R. Scott Raynovich

Will the Deflationist vs. Inflationist Debate End Soon?

Yes, but...

* Deflationists assume that we "let the banks go" and all of the credit is destroyed.

but...

* WE don't appear to be doing that. We appear to be running the printing presses overtime in a useless effort to save banks

* What happens when the government ends up having the buy all the crummy/toxic/bad assets from the bad banks that fail

* They will then be forced to monetize these assets... somehow.

Given what's happening in banker-ville today, it may have to happen sooner rather than later.

I believe, ultimately what will happen is either an informal (stealth) or formal massive devaluation of the dollar. It especially makes sense if you read your history books on FDR and you realize that Obama and Bernanke are both students of FDR.


On Jan 20 09:54 AM Kip Largo wrote:

> I am of the belief that money created through credit must hit rock
> bottom before any recovery can happen. That means trillions of dollars
> has to disappear so that pretty much what is left is the Fed generated
> money (rather than the money created out of loans). When this has
> happened, we'll be ready for growth as we will have proper reserves
> for any credit expansion, but if we try to keep massive amounts of
> credit alive by printing out money, we will only push us farther
> into bad times.