JasonC

What If the Great Depression Analogy Is Wrong?

All the world's ideologues think they can make their hyperinflation bets come right in the end after all, if they just screech loud enough that it is all some con. Well, boys and girls, they are epicly wrong and busted. Fact.

As a Brazilian whether 2.5% in dollars sounds like a good return.

The US economy bottomed in *May*, measured in Euros.

The personal savings rate has already risen to over 5%. It might go as far again in a single quarter. Companies are reporting losses, many of them non-cash, while forcing an epic cash flow in their favor from loan runoffs and stimulus actions received.

The balance sheet of all US sectors other than government are improving dramatically and nothing can stop that process from completing itself and having its natural effect.

Final demand hasn't dropped at all yet, in nominal terms. In 6-9 months when all the balance sheet repair has happened and the stimulus fuel remains lying around, it will pop upward.

And it will be real. Not a mere currency adjustment.

Until everyone gets the inflationary brainstorm out of their system, they will continue to be ground to atoms. Lots of money will be made in corporate loans and in equities, none of it by betting that the dollar goes to zero.

The Fed held M1 *constant* for 3 straight years, spring 2005 to spring 2008. Currencies willing to do that, and take this kind of epic asset-smash pain, do *not* go to zero, they are *not* soft currencies.