05-20-2016, 10:49 PM
(05-20-2016, 09:50 PM)Kinser79 Wrote:(05-20-2016, 06:54 PM)TnT Wrote: So my fellow Economic Wizards ... what is it? Catastrophic inflation or catastrophic deflation?
A little of both. Currently there is a deflationary trend, but all the imaginary cash created through QEinfinity will eventually have to wash through the economy causing a rise in prices and a devaluation of the dollar. This will probably result in further down grades to US Bond status, once it reaches the general economy. Rising prices of course would largely be the result of inflation as I don't foresee a major shut down of normal production and distribution just yet.
There is one simple question: Will the Fed governors ever accept that Keynesian economics does not work? If they accept this possibility then a deflationary period is likely followed by a long period of growth. If not then the US gets to look like Venezuela or Zimbabwe. So far the Fed has shown a pronounced tendency to print at every crisis but I have hedged against both possibilities in case they decide to behave in a sane manner for once.
One thing that you can count on is the economic predictions made by the Fed are the exact opposite of what will happen. They have a lousy prediction record. Even worse than Eric the Obtuse, which is quite a feat given how clueless he is.
Democracy is the theory that the common people know what they want, and deserve to get it good and hard. -- H.L. Mencken
If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action. -- Ludwig von Mises
If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action. -- Ludwig von Mises