Mailbox

Many argue that depressions cause deflation.

I argue that they can, but it can also cause massive inflation. The centralized response to debt creation and destruction process creates either inflation or deflation. If protection of the system jeopardizes confidence of the money issued by the system, subjective theory of value (money), the end result will be inflation depsite the deflationary bias of a debt collapse...

Source: Inflation verus Deflation, March 28th

Eric

Dear Bill

Hyperinflation is a currency, not economic event. That is not factored into your set of parameters leading to your conclusion William. Government do not default, they reschedule and print more money. QE can provide pieces of paper, but not buying power. All your points below that you offer to sustain deflation is the meat from which hyperinflation occurs. Governments of the Western world will provide all the fiat money to bail out everything but Main Street, but there will be no increase in buying power. I have written on this subject at least 200 times, and seem not yet been able to communicate what is an economic/political axiom. This currency event, not economic event has happened before and will again.

Did not the same conditions and formulas, you put forward to sustain deflation, exist in Weimar, Zimbabwe and 34 other examples. Is not what the Western world doing now EXACTLY what was done in Weimar, Zimbabwe and 34 other examples.

RY,
Jim

Hi Jim,

Bill Conley, I've sent you dozens of email, jokes, what ever for the last 4 or 5 years but now I have a serious question.

You predict hyperInflation. I can only see that happening if people have the money to spend. If their IRA is toast because the stock market has melted down, they will have no cash to spend. They have already lost the equity in their homes and most are underwater. Jobs are in jeopardy, everyone is cutting back, no one is going on a spending spree. If the Administration was to eliminate the income tax and sent $10,000 checks to everyone, then prices will rise like you predict.....but they wont give up taxes that easily. Ben will have to use a B-52 money drop.

Deflation can occur if no one has any extra money to spend. Most businesses finance their inventory and pay interest on their loans. If their products are not moving, they will not raise prices, hell, they may take a loss so they can clean out the back room and make this months payment. Sooner or later the Government will default on it's promises, it's just a matter of time, then interest rates will skyrocket. I just can't see how prices can rise when everyone is out of work or broke. I think they are deliberately trying to destroy America so they can give us a solution to the problem: the new world order - a one world government with the bankers in charge and our Constitution will be history. All the new money that has be created out of thin air has gone to the bankers, not the people. How can prices rise if the common man is destitute?

Bill