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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: J_Locke who wrote (75883)	12/17/2006 6:53:11 PM
From: kris b	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. In the globalized economy corporations would shift all their production to Chindia long before they would increase US workers wages. They would be bankrupt if they didn't, because somebody else would. Nothing can be ordered unless US reverts to the closed Soviet style economy with HUGE trade barriers. Can it be done? Sure, but do you think that US corporations care whether they employ americans or chinese? Their primary motive is profit. US doesn't needs jobs at all to purchase their goods. FED will create the money/another asset bubble=buying power and everybody will live happily ever after. Of course I am being sarcastic. "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". Like said before, the "tax rebates" would have to be permanent and to the tune of at least $ 2K per month per household. "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." How will this money find its way to the household's chequing accounts?

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