Economic Outlook: Debt Deflation

An economic analyst we respect discusses the connection between debt and deflation.

| January/February 1983

Once again, this column takes advantage of the wisdom of Vern Myers, the perceptive and often outspoken publisher of Myers Finance & Energy, a 14-issue-a-year economic newsletter that we've found well worth its $200-per-year, $110-for-seven-issues price.

The following essay, reprinted with permissions from Mr. Myers' October 1, 1982 issue, is representative of this writer's ability to dig to the roots of the crises facing us today, and then to rinse off those roots and show us very clearly just how we've gotten into a deflationary spiral — the economic mess that has been building for so long and that looks to haunt us for longer still.

The Little Red Hen

Almost half a century ago an enduring financial philosophy was summer-fallowed.

A general discrediting of old-fashioned wisdom took place right after the war. People under 60 hardly remember teachings inherent in our society beginning with the first grade readers.

For some decades prior to that, the earliest stories read by young children praised the concepts of frugality, industry, incentive, responsibility. But the story of The Little Red Hen no longer appears in our primary readers. Many of my readers will not even know it. I have to tell it to them.

The Little Red Hen wanted some help to prepare the ground to plant the wheat. When she asked who would help her she got these replies: "Not I," said the cat. "Not I," said the dog. "Not I," said the mouse. To make a long story short, when she had gone through all the processes of preparing the ground, planting the grain, pulling the weeds, reaping the harvest, gathering the grain and baking it into bread — when all this was finally done she said, "Who will come and help me eat this bread?" "I will," said the cat. "I will," said the dog. "I will," said the mouse. And so on.

"No, you will not," said the Little Red Hen, "for I shall eat it all myself." And she did.

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