No one to date has come up with a plausible scenario other than "helicopter drop" and I do not find that plausible.>
You may not think it's plausible, but once again in the real world, that's to a large extent what has happened. The Fed has expanded it's balance sheet by 10-13% annually in a high-low channel, back and forth. That's about how credit has expanded as well. The Chinese have done so even more.
In my view that kind of loose monetary expansion is pushing the envelope of a helicopter drop, and is and has been very inflationary, and if they goose it more, even hyper-inflationary. I think you may see alot of dead savings mobilized in Japan too, which will really set off an inflationary there as well. I think Japan has Weimer Republic inflation potential if they aren't careful. I'm constantly on the lookout just in case there aren't any takers for borrowing this fuel, but it just keeps getting more and more distorted and lopsided. On point two, the Wizards find religion, and suddenly become responsible, again I don't see much hint of that at all, other than for a brief two-three months in the 1Q, 2005. Then Uncle Ernie returned with a vengeance.
The scenarios you propose as the inflationists case aren't mine, because monetary fuel and maladjustment trumps that. Economic conditions historically in bad inflations are awful and hardy robust, as you apparently presume. |
