by Charles Hugh Smith
Of Two Minds
The consensus is that asset inflation is unstoppable and forever. History begs to differ.
Not unsurprisingly, people want a binary option: do we get deflation or inflation? Unfortunately, reality is messy.
Broadly speaking, globalization is deflationary as capital seeks the lowest cost labor, parts and materials, the least stringent environmental standards and the most corrupt governance to maximize profits by any means available (in this case, exploitation and corruption).
Wages lose purchasing power as every labor force competes with the cheapest available pool of global labor, and domestic companies must lower prices or face obliteration by the global corporations.
Broadly speaking, financialization is inflationary as the costs of services increase as financialization enables monopolies and cartels to dominate entire sectors.