WITH THE CURRENT DEFLATION AND THE LOW VELOCITY OF MONEY...
IT IS LIKELY THAT MASSIVE AMOUNTS OF MONEY WILL BE "PRINTED" TO REVERSE THE SUPPOSED DEFLATION...
BUT DOES THE LOW VELOCITY OF MONEY...THEN RESULT IN SUCH MASSIVE AMOUNTS OF MONEY BEING "ALLOWED" ... THAT A HYPER-INFLATION CAN KICK IN ALL AT ONCE...?
CLEARLY, THE HYPER-INFLATIONS IN THE PAST HAVE OCCURRED UNDER CIRCUMSTANCES SIMILAR TO THE PRESENT...EVERYTHING "SEEMED LOGICAL" UNTIL IT WASN'T...
MY SENSE IS THAT THE LOW VELOCITY OF MONEY IN EFFECT "ENABLES" THE PRINTING OF MONEY... WHICH THEN...SOMEHOW CAUSES A DEFACTO CURRENCY DEVALUATION TO OCCUR...
THAT MONEY DEVALUATION THEN CAUSES THE HYPER-INFLATION.
IN OTHER WORDS...IT'S NOT MONEY CHASING GOODS...THAT "CAUSES" THE (HYPER)INFLATION...
BUT...RATHER
IT'S THE MONEY PILING UP IN AMOUNTS SO HUGE...THAT THE MONEY'S VALUE IS REDUCED...
IN OTHER WORDS...MONEY CHASES MONEY DOWNWARD BECAUSE OF A MONEY GLUT...NOT BECAUSE MONEY IS "CHASING" GOODS...!!
GOODS THEN "AUTOMATICALLY" ADJUST TO THE NEWLY DEVALUED CURRENCY...
WE MAY HAVE SEEN THIS HAPPENING THIS SUMMER WITH OIL, GAS AND GOLD PRICES... NAMELY INFLATION AS A MONEY PHENOMENON...NOT A DEMAND PHENOMENON...
I HAVE A HUNCH THAT THE $4 GAS OF THIS SUMMER IS WHERE WE SHOULD BE LOOKING FOR THE CAUSES OF THE CRISIS IN SEPTEMBER...
THE CONNECTION BETWEEN THE $4 GAS...AND THE CREDIT COLLAPSE HAS NOT BEEN FULLY MAKE...OR APPRECIATED...
SO FINALLY, YOU CAN GET INFLATION AND HYPERINFLATION...WITHOUT DEMAND EVER PICKING UP!!
IT'S STRICTLY A MONETARY POLICY PHENOMENON...!! SO WHY PRINT MONEY TO "CURE" A RECESSION...
THE GOVERNMENT NEEDS TO DO MORE THAN PRINT MONEY...IT NEEDS TO ACTUALLY SPEND IT...TO PRIME THE VELOCITY PUMP...
SO THE FED PRINTING PRESS ALONE MAY NOT WORK...AND IT COULD CAUSE A DEVALUATION TO OCCUR WITHOUT DEMAND PICKING UP...
BUT DOES THE PRINTING OF MONEY WORK AGAINST THE FISCAL STIMULUS TO THE POINT WHERE THEY CANCEL EACH OTHER OUT...? DO YOU DEVALUE AS FAST AS YOU STIMULATE...UNDER NORMAL KEYNESIAN MARCO RULES...?
JUST A FEW THOUGHTS ON THIS VERY TOXIC SITUATION...
