> >[why has the Fed suddenly cut rates? One possible answer is because current
> >atronomically-high natural gas prices have created a huge shift of disposable
> >income from the US big seaboard cities, to the natgas producing areas. This
> >unexpected delfationary force may be the straw that is finally snappiong
> the spine
> >of the New Economy. Mark]
>
> I do not believe that this is deflationary.
> First, hihger prices are inflationary.
There is no doubt that high oil prices are net deflationary. In the 1970s this
produced stagflation, ie, price-inflation but economc recession. This leads to
demand-contraction and a fall in oil prices. But despite this fall, growth does not
resume. There were great disequilibria in the 1973, including the
[highly-inflationary] Viet war, the Eurodollar overhang, the collapse of Bretton
Woods, and the bneginning of a profound and prolonged process of deindustrialisation
in the metropoles. Today, the disequilibria in the world system are deeper, more
entrenched, and their feedbacks more dynamic. There is also now a radical political
instability caused by the end of the Cold War and the collapse of the
Soviet-American world system, which makes outcomes highly unpredictable. Think of
the pessimistic result you can, and then double it. The world economy can go into
freefall, yet inertial population growth means that there will be a huge increase in
population and the burden on carrying-capacity. Asia has perhapd already become the
financial centre of gravity of the world market, yet Asian incomes are still orders
of magnitude lower than in the US. The US has the firepower, but not the money. This
is an unprecedentedly dangerous conjuncture, and its backdrop is the radical
constraint upon human activity posed by the limits of the ecosphere, the fact that
humans already pre-empt 2/3 of planetary freshwater, crops etc. This is such a
longterm, protracted and fundamental crisis that it seems to happen in slow-motion;
you can grow up, raise a family, retire, and hardly notice a thing (if you're
lucky). But it is there, it is all-encompassing and overdetermining, and for 5bn
people, loss of security and falling living standards are already the everyday
reality. It can only get worse. There is only one possible way out for humankind and
biodiversity generally, and that is: socialism, socialism, socialism. End the
hegemony of markets, smash down finally and forever the capitaliost world system,
destroy the frontiers and barriers whioch corral off the peoples from one another,
create a world of authentic personal and biological security and true social
justice, end the gross inequality and inequity which disfigures our epoch, end the
tyrannies which grind their boots on innocent faces. That, or termional barbarism
followed by the republic of roaches and rodents.
> The increased profits for the
> gas sector are likely to be transformed into loss for other sectors which produce
> consumer goods.
mark
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