Too late to fight against inequality!

Too late to fight against inequality!

avril 24, 2015 0 Par Michel Santi

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Do not be fooled by deflation. It is the decades-old general decline in wages, which inevitably leads to the lowering of consumer prices. And consumer prices will be made to adjust to the deterioration of our standard of living. Deflation is only the natural result of our shrinking purchasing power. Prices collapse for an obvious reason: we do not have the means to live decently. In other words, deflation is the logical culmination of the intense downward pressure on our wages, which began in the Reagan-Thatcher era.

Forty years ago, our leaders clearly chose their strategy. It was to openly and aggressively favor capital at the expense of labor. However, this strategy is now backfiring and big business is being forced to reduce its profit margins. It has to continuously lower its retail prices so that armies of citizens can continue to afford its products.

We see today the last “refuge” – the United States – being contaminated with the deflation virus through the foreign exchange market transmission belt, which propelled its currency to new heights. Full deflationary contamination is only a matter of “when”, not “if”. The soaring dollar is highly detrimental to U.S. exports and a key factor in the current economic slowdown. It will be this trend combined with another devastating force, the fall in crude oil prices, which will announce the last act of globalized deflation. The shale oil industry, which developed and thrived on easy money made available by the U.S. Federal Reserve, has turned out to be a weapon of mass destruction for the U.S. economy. The resulting collapse in energy prices is the final trigger to widespread deflation.

Events are in motion. We cannot reduce with impunity the citizenry’s standard of living and make massive wealth transfers from the middle class to the rich without eventual consequences. These consequences are major downward consumer price adjustments leading to the real evil of deflation. It had been possible to fool an anesthetized population through easy credit but they are becoming increasingly harder to fool.

Deflation will not arrive alone. It will bring economic dislocation and mass bankruptcies of businesses and their creditors, also eliminating parasites that fed on the system. As the end of this story approaches it will not be an ending without a lesson in morality.