[AntiGuv]

The difference between Japan and America is that the former has remained export-dependent and the latter has become service-based. While foreign dissolution of dollar denominated assets would place upward pressure on prices, attempts to maintain domestic competitiveness would place downward pressure on prices. My thesis implies that this downward pressure would overwhelm upward pressure.

In a deflationary scenario, the American consumer would be reducing aggregate purchases of all products - whether imported or domestic. In the United States, this would manifest as a classic deflationary spiral, but in East Asia, this would manifest as hyperinflation. This because the American consumer market comprises the greater part of demand for both American and East Asian products. Given time, this would inaugurate a competitive rebound of American manufacturing, but this could only follow the initial onset of deflation.

In any inflationary scenario, you simply cannot create the economic circumstances conducive to a revival of American industry & exports. That's another reason why the American economy cannot hyperinflate. No other economy can absorb the global economic shock of American hyperinflation. In the current economic order, all roads to U.S. hyperinflation lead through deflation. You simply can't get there from here any other way, or at least no one has properly explained how....

[Soren]

Under your second point, does the East Asia hyperinflation occur because they devalue their currencies to maintain their exports?

Under your third point, I agree with the first sentence. My question is this. Could the Fed create inflation if it was hell-bent on doing so in a misguided attempt to prevent deflation? I'm not saying they would re-invigorate the economy, in fact, I'm guessing they would likely destroy the dollar.