John Ryskamp

Is Treasury's TARP Debt Already Monetized? Part III

You leave out one factor: the collapse in demand. That will outrun any inflation. No one--not you, not anyone--can dream of consumer spending collapsing as much as it is going to collapse. It hasn't even begun to collapse. By September you will see the true deflation nightmare: no pricing power whatever, prices being slashed everywhere, and still no buyers.

Will there be inflation? Sure. But it will be Austria 1919 inflation--infation caused by the collapse of the supply chain.

Absolutely no one talks about a collapse of the supply chain. But 60% of businesses now face difficult securing financing. As these businesses increasingly fail to secure financing, they will go out of business. Those are links in the supply chain which will collapse.

Because the supply chain always collapses faster than demand. This is the most devastating curve in the downward sprial of deflation.

Wait til September. Unmitigated disaster.