A visit to the supermarket is all that is required to see that this isn’t a conventional deflationary crisis. Unsold stock is being being sold off but new stock is coming in at higher prices or it is not coming in at all: a whole range of stuff is simply disappearing from the shelves. It is more like a complete collapse of the market where as a result of a growing concentration of wealth in a few hands there is no one left to buy. Printing more money will help bridge the gap momentarily until prices go up further. Hence, an inflationary spiral. This is accentuated in economies reliant on imports payed for with fiat currencies, such as Britain and the USA. The fall of their currencies automatically generates inflation. That’s why London and Washington want other central banks to devalue their currencies as well in a race to bottom which will preserve the dollar and the pounds privileged global tradeability.
Stephen King
Independent
24th november, 2008
For the Federal Reserve, the Bank of England and the world’s other leading central banks, it is time for unconventional acts of bravery. These acts are needed because the financial crisis is mutating. No longer is this a story simply about the unwillingness or inability of banks to lend. It is fast becoming a crisis of liquidation. You can see it on the high street with sudden, and aggressive, pre-Christmas sales. You can see it in the stock market, where we’re seeing renewed panic. You can see it in the property market, where prices are tumbling faster than ever before.
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