Thursday, 24 April 2008

US Hyperinflationary Depression

Until now, I have given equal credence to two possible scenarios:

1. We could have several years of inflation as we do now, and the powers-that-be would have a sudden rush of brains to the head, like Paul Volcker and Ronald Reagan did in 1980, and stop the “printing press,” ending inflation and the gold and silver bull market, for at least a few years; or

2. It is too late to stop it. The political forces and the Unfunded Liabilities would prevent the powers-that-be from ending the money-printing process, and in fact, would grossly accelerate it. This would result in a hyper inflation (400 percent inflation or more), and the eventual total destruction of the dollar. Suddenly America would find its money totally useless. Store shelves would be empty, gas would go through the stratosphere, and Americans would suffer through the greatest threat since the Great Depression of the ’30s.

So what caused me to settle on number two?

Not everything ends well. The evidence favouring a huge economic calamity in the near future is very strong. After all, one cannot operate a business, or government on gargantuan loans without expecting to pay off these debts at some point in the future. It seems, with the sharp contraction in the US domestic economy, that the future is here (see the remainder of the article).

[Posted at the SpookyWeather blog, April 24th, 2008.]

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