Open Thread

Still puttering on my “deflation” project, I found “hostile symbiosis”. Very provocative analysis of how the U.S. and its advanced economy dependents are locked by finance into a destructive relationship with https://open.substack.com/pub/chinarbitrageur/p/hostile-symbiosis-a-world-where-win?

Still not sure I understand what drives the deflation, per se.

From the moment Iran reopened the strait on April 17, only for Trump to immediately refuse to lift his blockade, a tidal wave of outrage over being “tricked” swept across Chinese social — and, more importantly, state — media: Trump exploited China’s good-faith intervention to extract an Iranian concession, then immediately used the Beijing-brokered ceasefire against China.

i.e., Trump stabbed China in the back immediately after China helped him in negotiating a ceasefire.

This is straight from Trump’s “Darth Vader” negotiating-style playbook: “”I am altering the deal, pray I don’t alter it any further.”

1. First, he demanded China to pressure Iran. Beijing showed good faith, and Iran opened the strait.

2. Then, he kept the US blockade anyway. Trump’s Truth Social announcement made it explicit: Iran’s reopening was welcomed, but the blockade “will remain in full force and effect as it pertains to Iran, only”.

https://dailypioneer.com/news/iran-opens-strait-of-hormuz-us-blockade-of-iran-remains

3. He framed this as a favor to China. Trump told reporters, “China is very happy that I am permanently opening the Strait of Hormuz” — while the US Navy continued to choke Iranian oil exports that China depends on, which IMO Trump intended to use as a pressure-point leverage against Xi in his upcoming visit and negotiation in Beijing.

4. Iran sees it as a violation — and so do Chinese on the social and state media, and IMO many in Chinese leadership must also see it the same way. Tehran said the US had “repeatedly violating trust” and has reimposed closure on the Strait of Hormuz.

https://jen.jiji.com/jc/eng_agt?g=nation&k=20260418NATION-40065199

Trump got China to pressure Iran, Iran opened the strait, and then Trump kept the blockade anyway — stabbing China in the back while claiming he was doing China a favor.

P.S. Iran has done China a huge favor by reimposing its blockade of Hormuz, after China had foolishly persuaded (or pressured) Iran into accepting the ceasefire that ended up being essentially a US blockade and leverage against China. I hope China will remember who is the real enemy, backstabber, and villain — and who is the real friend who has honor and China’s back.

Which just goes to show Mark Level, that kinks and pervs rule. Pass the eyeliner and falsies.
Speaking of the Kinks, Ray Davies did the Lola song back in 1970 when the trans thing was big in England. He was being tongue in cheek sardonic, not endorsing, but of course that passed beneath the radar of the trans crowd and radio DJ’s alike.
We live in a delusional world of illusion. There’s nothing to say there’s nothing to do it’s up to you . . . good morning, good morning, good morning

China was foolish to have pressured Iran, but China simply hopes to be able to sell things and make money and wants this war to just go away as it gets in the way of selling things and making money.

The Americans and Israelis, by contrast, are only interested in power, domination and control. If they have to crash the world economy to maintain power, then they’ll do it without a second thought.

Needless to say, the Americans see any peace feelers as capitulation, and they are getting ready to take another swing.

Feral Finster:

If they have to crash the world economy to maintain power, then they’ll do it without a second thought

Because the Israeli economy is propped up by US largesse, it won’t suffer. And average USians suffering isn’t a concern for the Trumpists who will manipulate the markets to their advantage but to the detriment to the savings of ordinary Americans, cause a recession/depression to the detriment of ordinary Americans, while slashing healthcare and services for ordinary Americans.

This children, is what happens when “empathy” becomes a dirty word and a weakness. “Hey, If I’m ok, why care about you? I’ve got mine.” That rot set in a long time ago.

If the real war is class war, then the long-expected, mysteriously delayed U.S. financial crash will have interesting features and benefits embedded.

“Hostile symbiosis” identifies the China / U.S. economic and geopolitical relationship, in which China depends for its own stability on keeping the parasitized zombie U.S. staggering forward, even as the U.S. flails abroad and sinks into depression domestically.

“Weaponized incompetence” is the standard of policymaking and personnel selection underlying U.S. and European partisan politics. Leadership selection is replaced by systematic deselection as corruption, expectations of corruption and virtual and actual assassination short-circuit any possibility of political reform. AI slop feeds Tiktok and X, which in turn fries the doom-scrolling American mind.

wot, me worry?

bruce wilder:

capitalism relies 100% on the wages of working people and government spending. then why do capitalists drive down wages, squeeze companies in a futile attempt to ring out more profits than a company can naturally produce, creating zombie companies, then cut their own taxes, get rid of pesky regulations, refuse socialism, then gut safety nets, and the results every single time, deflation and depression.

the hoarding of money at the top, coupled with a lack of wages that drives consumption, and with over production from a flood of imports, means intense vicious competition for scarce dollars.

during the depression, if the government caught you selling for less than cost, off to jail you went. once deflation sets in, its hard to beat. see japan, who has never really escaped deflation.

so in most cases, its inflation first as the leeches and parasites charge ever more, and squeeze companies and wage earners ever more hoarding dollars at the top, then deflation sets in because we can no longer afford just about anything.

also remember, government spending is actually our wages also. the trick is, whats it being spent on?

bush jr. bragged about U.S. growth during his wars. when in reality, he was just measuring the amount of money being added to the economy because of his dufuss immoral wars.

the reality was all during this time, inflation, and inflationary imports from free trade which causes wage suppression was under cutting the american economy and creating unpayable foreign debts, and creating deflation, which was the inevitable consequences of bill clintons economic policies, and it all went boom by 2008.

once wage earners can no longer earn enough to pay their bills, service their debt, save a little and have time to enjoy the fruits of their labor, boom, its over.

it was all out in the open for all to see. but the manipulation of unemployment, poverty, and GDP statistics under clinton, showed a rosy economic situation instead. it never fooled me.

https://michael-hudson.com/2026/03/inflation-first-deflation-next/

“Workers can’t pass on oil price increases into higher wages. Industrial capitalists can’t necessarily pass them on either. So what happens? People cut their prices, hoping to keep customers. But their neighbour is doing the same thing. Everybody is trying to pay down debt — which destroys money, slows the economy, and causes deflation.

Irving Fisher said it beautifully in the 1930s — what I call Fisher’s paradox: the more debtors pay, the more they owe. The real burden rises as the price level falls. That’s what leads to Great Depressions.”

“I want to pick up on Nika’s question about hyperinflation, since deflation and hyperinflation may go together. When countries cannot pay their foreign debts — and the Global South has enormous foreign debts falling due, all in dollars — what do they do? The IMF says: impose austerity. Make labour poorer and poorer until you can pay the debts. That’s today’s junk economics, and it goes back to David Ricardo’s bullionism.

Every hyperinflation in history has been caused by the need to pay foreign debt. Germany’s hyperinflation in the 1920s wasn’t caused by government spending on labour or social programs — that’s the myth. It was caused by printing Reichsmarks to throw onto the foreign exchange market to pay reparations. Chile and France had the same hyperinflation pattern.

And this reality is not taught in academic economics. So the graduates who join central banks around the world don’t understand the difference between hyperinflation, regular price inflation, and deflation. Steve and I are essentially persona non grata in polite circles, because what we’re spelling out threatens a very large power grab being put in place much like the Asian balancne-of-payments crisis of 1997-1998.”

…

Some responses to all (or near all):
To mago: we certainly travel in similar cultural circles. So speaking of Lola, a classic, I liked it even as a youth (before c. 1985 when Morrisey and the Smiths were big, and I briefly became gender-fluid for awhile, it didn’t stick, I like women’s body’s a lot more than men’s, but it was a short phase.) So my Firefox “Pocket” recently had click-bait to the effect of “Moby is repulsed by the Kinks’ song Lola.” I didn’t open it, who cares if he’s homophobic or frightened of other’s choices, that’s his loss. But the coincidence meter is running high today. Just did my weekly Tertulia Spanish conversation group with friends, there’s an older woman (late 70s) who had been in Nicaragua with her husband a decade before me, when Somoza was still in power. So I told her when I was there, 4-5 years after the Revolution, the revolutionary spirit and tolerance was very high. I think I’ve told this story on here before but will repeat it. So one morning when we were about to sing the National Anthem, there were 3 young gay guys, one was wearing make-up and lipstick, semi-crossdressing, and they started hugging and kissing one another. We all saw it, some of us smiled, some had a neutral response, nobody got angry or yelled at them despite the Catholic social conservatism, we moved on peacefully. So I was just reporting what happened, but when I got to the guys kissing part, my older friends’ face twisted with disgust and horror. I had to ask, “Sorry if I offended you, are you homophobic? I never sensed that.” She answered uncomfortably, No I’m not, I’m just surprised that DURING WARTIME people were acting out sexually!!” I thought that was bizarre and made the obvious point, No, N— don’t you know during wartime people have sex MORE? (‘coz they might die any day, didn’t make the obvious point.) She bobbed and weaved, her prejudice had been revealed, we moved on . . .

To Feral, I don’t greatly differ with your main points, but I did omit the fact that per Galloway (& others) the Brit security services (MI-6 or whomever) had looked into him and determined that he WAS a Security Risk. So Starmer was pretending NOT to know what he clearly did know, was told in writing, he is dirt. I am grateful to him though, he has destroyed Tony B.liar’s Labour party forever, they are toast. And as I said, I will be titillated by the trials at the end of the month viz the rent boys. And obviously I’m not censorious of the queer aspect, I am of the exploitation and hypocrisy of course. Caught a bit of Galloway today and he said that whomever is chosen from whichever party will be reprehensible filth, I have no reason to doubt that. I am an equal-opportunity hater of Deutschland and the UK, the sickest and most violent European countries (IMO, I know it’s arguable. We have one commenter here who has claimed Russians are subhumans and Hitler punked Stalin of course, despite how WW II actually ended.)

Stewart M’s response to Finster is a good call, to a point; they will still have free health-care, education, etc. while ‘Muricans are shat on and getting kicked out onto the streets, BUT they’re may be such massive devastation to their economy and infrastructure and morale if Trump drags this war shit out another 2 months there may be little to rescue, with all the powerful with a 2nd country Visa to bail out.

Nice observations on Thailand. I went twice, both c. 2009, had a great time. It is a great culture as the only major Asian country never to have been fully conquered by the Euro-US Axis of Empire, thus very unique relative to other places. I found the food and people and ambiance, the elephants and the Snake Museum (a friend insisted we go on the first trip) quite cool. Russell Dobular of Due Dissidence has traveled across 6 Asian countries now, though he is only posting his time in China on his smaller Russ on the Road NYC podcast, he is incommunicado with DD. He said he has no interest in the sex tourism part, he only saw a bit of that in passing in Thailand (a major sex-trafficking sight for the GIs during the Vietnam War as we all know), next to nothing like that in Laos, Cambodia, Vietnam (which he also praised as a very warm, forgiving and dynamic country).

Also to Stewart, I hope you are right about class-war. It is very overdue, obviously. ‘Muricans are dumbed down and stupified by propaganda, so it will take getting truly hungry and cold and fucked over to make it bloom.

I cannot and won’t dispute anything spud says, he seems nearly omniscient, deeply studied history. I’ve learned a bit about economics from Michael Hudson and Richard Wolff, as well as Yves of NC, but admit it’s not my forte. It is a big lever though, moves a lot. Not that it should be a God, God of the Market, like Friedman, Hayek and the other fascist Randians believe.

@spud

Talking about the economy as if it is akin to the weather, making deflation or hyperinflation the equivalent of meteorologic phenomenon is troubling. The notion that hyperinflation could be an accident is convenient to ideologues, I guess, but it is absurd. And, yet, for the Germans who experienced the 1921-23 hyperinflation, I suppose it did seem sufficiently outside the range of normal experience as to be baffling. And, it ended abruptly in 1924 with the “mortgage-backed” Rentenmark (which were attached to dedicated fiscal flows, aka taxes on land wealth) and then the conventional gold-convertible Reichsmark, after Dawes. My understanding is that post-war inflation accelerated into hyperinflation with the decision to support the general strike in the occupied Ruhr with income support payments. I don’t credit the claim that the papiermark ever fetched gold for reparations via the foreign exchange markets; I don’t know how that could ever have worked, let alone been sustained for weeks — who would stand as counterparty and receive papiermarks? And, buy what with them? It would make no sense. The mark went into freefall on fx markets and with Germany not producing much in its largest industrial area, there was little to export and little prospect of capital flows to finance imports.

The secondary sources I have read on the subject have not impressed me with the reliability of their analyses, but again handwaving and morality plays abound in accounts of economic history. The usual story is that “printing” drove the inflation, but it seems to me that the printers were struggling to keep up with the price-setters. How was all this changing of wages and prices coordinated across the economy? How did the sandwich shoppe know to raise the sandwich price? How did the factory or insurance office know how much to bump up wage payouts? Was the Reichsbank wildly discounting commercial paper or its equivalent? Discounting trade bills furiously? I want to know the mechanics, but no one ever says.

Rudolf Havenstein was the central banker at the Reichsbank, who would have had to be the central actor and prime mover. He conveniently died at nearly the exact same moment Hjalmer Schacht introduced the Rentenmark from the Rentenbank, so whatever he was doing abruptly stopped, on schedule. Go figure. (Karl Helffereich — Schacht’s rival in architecting plans and for new Reichsbank President also died in April 1924.)

Mark Level:

I’ve been to Thailand three times now (Bangkok twice, Pattaya once, and Phuket once). Of these three, I liked Phuket the best; it was someone less “touristy” than the rest and many of the things to do were Thai. We petted tigers and washed elephants (I’m in a movie washing an elephant, and I ask the audience “How do you know when this thing is clean?”), I petted big tigers; average sized tigers, and a tiger cub. Of these three, the cub was the most skittish. So was I!

We did a boat ride to some islands. All I can say is that people from the UAE are the biggest party animals around, once you get them out of the UAE. We traveled through caves that smelled of bat poop (as bats were overhead) and later we were allowed to swim in the ocean (but I didn’t bring swimwear, as it wasn’t advertised) but boy the the UAE’ers sure did. Besides, I was reminded of the bat poop smell.

But overall, while I get that Thailand was never colonized, it makes me uncomfortable to have a country seemingly designed to cater to my every vice. Vietnam’s not that way and neither is Taiwan. Maybe if I stayed in a smaller or more rural location I’d escape the boorish tourist crowds but I don’t speak Thai and probably English signage disappears (it does in Taiwan).

Both are friendly countries, but Vietnam just strikes me as the more geniune experience, even in the big cities. Taiwan is super nice and friendly too. However, the two countries are contrasts: Taiwan is super-safe, super-clean, incredibly impressive, incredibly efficient–I went to a Taiwanese hospital for an upper respiratory infection in 2022 and had to endure the “horrors” of “socialized medicine” which involved me paying like $19.90 for a doctor visit and medication. I also went with a Taiwanese friend for him to update his biometric passport, and he being him we got there only like 25 minutes before the place closed and it was packed—yet they processed people so efficiently we were out and done in 15 minutes!

In short, I come back from Taiwan and deal with the ever-worsening sh*tshow that is life in the US, and think “Gawd, why can’t we be like Taiwan?”

Vietnam, by contrast, is a developing country. Vietnam is like a friend or relative you have, who has problems, you see the problems, and yes, they need to fix the problems. But it is a country on the upswing, unlike my native US, and despite all the problems it’s so charming a place that like your friend or relative, you love it anyway.

Mago—there’s a family-run vegan restaurant just down the road I walk to a lot. You can get all sorts of tasty dishes, salads, appetizers, and more and eat your fill for $4 USD or less. I say “family-run” as you see their kids there either doing their homework or helping clean tables. Utterly charming!

However, watching those kids pains me to the world we’re leaving them, a world run by our incompetent and useless rich who are doing their damndest to destroy the planet and their futures just so they can win the “die with the most toys” contest with their peers.

bruce wilder:

clearly hyper inflation is a policy choice, or the direct results of policies choices.

germany could not pay reparations, so they trashed their currency on purpose to the french and british.

bill mitchel has done some good work explaining how free trade can lead to hyper inflation. i think i posted his series a while back.

here in america, when import prices started to get out of hand, it coincided with increasing inflation here.

these things are not coincidences. when you get put into impossible situations, you do what ever is necessary to get out of it.

the mexican peso crises was a clear warning shot that free trade cannot work, nor has it ever worked, most likely never will.

you are watching this scenario play out now. foreign debt has been destabilizing america for decades now. we got away with it because we issue the worlds reserve currency.

but there comes a tipping point, and we have reached that now.

To Stewart M on Asia, I strongly disagree with your claims–

China “entirely”, okay that word does a lot of work for you. Yes, it’s too geographically large, so I will give you that one.

On Japan, you lose. British Empire forcibly opened it up in colonial era. After dropping 2 A-Bombs, US and MacArthur rewrote their Constitution and occupied them. Their society became greatly infantilized as most people realized the round-eye white man was entirely running their country, they had NO power (until the 80s, economically, and even then as we all know, they were told by Reagan to deindustrialize and be good Subordinates, and did so.) I hope the spirit of Yukio Mishima does not hear your false assertion. The ghost would haunt and pester you!! Oh, and earliest Japanese Manga shows the infantilized nature of the arts community and wider society. Okinawa doesn’t want to be part of Japan, ethnically separate, but hosts horrid US Military bases. US soldiers routinely for decades raped women and girls, or when high on amphetamines drove trucks or tanks over innocent Okinawans, got shipped home quietly without ANY punishment. (Maybe fined $50 by their superiors for raping/killing “gooks.”)

Ottoman Turkey chose poorly in a World War, I think even in the first they got their asses kicked siding with the Deutsche Master? (could be mistaken). “Young Turks” had to come in and make an effort to get sovereignty back.

On Persia you are correct, and Russians do not count as Western power (even to the Russia-obsessed LAS), so point taken.

I too enjoyed Phuket, great place. I dunno if it was there that I took a boat out in the beautiful pristine blue-green sea and did a little snorkeling. Amazing!! But on the way back, big choppy waves came in and some decades after I worked on the open sea, I had no ability not to massively vomit off the bow. (Weird thing; I’ve only vomited a couple times in my life, never drink to excess. I had an epiphany when my stomach emptied, I went into a high trance that would’ve taken me 2-3 hours of asana and controlled-breathing, which I also haven’t done for decades, to achieve.) Met a nice Dutch couple, he gave me good advice about looking at the horizon to stave off the purge, but it wasn’t enough.

Ugly Americans. I recall my 2nd or 3rd trip to Mexico, some bitch woman in the hotel getting service screamed, “No Spanish!! No Spanish!!” at the waiter. And when I was taking a break from picking in a hospedaje in Managua, there was a dumbass “journalist”, the Duenya asked him “Su pasaporte, senyor?” I had to translate for him!! I’m sure that dipshit wrote all kinds of columns about how the little brown people in the country yearned for freedom and US occupation so they could be starved and worked to death like before.

Not to Karp about it, but those Silicon Valley transhumanist assholes are dangerously close to collapsing the world like comic book villains. Not really, because that’s all they are no matter their billions and temporary influence.
Play unplugged from your Palantir asshole if you want to make an enduring difference. Meanwhile shove your 21 point manifesto where the sun don’t shine, and have a nice day.

bruce wilder:

the trashing of the currency was to wipe out internal debt, buy gold back currency with fiat, then borrow from america.

so hyper inflation was the plan to pay for reparations. they also bartered.

so hyper inflation just does not pop out of no where, so far its been a policy, connected to foreign debts.

foreign debts are hard to pay off. internal government debt can be done away with easily.

the trashing of the currency was to . . . buy gold back currency with fiat

hyper inflation was the plan to pay for reparations

Hyperinflation could not “buy” any gold. And, the Germans wanted to NOT pay reparations, to demonstrate conclusively their collective unwillingness to pay, performed dramatically as an inability to pay.

Efforts toward economic reconstruction and the restoration of international trade after WWI were strongly shaped by expectations that the Gold Standard would again be used to manage and facilitate international trade and investment. From the perspective of a modern understanding of fiat money, the hold that thinking had on economists and bankers can seem like religious faith or superstition, but it is what it was. German wartime inflation had been enormous; a deflation to get back to pre-war parity would have been impossible, imparting to debts fantastic “real” values. The hyperinflation wiped out papiermark debts. Hjalmer Schacht used the Rentenmark as a transition currency to redenominate the Mark, before instituting the Reichsmark as a conventional gold-convertible currency at pre-war parity, when the Dawes Plan made the whole project plausible. I cannot say that was “the Plan” all along, but viewed retrospectively, that is how the pieces came together.

It is not clear that there was, on net in real terms, much in the way of reparations paid after Dawes. What payments there were, were effectively funded from the financial flows created by private American lending, lending that itself was never repaid.

I would not say hyperinflation is an “easy” expedient for wiping out an accumulation of public and private debt. It did great damage to German political society, contributing to a sociopathic redistribution of wealth and capital.

One of my recurrent themes in comments is that using economic theories without clear referents makes discourse misleading if not nearly impossible. Using a theory of markets, where money is reduced to a disembodied numéraire, to narrate an analysis of an economy organized by bureaucracies and money finance is confusing foolishness, cubed. On that we have a largely similar skepticism.