Deflation

Despite all the best efforts of our Federal Reserve Bank and other national banks around the world to promote modest monetary inflation, we now appear to be entering into a period of increasing worldwide deflation. This is prompted by the geo-political turmoil and by the decision of the Saudi Arabian government to push down the price of oil … see: The Bow. In many ways this oil price decrease is good for the United States since it strengthens the dollar, reduces the cost of living for normal Americans, and makes our enormous national debt an easier burden. (But it also makes our exports more expensive to the rest of the world.)

However, falling oil prices will cause major problems elsewhere in the world … in particular, many OPEC members’ budgets are dependent on higher oil prices and may suffer major economic dislocations if such lower prices persist … see: UK Telegraph Story. Like, for instance they might not be able to subsidize terrorist activities around the world … or may have to cut back on their development of atomic weaponry … or they might even have to stop promoting the adoption of Sharia Law (and all the evil that this entails) in non-Muslim countries?

But, unfortunately, I also believe that these deflationary pressures might eventually grease the skids for rampant inflation when it eventually does re-appear its ugly head. So enjoy things while they are good.