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In the last two posts I gave reasons why some very wealthy and powerful individuals and economic entities such as the Federal Reserve and Central Banks may desire a prolonged deflationary period. The two major reasons cited so far are to help quicken the pace of globalization, and assist the redistribution of wealth into fewer and fewer hands.

In a deflationary environment many businesses fail and are bought up by well positioned and liquid big fish. The tendency of more wealth and ownership going to a smaller number of individuals has been a hallmark of modern capitalism. In a deflationary economy prices and wages plummet. This would benefit globalization since the American and European workers make far more money than developing nations. A severe deflationary depression would level the economic playing field allowing the East and developing nations an opportunity to have their wages rival the US.

This leads us to consider the possibility that entities such as the central bankers may be attempting to manage a deflationary environment to increase their wealth while at the same time ushering in the new age of a global economy in the fashion of the World Order first envisioned by Reagan and Bush Sr.

It is more than a coincidence that Fed chair Ben Bernanke is known as a deflation and depression expert. If find it intriguing that Bernanke is often cited as a deflation expert and seldom as a deflation prevention expert. A reading of some of Mr. Bernanke’s economic writings on the subject prove to be quite illuminating. He often is very specific in the measures he would take in response to economic situations.

The actions Mr. Bernanke has been taking over the last several months come as no surprise to those that have read his economic papers. He has followed his own script rather faithfully. Yet, what is interesting to note is that each of the actions such lowering iterest rates, economic stimuli and bail out measures are described as means to manage and rectify deflation and not as measures to prevent deflation.

So while Mr. Bernanke and others at the Federal Reserve have been saying that their main concern has been inflation, their actions have been intended to deal with deflation. Even those with the most basic understanding of economics grasp the idea that one raises rates to combat inflation and one lowers interest rates to stimulate the economy to help prevent deflation.

It is not surprising that the Fed has misrepresented their concerns regarding deflation. Saying deflation is present or even probable in a capitalistic society is kind of like yelling fire in a movie theater. Once the call is out all hope of an orderly and sane emptying of the theater are near hopeless. Telling the populace instead that inflation is the danger is less a matter for panic and allows the measures an opportunity to work while the society braces for inflationary tendencies to surface. This keeps money flowing and prevents the economic system from freezing up as it does when deflation is on the horizon. Only recently has the mortgage debt led financial crisis ignited the initial freezing of a deflationary spiral.

It is indeed possible that Fed and Central Banks, as well as others, are attempting to conduct and manage a deflationary depression to accomplish the goals of Globalism. This is not conspiracist theory as much as it is a logical outcome of modern capitalism. The Fed was itself born out of the desire for a few select bankers to work together to maximize profits and insure the continuance of their practices.

One  has to wonder what is the design of this deflationary depression. Is it meant to be organized and measured? Or is to be quick and chaotic? Are their specific events planned to assist in keeping the masses off their trail, and how many insiders around the world are their? Is greed their only motive, or do they feel themselves pressed into a necessary task to benefit all humanity?

Can one truly manage deflation, or once it is unleashed does it take on a life of its own?

I have been predicting a deflationary depression for awhile now based on the history of economic long cycles. I based my predicitions of the Fed and Central Banks actions on the economic practices of the World Bank and the International Monetary Fund. The Fed has done little if anything which has not lived up to my predictions both of their actions and a deflationary depression. If they are not doing this intentionally the coincidences are quite amazing.  Though it is scary to think that people might  be attempting to facilitate a period of econoic hardship and turmoil, it is even more frightening to think that no one is guiding the ship through the storm.

Jim Guido

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