Agreed, Arch.
My overall point is that while history (not economists) can give us the answers we seek in a general sense, specific answers are unknown.
It's somewhat amusing to see that experts themselves can't agree, yet ordinary folk are certain that this or that will happen.
I still maintain that nobody knows... not Bernanke, not Geithner, not the Chinese, not the economists - nobody.
What we do know is that the Fed has stated it will begin withdrawing liquidity from the economy as soon as inflation begins to appear.
If monetary policy works as he has indicated (many doubt that it will) then there will probably be inflation (who knows, 10%? 15%? 20%?) but no hyperinflation. One thing I would add is that his recent actions leave no doubt he's prepared to act more aggressively than any predecessor.
However, if his policies and actions don't work, then:
[A] We're in a heap of trouble, and
[B] Monetary intervention will suffer a huge defeat.
In the meantime, it appears he has prevented a crash, and the instant deflation that would have resulted. Globally and locally, we're still in a contractionary phase, though economic interventions seem to be blunting the impact. For the rest, who knows?
Jim |
