November 18, 2006

THE NEED TO FEEL THAT SOMEONE'S IN CONTROL DON'T MAKE IT SO:

What Global Economic Slowdown?: France and Japan may have hit some rough patches, but the global economy still looks plenty solid heading into 2007 (Peter Coy, 11/13/06, Business Week)

Why is the global economy still looking solid? The drop in oil prices, from the high $70s last summer to around $60 a barrel now, is a big factor. Another crucial factor is sound management of the economy by the world's central banks. The Federal Reserve and its counterparts kept inflation in check even when oil prices were shooting up, so they don't need to take drastic action to chill their economies in order to avoid runaway prices.

Strange that folks who study economics would believe that bureaucrats have controlled inflation. The reality is that nothing a few individuals can do can stop the global deflation that accompanies freer societies.

Posted by Orrin Judd at November 18, 2006 7:30 AM
Comments

An ominous sign: a study showed that Business Week is the slowest to the party. When it sees the stock market has ways to go, the stock market promptly reverses course in a week; when it says we are in recession, means the economy is bottoming and is on the verge of turining up; when it says the economies have ways to go, it means we are going to have a down turn pretty soon. Mark my words. Or better mark Business Week's words.

Posted by: ic at November 18, 2006 2:11 PM

A central banker can always create inflation if they want. Global deflation is a far weaker force than the debasing/devaluation of a currency.

Posted by: PapayaSF at November 18, 2006 3:10 PM
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