JohnAl

Evidence That Big Inflation Is Coming

Excellent article and commentary!

I'm starting to feel comfortable in the "(general price) inflation will return later rather than sooner" camp. I don't see how "big" inflation can return until "big" borrowing does. Desire to borrow is the main missing ingredient in the credit bubble reflation formula. Desire to lend is missing right now too, but I'm guessing that banks will get cleaned up and will be ready to lend again before people and businesses are ready to borrow big again.

Many individuals with big debt got crushed last fall and others had the crap scared out of them. And most everybody is looking over their shoulder and hoping the boss doesn't show up with a pink slip. People are doing the right thing now, the rational thing - saving - and aren't likely to want to get in over their heads borrowing again any time soon, if ever.

And what business is interested in borrowing for expansion right now, with unemployment rising and the general economy looking like it's on life support?

Yes Bernanke and the gubmint are doing everything they can to reflate the credit bubble, and we can all see the enormous base money increase, but it can't do much harm just sitting there in the banks.

It's like Bernanke is furiously trying to light a bonfire but the wood is soaking wet. It's gotta dry out. It's gonna take a while to light.