The Theory of Economic Sustainability in a Scenario Influenced by Inflation or Deflation

Abstract

This work aims to examine the issue of troubles and anomalies that affect the development path when it has abandoned the regular path of a constant and contained growth with minimal impact on nature. Because any alternative is indeed fruitless; the alternative, in fact, is the fall into the so-called sub-world, in which the constant line of development is caught in the conjuncture cycle and appears taken by inflation or deflation. Nevertheless, ‘every cloud has a silver lining’... Indeed, these anomalies of the sub-world are by no means offensive instruments but rather a kind of cure, if we do not awkwardly oppose their manifestation. Thus, any resistance to these anomalies, starting from inflation and deflation, may then be responsible for the growing malaise produced by their permanence within the economic scenario. Therefore, not accepting the penalties to be paid in order to leave the sub-world was the cause of the twenty-year inflation that afflicted the world during the 60s and 70s of the last century. But worse than that, the hyperinflation has occupied the economic scenario and then attempts were made to fight inflation with an abnormal increase of money circulation. Inflation and deflation are care treatments requiring a sacrifice (convalescence) to be released from monetary malaise. Even deflation, which we must consider a dangerous disease, if neglected cannot be solved through the usual melting pot based on hyper-Keynesian actions and increased liquidity. Not only this isn’t the right way to face the problem, but we seriously risk the syndrome that affected Japan, which has been fighting deflation for twenty years without success. The cure that can put us back on the path of constant growth with minimal damage to nature, is instead to simply follow the natural settings that ask for a recessionary turn, even hard, to really start the solution. Because both deflation and inflation are natural messages that warn the community that things in the economy are going badly and a direction change is needed soon, even going through a severe recession. The community is the referent of natural world on the issue of life survival on the planet and a good government should listen to its community, without looking for alternative and wrong escape routes. The community may accept the recession, because the natural message of conjuncture is perceived in advance as necessary and therefore the only possible decision is to bear the costs required by recovery.