Inflation, Deflation… Where The Heck Are We Going?
Some folks are telling we are going to have deflation, what with the economy contracting and the vast disappearance of tons of cash through the implosion in value of assets that weren’t really worth what Goldman, Welfare, Queen & Sachs and the rest of ’em told us they were worth. Some folks tell us we’re gonna have inflation – after all, the Fed is printing money like mad and the Federal Government is handing out bail-outs to those who got us into this mess like there is no tomorrow.
I’ve been too swamped with my day job to have a chance to work through this myself, but it seems to me that falling prices are coming to some sectors of the economy, and the loot is going to other sectors of the economy. Perhaps the end result of this is going to be merely one big redistribution, with the change in CPI remaining within a range (say, -1% to 5%) that is not outlandish by US standards and which certainly doesn’t qualify as a problem when viewed from the perspective of countries that have faced hyperinflation or massive deflation. In other words, we may not see a monetary phenomenon (at least not until significant parts of the debt eventually become hard to service, which is not a matter of months) but rather a furthering of our travels down the road as a kleptocracy.
Like I said, I haven’t had the chance to work this out. Where do you think we’re going?