Prices are falling in Japan and elsewhere in Asia, yes? This is what in Keynes's day was called a deflationary recession of trade and the term is fashionable again. This recession is, as you suggest, turning into a global slump.
The word deflation has undergone changes in meaning. After the Plaza accord, if not the collapse of Bretton Woods, Japan and Germany followed what were often called deflationary economic policies. This had nothing to do with falling prices, however. These rival capitalist nations had answered US dollar devaluations not by competitive devaluations but by forcing their national capitals to streamline and become more efficient. This resulted in the lower growth trendlines and growing unemployment characteristic of the period since 1973. These policies caused stagflation, and were therefore also called sado-monetarism; only recently, now that inflation has been squeezed out, have people recollected that the original definition of deflation was falling prices.
For many years deflationary policies were broadly successful and Germany and Japan continued to out-compete the US despite the Fed's cheapskate tactics.
They went on developing their export capacity and building their cheap-labour export platforms until the whole thing went bust as it was always going to and now they are all in the shit. This is called by Marxists a capitalist crisis and is invariably followed by war and revolution. This, despite the anguish some people feel, is a good thing since it heralds the end of world capitalism and US nemesis in particular, about which you will be as glad as me and several billion others. Won't you, Max?
Mark
Max Sawicky wrote:
> Mark old boy,
>
> A better and perfectly respectable answer
> would have been, "I don't know."
>
> >The London Sunday Times today reports that Japanese GDP will be down 5%
> this year. That's deflation. Next year the British and American economies
> will shrink, too. Not to speak of a long list of other places like Indonesia
> and Russia.>
>
> >Max Sawicky wrote:
> >
> >> > . . . When the US bubble bursts it will do so in the context of an
> already-raging world deflation. . . .>>
> >> Is this in reference to the Asian basket cases,
> >> or is it more general, and if so, where is it
> >> documented most concisely?
>
> I guess you have to be some kind of Keynesian
> to appreciate the gravity of a genuine pattern
> (if it be so) of falling PRICES worldwide in
> mature capitalist economies. This isn't to
> minimize the suffering in 'formerly-socialist'
> (or whatever you want to call them) nations,
> nor the historical significance, but to focus
> on the potential frailty of the leading national
> economies.
>
> MBS
>
> Cheers,
>
> MBS
>
-- Mark Jones http://www.geocities.com/~comparty