http://www.creditwritedowns.com/2009/05/us-inflation-where-and-when.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 http://www.creditwritedowns.com/2009/05/us-inflation-where-and-when.html#comment-56332 Vangel Sat, 02 May 2009 01:34:00 +0000 http://www.creditwritedowns.com/?p=8355#comment-56332 I wish the deflationists luck because they will need it. While it is true that some assets are overpriced and some goods are oversupplied it is a fact that the supply of money and credit is growing far faster than the supply of real goods that can be purchased. The bottom line is that in a fiat world where governments will do what they must to remain in power there is no incentive to permit deflation. We now have a massive federal deficit at a time when local and state governments are going bankrupt and public pension funds are going under. That means that we will see governments lean on the printing presses to bail out the reckless gamblers and the borrowers because they vote while America's foreign creditors do not. I wish the deflationists luck because they will need it. While it is true that some assets are overpriced and some goods are oversupplied it is a fact that the supply of money and credit is growing far faster than the supply of real goods that can be purchased. The bottom line is that in a fiat world where governments will do what they must to remain in power there is no incentive to permit deflation. We now have a massive federal deficit at a time when local and state governments are going bankrupt and public pension funds are going under. That means that we will see governments lean on the printing presses to bail out the reckless gamblers and the borrowers because they vote while America’s foreign creditors do not.

]]>