Monday, September 12, 2005

Retroflation

What is "retroflation"? Good question. I found this article interesting. A bit off-topic but oh well; I'm the master of this corner of the web so why not?

Some choice quotes (sorry about the long post but this is just so articulate):
"Succinctly stated, retroflation can be defined as the tendency toward inflation within the larger scope of K-wave deflation [long-wave worldwide deflationary trend]. It’s like having an air mattress of inflatable raft with a slow leak in it. The tendency of the mattress, when left alone, is to steadily deflate until it loses all the air within. But if you have a pump you can fight this slow, steady leak by constantly pumping to make sure the air mattress keeps its form (or something that closely resembles it). Sometimes, if you pump vigorously enough, you can even keep it pretty close to the maximum allowable air limit despite the leak (although this usually doesn’t last too long). The market analogy to this would be the vigorous money pumping operations of the 1930s and, more recently, the post-9/11 reflation efforts."

"What happens when you try to overinflate an air mattress that has a hole in it? You end up making the hole even bigger. In order to avoid this you have to know when to stop pumping before you create greater damage. The Fed is involved in this game even now as it has clearly stepped off the accelerator a touch since last year since it obviously fears the impacts overinflating an economy that is still under the influence of the falling K-Wave. But if you’re crafty and time it just right, you can alternatively inflate/deflate/reflate for quite a while (not to mention some timely patch-work maneuvers here and there) before the game no longer works and implosion becomes unavoidable. This is the game the Fed and the financial powers-that-be find themselves playing."

"Is the Fed purposely "playing the game" with its interest rate policy (a policy which George Brockway contends in "The End of Economic Man" leads directly to inflation)? If you analyze the official statements made by the Fed in reference to bringing inflation under control and then note that the effects of its policy are usually the opposite of the state goals, the answer to this question must be an emphatic "yes"! Deception and camouflage, after all, are part of every serious gamesmanship."

"The tendency to constantly inflate everything (including credit) in the face of K-wave deflation is relentless all over the world, but especially here in the States. In an inflation-driven economy like ours where retroflation is the rule, the tendency toward inflation spills over even into the job market. Retroflation means inflation, followed by deflation – but only so long as needed to clear the way for further re-flation. It’s truly a vicious cycle and one that’s drawing ever closer to completion as we approach the fateful 2009-2010 timeframe."

"Then there is of course the very prominent example of housing styles. Here on Topsail Island, if you take a long stroll down the beach and observe the various houses along the way, you can always tell which ones were built in the 1950s and 60s. These structures are slightly distinct compared with the dominant architectural style and sizes of the ‘70s and 80's. But the houses built in the ‘90s begin to stand out as bigger and bolder, and the ones built in the past 3-5 years are flat out garish and inordinately huge (McMansions as they’re sometimes called)."

"But another observation that can be made about these super-sized houses of recent years is that they’re construction is much cheaper and flimsier by comparison to the low-to-the-ground, solidly built houses of the 1950s through 1970s. During the last major hurricane in 1996, the large but flimsy homes were those most likely to have been damaged or destroyed, while the old reliable, low-to-the-ground 1950s houses survived. That’s another thing that can be said about retroflation – even as it beefs everything up in size, it makes up for it in lack of quality."

"So how can you survive the endgame of retroflation? From the individual’s standpoint, one must resist every temptation toward expansion beyond one’s means, including present income and future expectations. From the standpoint of a small business it might mean resisting the expansionary impulse unless absolutely necessary and economically viable."

"Adjustments can be painful at first, especially after a protracted period of inflation. Buy they are beneficial as they are necessary in the long-run. For the individual/consumer, it may mean scaling back insalubrious appetites and excess spending in several different ways. But for many, surviving the endgame of retroflation will mean adjustment to some degree or another. It also means discerning between the words and
the actions of the "game masters" who control the outcome of this ever-changing endgame."

1 Comments:

Blogger HARM said...

"So how can you survive the endgame of retroflation? From the individual’s standpoint, one must resist every temptation toward expansion beyond one’s means, including present income and future expectations. From the standpoint of a small business it might mean resisting the expansionary impulse unless absolutely necessary and economically viable."

I agree, bit this runs so counter to the debt-centric mindset and economy of today, it probably sounds "un-American" to most sheeple. Yet this was the norm for the WWII generation. *sigh*...

Sep 16, 2005, 1:43:00 PM  

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