.

First, on the "edge" of deflation...
IMAGEAnd then falling "into deflation", a development that would apparently be so painful that the Senator had to close his eyes and grimace just to get through it.
IMAGEHe may have mumbled something about Irving Fisher as well, but it was too faint to be accurately transcribed.

The dementia has apparently spread to the U.K. as well, this item from the Times Online showing how a seller of "with-profit" bonds has somehow been transformed into some sort of a cartoon character as a result of deflation.
IMAGESomeone should probably crank up the microfiche machine to see if there were any similar occurrences of deflation dementia back in the 1930s.

10 comments:

Anonymous said...

You mean Chuck and not Dick Schumer. Maybe a Freudian slip?

Anonymous said...

That's dEmentia ...

Chuck Ponzi said...

Yes,

I was wondering if there was some kind of intentional misspelling...

Die
Divest
Dig

Unfortunately, I came away thinking this was a simple misspelling.

No matter. I am still of the feeling that we'll see more asset deflation in lots of asset classes due to the deleveraging. I believe that a whole lot of USD are being chewed up faster than we can print it in the bailouts. Besides, velocity is slowing considerably which adds to the problem.

Sooner or later we will have inflation from all of this stupidity, but not right now. When you have Schumer trying to make some kind of point about a complex economic phenomenon that even the experts are divided on, you're bound to get wrong information. It's almost as bad to even give him a place in the blog (not that it isn't useful for more intelligent readers), but it only reinforces that he might know what he is talking about. I'd believe more that he has his talking points down on the napkin in front of him than that he understands the difference in monetary policy shift Bernkanke has embodied.

BTW, when are we going to get the themessthatbernankemade.blogspot.com ?

Chuck Ponzi

Tim said...

Damn typos - I was sure it was dimentia and I even looked it up... is there a Dick Schumer?

Tim said...

That's funny - I used to run everything through MS Word and use their spell checker. Then Blogger added a spell checker a while back, but it produces so many false positives (or is it negatives) that I now routinely ignore the little squiggly underlines when I shouldn't...

Anonymous said...

It's "dementia" I believe.

sorry, I can't help myself.

Tim said...

I'll never misspell the word again - promise...

David said...

Actually Tim, if you use Mozilla, it has a spell checker built in that works on fields in web forms. When I leave comments on blogs I get a similar spell checking interface to the one that you get in M$ Word (underlined words and right click to show suggested substitutes).

staghounds said...

He's the only one I know of, and he's always been a dick.

Small and annoying, limp...

fish said...

Crap....Staghounds beat me to it! Dang....


On a separate note the word verification word for this submission is fabulous!


feucksh.......brilliant!

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