Finding the Upside

[peristaltor]

At the tail end of my last money-ish post, I quoted L. Frank Baum's opening to his topical money allegory The Wonderful Wizard of Oz:

Dorothy lived in the midst of the great Kansas prairies, with Uncle Henry, who was a farmer, and Aunt Em, who was the farmer's wife. Their house was small, for the lumber to build it had to be carried by wagon many

Comments

[l33tminion]

The growth of the financial sector is a vicious cycle: Slowing of the real economy means that martingale strategies and Ponzi schemes are more appealing, which draws capital from the real economy, slowing it further.

Unfortunately, that effect is the only thing preventing crazy monetary inflation from becoming crazy price inflation. Which quickly turns into hyperinflation absent growth in aggregate demand channeling that to productive capital instead of durable goods.

To use Homer-Dixon's metaphor, there's an upside to forest fires, too, but that doesn't mean it's fun to be caught in the middle of one.

[peristaltor]

Yup. No one wants to be the Omega Phase Man.

[l33tminion]

You seem to have hidden your reply to this. Was that inadvertent?

[peristaltor]

Quite. Thanks for the heads-up.

LJ can be weird. I edit one comment, and it screens it.