Quote:
Originally Posted by The Demon
You are exactly right. This is what I and the rest of the "pessimists" are expecting. However we are leaning towards the dollar losing reserve currency status and hyperinflation hitting. I am in favor of everything you just said..And it's all looking that way too.
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The part you did not quote is where the contrast in our outlook lies...
I think the near term threat is deflation, not inflation let alone hyperinflation.
The reason is that there exists staggeringly more dollar denominated debt than cash dollars (about a 50
Trillion dollar difference). This enormous amount of debt, as it implodes, is killing the ability to inflate -- despite the FED's efforts.
A reduction in the aggregate value of dollar-denominated debt is deflation, which is what we have going on now. At some point, the value of credit will contract to where it can be sustained by new production. When this happens, your scenario will be real.
I just think deflation has to run its course first and we are not there yet.