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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (98786)	6/22/2009 1:49:09 PM
From: mishedlo	2 Recommendations Read Replies (2) \| Respond to of 116555

The Big Inflationist Scare globaleconomicanalysis.blogspot.com Inquiring minds are reading Pushing on a String by Gary North. Gary always writes an interesting column. Indeed, there is too much to excerpt that I suggest reading it. Gary has many of his facts correct, yet still manages to come to the wrong conclusion. ... Mish

To: Claude Cormier who wrote (98786)	6/23/2009 8:09:07 AM
From: axial	Respond to of 116555

"Price inflation needs more than trillions sitting on banks balance sheet. It will remain latent for a while, but, nevertheless, it is a time bomb." --- Agreed. But the Fed has stated publicly that when inflation begins, it will start withdrawing liquidity from the economy. Do not confuse this with stating that the Fed will succeed: I didn't say that. In fact many doubt that the Fed can succeed. So if Bernake fails, current monetary policy will fail with him. Not only in the US, but also in other global economies practicing the same fiat-money interventionist economic orthodoxy. Most people are not aware of what the Fed has stated, and they argue unconstrained flow of liquidity into a revitalized economy. According to the Fed, not so. To ignore what the Fed has stated is to state the potential problem dishonestly, or at least, incompletely. Perhaps a better way to state the issue is thus: If the Fed cannot quickly withdraw liquidity from the economy at the onset of inflation, hyperinflation is a high-probability outcome. Also, no one has decided what is "acceptable" inflation in the coming circumstances. We've seen double-digit inflation before, and it was difficult, but it didn't kill us. Where's the trigger? 10%? 12%? 15%? We know we don't want Zimbabwe-type hyperinflation, but what will we accept? That said, barring some disruptive disaster like war, pandemic or a USD run, inflation is not an immediate concern - nor should it be. Jim