10.01.2010

No hyperinflation

ZeroHedge makes a good argument for why hyperinflation won't happen here.

Basically, Congress will eventually show some fiscal restraint. Zimbabwe Ben will let inflation run for a little while to inflate away the debt, but then he'll slam on the brakes. The economy will suck, but Bernanke will eventually choose recession over hyperinflation. This aligns with the stagflation scenario I've been envisioning, and it's the implicit assumption in my devaluation argument: that we'll we able to start inflating and then change course a la Volcker. That remains to be seen.

1 comment:

Shane Atwell said...

excellent. did you read the comments section? some interesting stuff there as well.

i lean towards the hyperinflation camp, but Mish (a big deflationist) is one of my favorite bloggers

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