The uncertainty of the economic prognosis. The deflation has not
come to an end as of 2009! The future dangers of a deflationary
price tendency. Inflation and deflation as symptoms of an economic
immune system deficiency. Misinterpretations of the term
‘social’. The state and misunderstood justice. About the upcoming
super-inflation. The need for a dynamic mediation between Homo
Oeconomicus (Economic Man) and Homo Oexchangicus (Stockexchange
The question currently most frequently asked by people in
relation to the economy has to do with prognosis. The anxious
question: “Where does it go from here?” occupies the media
without end. Through the failure of the scientists, as already
explained in § 1, it is obvious that no reliable prognosis can be
given. No surprise, then, that new predictions have been published
time and time again since last year. Some institutes have
completely stopped predicting results, giving as their reason
that the consequences of this unparalleled economic crisis
could no longer be predicted.
Politics is similarly uncertain: the German chancellor, Mrs
Merkel, currently contents herself to applying “strength and
courage”. In fairy tales it is befitting to demand strength and
courage from the hero; where the economy is concerned,
however, we require somewhat more. But we cannot expect an
appropriate therapy, however, when we have no appropriate
It is possible, however, based on the implications laid out
in this text, to offer a rough prognosis. The probable prognosis
should sound something like this: First, there will be a powerful deflation, whose high point will
not be reached in this year, but much later. Afterwards follows a
During the deflation, we will see a price trend that is the
reverse of inflation of goods and services. While in the latter,
prices spiral ever higher, and goods become ever more expensive,
a deflation entails exactly the opposite. The previous generations saw only an inflationary movement of prices, which
is why scientists have paid little or no attention to deflation
for decades, a fact I have already criticized in my work on the
structure of global capitalism published in 2006.
At the time of writing this work, those in official positions
are not yet talking about deflation, as the usual calculation of
statistics still shows minimal inflation between 0–1 percent.
However, the consumer will already have noticed that many
consumer goods have become cheaper in the course of the first
months of 2009, and that the newspaper title pages occasionally
report a “price slump”. This is the beginning of a trend
that will, by no means, end as quickly as the voices attempting
to calm the population would have us believe. The downward
price spiral will continue into next year and it will not
be long before the announcement of an official deflation.
Why do we fear deflation more than inflation? The answer
is obvious. During inflation, consumers spend money quickly,
because they know that the longer the money stays in their
pockets, the less they will be able to purchase in the future.
Certain countries did, in fact, see particularly accelerated inflationary
price spirals within the last few decades. I remember
the 80s in Brazil, when I had to exchange some of my dollar
reserves for the local currency on a daily basis in order to shop
for my daily consumption, as even the price of the bus tickets,
calculated in local currency, rose by 7% from one day to
Generally, it can be said that inflationary tendencies motivate
the money holder to spend money as fast as possible,
thanks to the permanent threat of depreciation. In this way,
inflation encourages the flow of money, and, if the inflation
rate is not too high, also production and the economy.
Conversely, there is nothing worse for the economy then
consumers losing their desire to buy and beginning ‘to sit on
their money’. If you can compare inflation bodily to diarrhea,
then we can easily compare deflation to constipation. People
become closefisted, part only reluctantly with their money
and buy only necessities. Why? Because hoarding money in
such an economic period has the advantage of promising added
value. Why buy something today when the downward price
spiral promises consumers the chance to purchase the goods
even cheaper if they just wait a little? The economy is lamed
by deflation, which can lead to anything from a significant rise
in unemployment figures all the way up to mass dismissals.
The higher rate of unemployment brings with it a cumulative
downwards effect for the deflationary price spiral. The unemployed
spend less money than the people who still have work.
In this way, money is increasingly removed from the economy.
On top of this, mass dismissals can lead to social unrest. A
social environment burdened by violence and insecurity further
destabilizes the economy and slows down production.
Even back in 2005 I found the topic of inflation and deflation
so important that in my work titled: “The Structure of
Global Capitalism” I dedicated an entire section to the topic
from the perspective of “Opportunities and Limits of Immunization”.
I pointed out an original definition by the sociologist Niklas
Luhmann: “Deflation and Inflation are in certain ways immune
responses of the economic system, with which it reacts to an
overly high risk load.” My position in regards to this immune
response did differ from that of N. Luhmann, however. In his
system theory we have to be responsible for developing a concept
of the whole and with it a concept of holistic connections.
His theory runs into the dead end of one-sided differentiation.
This hazard can also be viewed in the mindset of natural scientists
of medicine. Ever since the outbreak of the AIDS virus,
medicine has grappled with the question of immunology.
However, one can see that there, too, the epistemological
will to understand unity and difference in context, and not to
put one or the other in the foreground, is missing. A misinformed understanding of immunology characterizes both medicinal and economic scientists. Characteristic of both disciplines
are a scapegoat strategy (“The virus has to be fought!”,
“The greed of the banker must be limited!” etc.) as well as distorted
theories on the possible combinations of data and facts.
A different mindset is required to strengthen the immune system,
however. An adequate understanding of immunity is
not possible unless we develop a sense of society.
On the political stage of the Federal Republic of Germany,
the SPD and the CDU, even the FDP claim the term “social
market economy” as one of the central features of their party
politics. Of course, the parties are using completely different
definitions of the same term. This causes the ‘social’, and
whichever definition you choose to give it, to degenerate into
a party slogan and become the victim of the propaganda of
the respective parties. “Social!” – that is pretty good, the masses
think, and are quickly satisfied. But for how long? Until the
impotence of the misunderstood term and all the resulting
consequences catch up to those same masses. On the second
of May 2009, the Munich edition of the newspaper “Bild”
read: “Hooligan alarm! Police nowadays permanently stressed!”
Now form your own opinion! As long as science allows such
chaotic conceptions, and politicians – for lack of an alternative
(?) – then fervently use them, there will be permanent
stress not just in the economy and in politics, but also on the
streets! The anti-viral medication (used for AIDS), financial
rescue packages from the state (e.g. the scrap bonus) or police
measures against rioters at demonstrations may, at a high
price, repeal the symptoms, but they are no solution for the
disruptions to the immune system.
We can find a similar term in the same realm as the slogan
“social market economy”: that of “social justice”. The constitutional
state can bear the responsibility for judicial justice,
but this should not be confused with social justice. One third
of the children in Berlin live under the official poverty line.
With which court can we file a suit protesting this fact?
The term “social” can only become a reality in a community
setting. Community and society today should no longer,
however, be seen as congruent. Part of the pitfall of state intervention lies in the ignorance of the fact that the legislation
in the organs of the state wants to add social justice to it’s
After the deflation will come inflation. I want to stress once
again that we have not even come close to the height of deflation
in July 2009. We are, at this point in time and for a little
while afterwards, in a ‘bubble of anticipation’. Most people
who have some involvement in the economy hope that the
massive government investments have already solved the crisis.
What a disappointment is to emerge from this economic policy,
whose most prominent author is without doubt the current
president of the United States, Barack Obama. Marketing
is not everything, and it does not protect from the pitfall
into which the capital will fall. When the stock market prices
slip once more into the basement, into a basement that is
significantly deeper than previously thought, then people
will ask how we in the Wachstumstrend Research Institute
were able to predict this trend. I can already give you the
answer: It has to do with our mindset. For a forward thinking
prognosis, you need a lively, dynamic thought process, not
Once the super-deflation has run it’s course, than the second
expression of immune deficiency in the economy, super-inflation,
will follow. It will rob the poor of every chance they might
have had to take advantage of the loss of value, with it’s boom
in the value of material goods (shares, property, etc.) as, as is
known, they cannot hope to afford such goods. They will be
victims of the declared ‘social’ agitation of the state and the
blown-up rescue buoys of millions of tax dollars given to individual
beneficiaries by the economy.
From the viewpoint of super-inflation, it seems naive or hypocritical to calculate how the accruing super-debts can be paid
off with tax dollars. They cannot be! The inflation has already
ensured that all debts will quickly disappear again – this is the
most damaging but also most refined form of debt discharge.
And the moral of the story? The role of the state has to be
thought out anew. The current market dynamics cannot be
satisfactorily regulated using only the indolent effect of the
law. New institutions are required, as well as the courage to
recreate economic regulation. We have to find dynamic mediation between Homo Oeconomicus and Homo Oexchangius.
Homo Oeconomicus lives via rationality and wherever economists
use it as their model, they err in the one-sided assumption
that people are always driven by rational criteria. Homo
Oexchangius is often driven by irrationality, as though the onesided
rationality is continuously followed by it’s own shadow.
The two extremes require mediation. In the human body, the
heart takes on the function of mediating between the nerves
and the metabolism. It is not without coincidence that most
people wish that we could construct an economy with “more