Up until the past week I was torn between the probability of the US economy heading into deflation or heading into significant inflation. Experts such as Harry Dent in his recent new book “The Great Crash Ahead” gave a sound argument for deflation in the coming decade. However, with all due respect to Harry, I don’t think he considered that the scale of perpetual “quantitative easing” (aka printing hundreds of billions of dollars out of nothing) – to not only prop up our own US banks, but to prop up banks around the world -would reach the level it has.
The Euro’s crash appeared imminent to many, perhaps within days. With the interconnectedness of international banking, the risk of the failure of the Euro has the additional risk of crashing banks not only throughout Europe, but in the US as well. Earlier this week the US Fed took the unprecedented action of providing US dollars in exchange for risky Euro’s to avert Euro Armageddon and the likely follow-on world banking Armageddon. More details of this move by the Fed and other banking systems are given HERE.
This action is seen by some experts as the Fed embarking on “perpetual quantitative easing.” Never mind QE 3 or QE 4. We now have QE infinity.
This puts a whole new twist on Dent’s predictions. The clearer direction at this point is significant inflation.
The following are several resources I have reviewed to come to these revised conclusions:
This last book explains why a government in debt up to its eyeballs prefers wealth-stealing inflation over deflation: