[AntiGuv]

I'm telling you, it won't be hyperinflation for the United States, it'll be deflation. All roads to hyperinflation lead through deflation...period. You can't get from here to a hyperinflation or even a genuine stagflation scenario without plunging into a deflationary contraction. And, once such a development occurs, the economic dislocations will be so comprehensive as to render the very basis of these hyperinflation forecasts meaningless.

[arete]

I'm telling you, it won't be hyperinflation for the United States, it'll be deflation.

Russell obvously believes that the FED will be able to avoid asset deflation. I'm in the stagflation camp right now although that could change.

Richard W.

[expatpat]

You're right, AntiGuv -- the first 3 changes that Russel comes up with (saving vs spending, parsimony, and unemployment) are all deflationary as hell.

[Beck_isright]

"I'm telling you, it won't be hyperinflation for the United States, it'll be deflation. All roads to hyperinflation lead through deflation...period. You can't get from here to a hyperinflation or even a genuine stagflation scenario without plunging into a deflationary contraction. And, once such a development occurs, the economic dislocations will be so comprehensive as to render the very basis of these hyperinflation forecasts meaningless."

I agree. Even though money will be "cheap" on the short term securities and Fed Funds, the long term loans which drive real estate and economic expansion will become expensive. So we will have cash, but no one able to afford to take out the loans. Then prices will collapse across the board. I vote the short term inflation, long term deflation scenario. Especially since the earning and spending power of the consumer has not changed in real dollars (adjusted for inflation) since the mid 1980s.

[Orangedog]

IMHO, Greenspan is ready to do anything to avoid deflation, that includes running the "printing press" at high speed, 24/7. It is my belief that his efforts to prevent deflation will cause hyperinflation. In any event, gold and silver are going to be the safe haven of choice. I would expect the next administration in the White House to bring back gold and silver confiscation once the dollar quickly loses more than half it's value within a few weeks (or days) time.

[Soren]

defaltion/inflation:

The Fed can lower interest rates, but it can't force people to borrow. However, isn't the ultimate monetary stimulus mechanism having the Federal Govt run huge deficits and have the Fed monetize the debt? (ie. the govt runs a deficit, issues debt, the Fed buys it using newly printed money, and the money enters the economy as the govt spends it) Can't inflation be forced this way?