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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: kris b who wrote (75876)12/17/2006 3:27:37 PM
From: J_Locke  Read Replies (1) of 110194
 
There are two ways to create hyperinflation in a modern economy. First, the Brazilian way, which is for the government to massively increase the money supply while simultaneously requiring employers to increase wages to keep up with the inflationary loss of purchasing power.

The second way is for the government to issue "tax rebate" checks to the populace while the central bank monetizes the deficit spending required to pay for the "rebates".

Neither seems particularly likely to happen in the U.S. on more than a modest scale. I do expect the Fed to eventually monetize large amounts of mortgage-backed securities, but it's not clear what the effects will be on the general price level.
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