Would deflation in housing cause inflation elsewhere (money toward mortgages redirected to rent/general economy), and might this (plus piddling tax rebates) balance out the death of the HELOC/home investment spending? If so, nothing could be worse for the Admin than a fall in oil prices.
If the admin thinks that the death of the HELOC means a deflationary collapse basically just before an election, then it would have every reason to perform, as subtly as possible, an intervention similar to the 1933 Agricultural Adjustment Act, wherein food was destroyed in order to keep prices high, doing violence to production. If high oil prices, along with the lesser and temporary effects of a commodity boom, are the only things preventing a deflationary spiral, might this explain a breakdown in peace/cooperation agreements between the Al-Maliki government and the Mahdi Army on the one hand and Sunni Awakening Councils on the other, and the subsequent attacks on oil pipelines? More sinister things have happened.
Still, on the other hand, one cannot exclusivise the occurrence of inflation and deflation, nor can the relationship between them be strictly described as one of causality. Take housing again as an example: the inflation of housing happens as a function of its deflation, and vise versa. Credit markets tighten (inflation) as prices drop (deflation); these phenomena feed each other until price drops mean that we no longer need credit to buy houses - or in any case to be housed (rent). This might best be described as a paradox of value: something worth an infinite amount is in fact worth nothing - it is priceless. We might call this synergy "conflation." And we might even call this conflation of everything with nothing, their infinite and impossible exchangeability, an aneceonomy. This process can only be arrested by the active destruction of value through an increase in price, an inflation produced by a counter-technologically-induced privation: credit lending. The recent housing bubble happened in just this way. However, global political discourses are far too confused in their ideological thrusts to intentionally engineer such an arrest on a macro-economic level. As it stands (as a sort of sarcophagus, saluting its own absence), this indeflation of a certain type of history seems to be marching ahead.
Now, if this expansion of the sphere of the priceless is continuing to accelerate under the pressures of a global technological modernity (this is very much in question as the raw materials required for production seem to dwindle), then what we can hope for int he barren climbs is the growth of the aneconomy, rather than the economy, where power, still hesitating, will will no longer believe it can restrict itself.
No comments:
Post a Comment