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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Claude Cormier who wrote (50350)1/20/2006 10:54:10 AM
From: mishedlo  Read Replies (2) of 110194
 
But a complete scenario must also include the possibility that Bernanke brings his helicopter speach into reality hoping that he (they) can control the game and maintain the system. As an example, 2 millions canadians or so received this morning an automatic deposit of $125 in their bank account, simply to compensate them for a recent increase in heating oil. This is a small amount, but nothing could have stop them to send a lot more for whatever just cause.

I accounted for that in my scenario.

Such actions will stop when they greatly hurt creditors.
True, hyperinflation is easy to accomplish. I suspect we may see it again AFTER consumer debts are purged away in bankruptcies.
When primarily the government owes, especially to foreign governments, it will certainly inflate it away.

The problem of course is consumer debt is NOW a far bigger problem. Banks and the FED will not want to bail out consumers at the expense of themselves and corporations. That should be logical IMO, and that is why I discount the helecopter drop.

The other problem is that hyperinflation more or less ends the game. Deflation allows the game to continue.

For now it is logical to discount the helicopter drop. When we get to the point of Weimar - where US govt debt is a far far bigger problem than consumer debt then we can put hyperinflation back on the table. There is a huge purge of consumer and corporate overexpansion that logically needs to be purged first.

Mish
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