My Political Party

I've finally determined my political party.

Until 2004, I thought I was a Republican. I just wanted a small financially conservative government that lived within its means. Wow, was I ever naive.

I then thought I was a Democrat. I had two reasons. First, I knew I wasn't a Republican any longer. That was a given. Second, I really would like to help the poor and less well off. Unfortunately, there doesn't seem to be a plan to actually pay for it. That bothers me immensely.

Now I have determined what I am. I am... drumroll please...

A Banana Republican!

It isn't by choice. It's simply a realization.

Banana Republic

...a banana republic also typically has large wealth inequities, poor infrastructure, poor schools, a "backward" economy, low capital spending, a reliance on foreign capital and money printing, budget deficits, and a weakening currency.

Large wealth inequities? Check!

Poor infrastructure? Check!

Poor schools? Check!

Backward economy? Check!

Low capital spending? Check!

A reliance on foreign capital? Check!

A reliance on money printing? Check!

A reliance on budget deficits? Check!

A weakening currency? Check!

If oil can stay at $50 during a near Global Great Depression, the mind boggles at the idea of where oil will trade once the global economy booms again, assuming it ever does boom again of course.

Stagflation is low growth with high inflation. Maybe that isn't what we get long-term. However, I still argue that we'll be getting at least low growth OR high inflation. If so, stagflation will be at least half right, which is good enough for me. Here's my gut feel matrix for the long-term.

Low growth and low inflation: 40% chance (we're turning Japanese!)
Low growth and high inflation: 50% chance (get out the 1970s disco balls!)
High growth and low inflation: 10% chance (the 1990s ended, get over it)
High growth and high inflation: 0% chance (the only thing the Fed can stop)

As you can see, I'm very sympathetic to the deflation arguments, but I lean towards stagflation just the same. I'm a believer that a determined government can ruin its paper currency over time (patience is a virtue). Further, the central bankers are currently working overtime. They seem very determined.