Deflation Hawkers

There is a widespread and well justified fear of deflation among economists. Paul Krugman rarely misses an opportunity to warn about it. The basic argument is that deflation destroys jobs and creates economic paralysis, since it makes it more valuable to sit on money than spend or invest it. There is plenty of history to back this view.

Not everybody shares this view though. Michael Pento, allegedly an economist for some investment fund, is one who doesn't. He makes his argument here. - shame on Huffington for this.

Deflation is an ill wind, but it blows good to some. Borrowers may be crushed, but lenders do very well indeed - if they can get their money back. History has more than a few fortunes built on the power of deflation to extract money from the public and concentrate it in the hands of bankers. The rentier class is the big benificiary of deflation. Entrepreneurs and workers grow poorer, but the rich grow richer.

Unfortunately we live in a time when that class has captured much of the government, including a lot of the Federal Reserve

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