Are Hurricanes Inflationary or Deflationary?
By Tim McMahon, Editor Insurance companies have estimated the damage from hurricane Katrina at $25 Billion Dollars. But the economic effect is much greater than that. That is just the loss of property. Another consideration is the loss of revenue while things are being rebuilt. What about the loss of jobs from the companies who won’t be rebuilding because they didn’t have insurance? According to the “Financial Times” current estimates of “total economic losses” are closer to $100 Billion. Those numbers are so large that it is almost impossible for us to get our minds around it. If you stacked 100 billion one dollar bills on top of each other. the stack would be about 5000 miles tall. Or roughly the distance from Washington, D.C. to Moscow. That is a lot of money! So what will this $100 Billion loss do to the US economy? Will it cause inflation? Deflation? Stimulate the economy because it all has to be replaced? Or depress the economy because of all the loss of jobs? The answer is diffi
