H. Michael Arguello_

The Trouble with Recession Averages

There is actually another alternative to default...we can inflate our way out of it which appears to be the government's new approach. Sorry, $10 trillion in debt is a meaningless figure without some sort of purchasing power index to understand it. $10 billion in 1930 would have been an extraordinary figure - today its trivial in govt finance terms. I am reminded of the skit in the Austin Powers sequel that drove home that point.

Mind you it can cause some short term severe pain as in the hyperinflation of the 70s, but it can wipe out the value of debt which, with the exception of TIPS, are generally not inflation indexed. Question is, who gets to be the new Paul Volcker lol since Paul is joining the inflation team. There are no easy answers, but given a choice between a depression, a period of hyperinflation to wipe out the value of debt, or a massive default and shattering of all faith ind ebt forever, I choose hyperinflation. Granted, I am a net debtor at this stage of my life lol, so works for me!