"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Tuesday, August 10, 2010

Chris Martenson on Tech Ticker: we’re “dangerously close” to entering a stage of ‘stagflation’

Tech Ticker
The Federal Reserve will announce it’s latest interest rate decision on Tuesday. Few are expecting the central bank to raise rates. Instead the attention, as it has been over the last year-plus, will be focused on the Federal Reserve’s wording. Will they signal another round of quantitative easing based on fears of deflation?

The theme of deflation has picked up steam among some of the world’s top investors, as we recently chronicled with the Wall Street Journal’s Gregory Zuckerman.

Yet many reading this must be thinking: What deflation? The price of gasoline, food, healthcare, education are all getting more expensive.

Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”

“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”

Martenson thinks we’re “dangerously close” to entering a stage of ‘stagflation’ that crippled the economy and market in the 1970s. “That really squeezes the workers even harder than any other condition you can experience," he says, because wages are stagnant while the price of goods and services rises.

With both fiscal and monetary stimulus winding down, Martenson is convinced a double-dip recession is imminent, if not already under way: "The early data is saying, 'weakness still is here' and we’re going to have to live with this for a while,” he says.

As a result, he’s convinced Fed chairman Ben Bernanke will go back into his 'tool box' in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.

But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government.




Grandpa:
I encourage all to view Chris Martenson's Crash Course and encourage your high school age kids to put down the video game and spend a few hours viewing.  Mr. Martenson offers a concise video seminar on how our economy, energy systems, and environment interact, and how they will impact the future. Link to the Crash Course

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