Would I be correct in assuming that inflation within the modern(post 1936) economies of the west is a given, and that if the governments of said economies print more and more money that it will create hyper-inflation? If that is true, even before the rampant printing of money(like in Zimbabwe)there was devaluation of the currency.
If the currency is devalued either by policy or process, the only way it would become hyper-inflationary is if the government of said economy continued to try to print its way out of it.
Would I be correct is saying that you are wondering if our government will try to follow the same old worn path that Zimbabwe is doing, or they stop printing gobs of money and let the past catch up to us?
Your last line would not be correct. I’m not wondering if Bernanke will try to inflate. I KNOW he will try to inflate to stave off deflation. What I am left wondering is if his attempts to inflate will even work.
Even if we have 10% inflation for two years, but then the US economy completely collapses and we have a decade of brutal deflation, I would say that the credit crisis ended in deflation, not inflation. I’m absolutely NOT saying that I know this crisis will end in deflation. I do not know. I’m struggling to see whether it will end in years of massive, painful inflation or in years of economy destroying, business destroying, bank destroying, job destroying DEFLATION.
I just don’t know. Nobody does of course, but I don’t even have a foggy clue or have a ghost of a chance to lay odds. I’m am lost on the question of whether this liquidity crisis will end in inflation or deflation.
So as I’ve said at least 4 times now, I’m simply bringing up the possibility that it could end in deflation, and I think it is worth repeating because it is VERY OBVIOUS to me that a lot of people in public and on this forum are assuming it MUST END IN HIGH INFLATION, and are completely ignoring or ignorant to the POTENTIAL FOR DEFLATION.
I’m getting frustrated now because too many people are parroting the “hyper-inflation” only scenario and REALLY NEED to learn that inflation is not the only possible outcome. This is ESPECIALLY important, since the entire reason Ben Bernanke wants to push inflation is because he is terrified of deflation and considers that the cause of the Great Depression.
Bernanke wants to inflate to insure against a repeat of the Great Depression. That is my point. I guess too many people here think we can’t fall back into a deflationary Depression and think the ONLY possible negative outcome of this is inflation.
Learn what deflation is and why Weimar is preferable.