I haven’t written anything here for awhile, mostly because I’ve been working day and night on a book whose due date is coming up. But I’m a bit insomniac this morning so I’ve been reading some news, for a change, before working on other stuff. Just to get a post in I thought I’d cross-ref this article by Harvard’s Niall Ferguson on the global $ meltdown. I agree with him on this assessment:

There is a better way to go, but is in the opposite direction. The aim must be not to increase debt, but to reduce it. In past debt crises–which usually affected emerging market sovereign debt–this tended to happen in one of two ways. If, say, Argentina had an excessively large domestic debt, denominated in Argentine currency, it could be inflated away. If it was an external debt, then the government simply defaulted on payments and forced the creditors to accept a rescheduling of debt and principal payments.

Today, Argentina is us. Former investment banks and German universal banks are Argentina. American households are Argentina. But it will not be so easy for us to inflate away our debts. The deflationary pressures unleashed by the financial crisis are too strong (consumer prices in the U.S. have now been falling for three consecutive months; the annualized rate of decline for the last quarter of 2008 was minus 12.7 per cent.)

Chickens coming home to roost, unfortunately (and they always do). Disaster capitalism can only outsource its disasters for so long (the world is a finite circle, after all). The “Argentina is us” sentence reminding me of a great 2005 book I read back when it came out, John Perkins’ Confessions of an Economic Hitman. It’s an expose of engineered-disaster capitalism since the 70s from a guy who knows first-hand (since he’s guilty as an inside player). And now I see that he has a brand-new book out, The Secret History of the American Empire. I’ll have to check that out.

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