Deflation is already here.

In light of the latest published GDP growth rate (2Q) of 1.6%, a further discussion of the 3 solution options to induce growth is needed:

a) Inflate
[...Bernanke’s late mentor, Milton Friedman, theorized the Great Depression could have been prevented by sufficient monetary stimulus and so in 2008, faced with the possibility of another deflationary depression, Bernanke put Friedman’s theory to the test. Unfortunately, when tested, Friedman’s theory didn’t work. Despite Bernanke’s massive monetary expansion, global credit is still contracting and lending is drying up.

Inflating away debt is virtually impossible in the presence of deflation, but if U.S. monetary expansion is sufficiently large, it could result in the hyperinflation of the U.S. money supply, which would destroy both U.S. debt and the U.S. economy as well...]. 100% on the mark. Inflate wont work (technically e.g. from economic science).

c) Tax
[...Taxation is another option but is no longer available to the U.S., as its liabilities are now too high. It would be like forcing the elderly and morbidly obese to engage in strenuous exercise to regain youth...]. Also true. Tax wont work either(also technically e.g. from economic science).

b) Devalue
This is the only technically feasible solution (e.g based on economic science). However a big question: Is it politically feasible? Discussion:

Who stand to loose from it?
The very rich because their financial assets will be worth less and less. They will not even propose it.

The working class (but only in the short time) because with the massive import of everyday ‘cheap’ goods from China, prices of these goods will increase, making the poor feel a little bit poorer. The current demagogues (e.g. populists) in Washington will not propose it.

Who stand to gain from it?
The thrifty middle class because, with already depleted savings, devaluation will not hurt their pockets anyway, and the ensuing real growth will then necessarily lead to more jobs and reduced unemployment, which will ultimately benefit everyone!

Points to make:
Point 1: It can be done. America is a democracy: Enlightened people and bold leaders should push for such a move, although initially painful for some.

Point 2: If not done, deflation will reign in. Americans will attach themselves to what they have now, but alas, will not have more than what they have now. This will not be America!

Indeed, US M3 money supply is currently shrinking at 1930′s pace. http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html.

Also, note that the Fed has not significantly increased primary money supply, its base of physical currency has stayed quite stable. Instead, it has ‘credited’ the bankster’s accounts with virtual money in return for collateral.

Honest money produces honest people, corrupt money produces corrupt people.

In a natural, organic system, supply and demand find a moving but relatively stable equation.

In our current world, the supply side has overbuilt and the demand side is dying.

I’m afraid we are in a lose-lose situation. Much pain to come.

Hang on to your hats indeed.

Anadianant

http://aadivaahan.wordpress.com

Mark Savatar is nearly right! although how you can hold heavily created and therefore borrowed money in Reserve is only a trick the big boys can do.
The money being created (printed) is being “spent” by the large corporations that were mostly bankrupt and was used to shore up a plethora of financial instruments and deals , not real “spending” as you and I know it.
This spending was not inflationary! But if the inevitable happened and this money filtered through and started appearing on main street , that would be inflationary.
To negate the effect of this happening , which it eventually would , the banking system for a number of years now has gently restricted the Growth of M0 and M1 , so called “Main Street Money” the only money maybe 70-80% of the population have access to or interest in!
Meanwhile M2 and M3 have been heading for the Stratosphere , and in the case of M3 (includes Big Corp money etc) its increase was so embarrassing that the Fed stopped reporting the figure in 2006 although it still reports on M0 , M1 and M2.
This is one of the methods being used to restrict and control inflation , the real enemy of the working class. Unfortunately it has horrible side effects, unemployment from the decrease in spending and vice-versa , and the inability of Companies to grow or improve through scarcity (through increased collateral requirements) of Capital (except the Motor Industry of course) , let alone the drop of spending in the Working Economy which negates any reason for a Company to grow or increase production in the short to medium term (I believe it will be a Long Medium term 5-8 years)unless an unforseen factor arises to increase demand (WAR)!.Low wage increases ,lower wages overall and a continuing collapse in Housing Values (Myth:House prices are real Money!) will carry on unabated as the people that really produce wealth in this country pay off the debts that the Wealthy Financial class have created on behalf of them.
The sinking in the economy will continue and unlike some people who predict Armageddon, I say America will carry on with one change, everybody will be poorer, except the Wealthy Financial class of course .
And while the Federal Reserve and the 12 Banks remain in Financial Power , as they assuredly are , there is no way out.
And there is the main problem, money always flows towards where the greatest accumulation of money is (because of interest), a bit like mass and gravity , from the poor to the rich. Maybe there is nothing wrong with this ,maybe this adds excitement to our lives? What if we all had the same amount of money and started anew what would happen?

It is said that “In a democracy you get the government you deserve”.

You’re right about the rest of it, too. Including the USS Liberty, deliberately attacked by Israeli forces in a failed false-flag operation.

Let us not forget Rachel Corrie. Let us hope a thousand ships named Rachel Corrie ply the eastern Mediterranean in full view of Gaza.