Dear Vince,
vincecate wrote:
> John wrote:So it isn't "Bernanke versus the World" as Cook says. It's
> "Bernanke and Xenakis versus the World." Whew! What irony!
> You two make a strange pair. You have been right so many times and
> Bernanke has been wrong so many times, yet now you are predicting
> the same thing. One of you will break with tradition.
Bernanke was wrong about a number of things. He believed that a
so-called "fiat currency" could never suffer deflation, which has been
disproven by Japan's experience. He believed that verbal statements
by the Fed could control inflation and deflation. And he believed
that the Great Depression could have been cured by a very simple fix
of lowering interest rates, which has been mostly disproven by his own
experience as Fed chairman since 2007.
However, it's not clear that he's been "wrong" for the last three
years. He's been doing what he had to do, and saying what he had to
say. There's nothing he could have done differently at any point,
because of political pressure. That will be the subject of a lot of
debate, now that Trichet has raised the ECB interest rate.
I should mention that this inflation/deflation debate is a huge issue
for you, which is appropriate, but for me and Generational Dynamics
it's actually a relatively minor issue in a world model that
encompasses hundreds of financial and geopolitical issues. The
inflation/deflation issue is highly interlocked with a lot of other
issues, and if we aren't headed for a deflationary spiral, then a lot
of other things would be wrong as well, including many things that
have already turned out to be correct.
For example, I received a very great deal of flak from the BigPeace
people for my analysis in January that Egypt would not turn into
another hardline Islamic state like Iran. And now, three months
later, that analysis is turning out to be correct (even though some of
the BigPeace people still can't believe it). This may seem to most
people like a completely different issue, but in fact it's interlocked
with the financial issues, and exactly the same world model and
methodology that led to the Egypt analysis also leads to the
inflation/deflation analysis.
So say what you want and believe what you want, but I'm going to say
the same thing again that I said to your new girlfriend Lily: There
isn't a snowflake's chance in hell that the (hyper)inflation scenario
is going to occur. It just cannot happen.
John