A recession is much, much worse than high inflation?
- Thread starter crgarcia
- Start date
Hyperinflation always ends with recession (or depression).
Natural law of economics.
Hyperinflation creates speculative bubbles, which ultimately pop as credit is restrained to preserve its value.
If Bernacke *really* hyperinflates, this Country will turn back ~50 years of economic progress.
A recession is unavoidable, IMO.
Money supply says it all. The US, EU & Japan issue wayyyyyyy more credit than their respective economies - or Global Economy in general - can absorb.
This drives speculative bubbles and mis priced risk, which, under normal circumstances, would serve as the catalyst for a crash/recession.
The rescue of bagholders only compounds the original problem and defers one bubble to the next.
It has to end at some point. Otherwise, half the country winds up homeless, burning dollars to keep warm.
Some say we're already there.
Judging from Shadowstatistics using Clinton-era CPI, real GDP should be around 0 or -1%.
Stagflation means a recession must last that much longer to bottom commodity prices, wages and goods.
Quote from PAPA ROACH:
"Only you can prevent a forest fire"
HAHAHAHA
omg... that fell right into your lap.
Spot on. Or as the old adage goes, 'inflation begets deflation'. As general rule of thumb, the bigger the inflation, the bigger the resulting deflation, and since we've had an overly extended period of inflation thanks to a careless Fed and irresponsible government, you can imagine the deflation that is coming our way. At this stage though considering the lunatics we have running the Fed, hyperinflation cannot be ruled out. It will however only serve to postpone the inevitable and lead to in an even bigger depression.
For the OP and those that still don't get it, I'll leave you with a quote from Ludwig von Mises (there are many other quotes by other economists on this, but could not be bothered looking):
"An increase in the quantity of money or fiduciary media is an indispensable condition of the emergence of a boom. The recurrence of boom periods, followed by periods of depression, is the unavoidable outcome of repeated attempts to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. The breakdown appears as soon as the banks become frightened by the accelerated pace of the boom and begin to abstain from further credit expansion. The change in the banks' conduct does not create the crisis. It merely makes visible the havoc spread by the faults which business has committed in the boom period. The dearth of credit which marks the crisis is caused not by contraction but by the abstention from further credit expansion. It hurts all enterprises ¨C not only those which are doomed at any rate, but no less those whose business is sound and could flourish if appropriate credit were available. As the outstanding debts are not paid back, the banks lack the means to grant credits even to the most solid firms. The crisis becomes general and forces all branches of business and all firms to restrict their activities. But there is no means of avoiding these consequences of the preceding boom. Prices of the factors of production ¨C both material and human ¨C have reached an excessive height in the boom period. They must come down before business can become profitable again. The recovery and return to "normalcy" can only begin when prices and wage rates are so low that a sufficient number of people assume that they will not drop still more."
Ludwig von Mises