You will recall I asked about the evidence on the incidence of falling prices outside of Asia (and the U.S., which I'm familiar with).
>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.>
o.k.
>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.>>
Sure but I was asking more specifically about absolutely falling prices.
>This had nothing to do with falling prices, however. These
I wasn't asking or implying anything about cause and effect, clearly a deeper subject.
>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. >
Um hmm. Um hmm.
>For many years deflationary policies were broadly successful and Germany
and Japan continued to out-compete the US despite the Fed's cheapskate
tactics.>
Yup.
>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?>
"invariably" sounds too strong, either as prediction or historical summary.
If I thought a) this was true; and b) the new system would be an improvement; sure I'd be glad. But I doubt a) and don't see a well-developed (b) out there in theory, much less practice.
The crisis, such as it is, will be an opportunity for social democracy to revive and do some good things, which I expect is the best we can hope for.
Cheers,
MBS
P.S. Can anybody here summarize the extent of actual price deflation outside Asia?