Even Faber says the FED has the power to DELAY the inevitable for possibly up to 5 years.
Max, the Fed had a big hand in delaying the inevitable from 2003 to 2008, but I have to doubt their ability to influence things that long this time around. The magnitude of their response since 2008 has been enormous, but it seems like they must have pretty much shot their wad by now.
I have mucho respect for Faber, but when he says he expects the Fed to keep printing and pumping indefinitely until hyperinflation occurs, I have to wonder.
With MBS purchases scheduled to end in a couple weeks, and the publicly announced Treasury purchase program over a couple months ago, and so much public sentiment against bailouts and increases in debt, how are they going to ramp up liquidity to the point hyperinflation takes place?
Maybe I misunderstand Faber, but it seems more likely to me that the global debt maw is so huge it will ultimately swallow whatever the Fed and the Treasury can throw at it. The inability to avoid mass default seems like a more probable outcome.
Here's another piece on the "dead horse" of inflation v. deflation:
theautomaticearth.blogspot.com
Opening paragraph:
"Today we have a guest contribution from one of our regular commenters, El Gallinazo, who weighs in on the dead horse of inflation vs. deflation, dissecting a John Williams Shadowstats paper. And while Stoneleigh and I here at The Automatic Earth haven't had any doubts on the issue in "like forever", keeping the discussion alive in some form may be useful, if only simply since it won't go away.
Just let me state two issues that are obvious to us before handing you over to the cantankerous vulture:
1. There is no way we'll get into hyperinflation BEFORE debt deflation has run its course.
2. There is no way the Federal Reserve (or ECB, Bank of Japan) can print enough money, electronically or physically, to fabricate hyperinflation, as long as the debt deflation train hasn't finished running over our economic systems.
3. After that train is done, it's anybody's guess; the damage done will be so severe there may not be a Fed left to inflate even a party balloon." |
