The only way we can possibly get a strong bout of inflation....

MrEureka · March 1, 2009 4:29AM

The only way we can possibly get a strong bout of inflation is if Obama's plan to revive the economy works.

Otherwise, deflation is almost a certainty.

Agreed?

ebaytrader · March 1, 2009 5:15AM

<< Agreed? >>

Nope.

Danny9995 · March 1, 2009 6:19AM

The problem is that if it doesnt work they will have another $10 trillion plan and then another and then another,and so on until something changes. No matter what, its going to be very inflationary long term. This Obama plan isnt the first stimulus plan to try to get the economy going. We had the $600 tax check stimulus refunds, then we had the $800 billion dollar stimulus/bailout package under Bush. They are just going to keep spending money until something changes.

OnlyGoldIsMoney · March 1, 2009 6:51AM

No. I remember stagflation in the 1970's.

percyb · March 1, 2009 7:03AM

Inflation is coming whether his plan works or not. And when it arrives, you'll be stunned at it's strength. Watch for hyper inflation down the road.... of course the rub is when it will all begin. The stars only know when that will be...but be it will.

Norseman88 · March 1, 2009 8:01AM

<< Inflation is coming whether his plan works or not. And when it arrives, you'll be stunned at it's strength. Watch for hyper inflation down the road.... of course the rub is when it will all begin. The stars only know when that will be...but be it will. >>

Percey speaks the truth, at some point hyperinflation is in the cards just check out the growth of the money supply the past year.
It will probably be gradual but when it hits it will surprise most people how severe it is.
The government has no choice but to try and inflate away the economic crisis especially considering "helicopter Ben Bernanke" is the chairman of the Fed and will do everything in his power to avoid another great depression.
Another point to ponder is during the great depression the United States wasn't saddled with the huge national debt we currently have and contracting the money supply would most assuredly cause a default on the debt along with blowing holes in the budget of nearly every state in the U.S. The only real solution for the United States is to try and print it's way out of the debt which inevitably will result first in inflation and then for a period of time hyperinflation, what follows is open to debate (I suppose a currency devaluation is possible) and I welcome other peoples opinions.

ProofCollection · March 1, 2009 8:14AM

Inflation (in terms of gold) is a function of the supply of dollars available to the world vs. the supply of gold. The supply of gold is increasing at a fairly constant rate, while the supply if dollars is increasing at an astounding rate. A lot of USD may be locked up or frozen at the moment, but it won't stay that way forever. Once those dollars are unleashed, the "free market" will balance it out.

PerryHall · March 1, 2009 8:24AM

<< No. I remember stagflation in the 1970's. >>

Yup. So do I. Inflation + Recession = Stagflation

secondrepublic · March 1, 2009 8:38AM

The government would need to substantially ramp up its printing/borrowing/spending to produce hyperinflation.

But to answer your question, the government could, of course, create hyperinflation without an economic recovery. Was Weimar German or current-day Zimbabwe caused by strong economic growth? Far from it.

cohodk · March 1, 2009 9:46AM

<< Inflation is coming whether his plan works or not. And when it arrives, you'll be stunned at it's strength. Watch for hyper inflation down the road.... of course the rub is when it will all begin. The stars only know when that will be...but be it will. >>

Just changing a word....Deflation is coming whether his plan works or not. And when it arrives, you'll be stunned at it's strength.

roadrunner · March 1, 2009 10:26AM

The only way we can possibly get a strong bout of inflation is if Obama's plan to revive the economy works. Otherwise, deflation is almost a certainty.

No. Strong inflation is already a certainty.

Asset deflation is already occuring and will accelerate with respect to home prices, commerical RE, durable goods, autos, clothes, etc. However asset deflation is not monetary deflation....they are totally different.

The govt has a perfect track record of no deflation since the 1930's. They won't let it happen again. While prices of homes, RE, durable goods fall into 2009, the prices of food, drugs, health care, and other key services will continue to rise. When the prices of the latter, as well as liquor, otc medicines, transportation fares, electricity, fuels, gas, doctor and emerg. room visits, USPS-Fedex-UPS fees, batteries, candles, tissue paper, shampoo, eye glasses, safety supplies, basic tools, etc. all start to crater, then I'll buy into the pure deflationary scenario. Anyone notice price of stamps going up 5%?

roadrunner

CalGold · March 1, 2009 12:58PM

Actually, stagflation may be a sign that the Obama recovery plan worked, since we are in the midst of an economic decline. Economic stagnation implies that the economy is neither declining nor growing, so to achieve stagnation we would have to put a halt to the decline. And that would be a sign that the recovery plan worked at least in part.

CG

theboz11 · March 1, 2009 6:57PM

Until someone puts a Value on the debt, I see no upside. They have yet to get a handle on what the bad mortgages are worth, not a clue, and this was a crisis 6 months ago that needed immediate attention.The original TARP was supposed to go toward that, it didn't and the problem remains.

The term Inflationary Depression is being bantered about.

dbcoin · March 1, 2009 8:39PM

there are 3 ways out of this mess tried and tried again throughout history:

Inflation - we are in this phase

repudiation - next phase (think Chavez)

depopulation - I hope it doesn't get this far

No one ever deflated their way out of debt problems.

ProofCollection · March 1, 2009 11:50PM

<< No one ever deflated their way out of debt problems. >>

Or spent their way out of debt problems...

curly · March 2, 2009 12:18AM

<< The only way we can possibly get a strong bout of inflation is if Obama's plan to revive the economy works.

Otherwise, deflation is almost a certainty.

Agreed? >>

OK brothers, I'm not an economist but this is what I think.

#1 If we can get someone like China to loan us the money then we will see deflation down the road because all our money will go to pay off this massive debt rather than people buying products and services.

#2 If no one will take our debts then we will have to print the money to provide for all this stimulus. In this case I see inflation rolling like a storm across this nation.

This is my take on it anyway.

cohodk · March 2, 2009 12:45AM

The govt has a perfect track record of no deflation since the 1930's

And you think the G can keep the game going?

This problem is much bigger than the printing of money. In the last 18 years the population of the USA has grown from 250 million to 300 million. Do you think we can add another 60 million (25%) increase in the next 18 years? What would be the "quality" of those additional 60 million? Where will the demand for capital come from? The G can print all it wants, but what if nobody wants it?

57loaded · March 2, 2009 1:32AM

as odd or simplistic as this may seem, when the world economy no longer "wants" USD, then the cash bubble will burst.

look out above, or below

gecko109 · March 2, 2009 1:40AM

<< The only way we can possibly get a strong bout of inflation is if Obama's plan to revive the economy works.

Otherwise, deflation is almost a certainty.

Agreed? >>

Here is the problem....most (80% in fact) of all the paper money ever made by this country resides in foreign vaults. It just sits there because for decades, the U.S. dollar was the industry standard. When...NOT IF...but when the holders of all that U.S. paper come to the realization that they need to dump those holdings, you will see inflation of the sort that will blow your mind! It will be a domino effect as nobody will want to be left with a vault full of green toilet paper.

dac076 · March 2, 2009 1:47AM

All the spending is on the gov't side now, and that won't be enough to cause inflation. Consumers are showing very little propensity to spend, and that won't get better until the housing and stock markets improve. That looks like a long way off. Also, when taxes are raised to service the interest on this massive debt, further consumer and business dollars will be diverted from stimulative spending. JMO, but I've been pushed firmly into the deflation camp, or at minimum, very low inflation for years to come.

ProofCollection · March 2, 2009 2:18AM

<< All the spending is on the gov't side now, and that won't be enough to cause inflation. >>

Spending doesn't cause inflation. Printing money causes inflation.

PerryHall · March 2, 2009 4:19AM

<< 

<< All the spending is on the gov't side now, and that won't be enough to cause inflation. >>

Spending doesn't cause inflation. Printing money causes inflation. >>

Doesn't the government have to print money so they have it to spend? It's not like tax revenues will be sufficient to pay for all the planned government spending.

streeter · March 2, 2009 4:33AM

There are two conventional ways out of this mess. Assuming of course that the consumer is not going to lead the charge and we go through a lean period for the next 10 years based mostly on the fact that the baby boomers are aging and less likely to NEED things.

1. TAX to pay for things. AKA-stick it to the rich. Solution, hide your wealth
2. inflate to pay for things. AKA- bleed the savers dry year by year and make the poor unable to feed themselves thereby inciting civil unrest. Solution, buy gold if you are a saver and pray if you are poor.

The unconventional way is to devalue the dollar which may be a needed method that is not politically practical to do now but which is likely to be a favored solution down the road. Solution, buy gold

Econ 101
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We have met the enemy and he is US. sincerely, POGO

bluelobster · March 2, 2009 5:26AM

Anyone who says HYPER inlation is coming, Is way off base IMO, Of course I realize the this board is coming from a distinct point of view in general

We could have inflation at some point and I hope we do, because that would be better than spiraling deflation. but that is down the road, not now or near term

Curly, in essence you have simplified the argument and your point is quite valid

And my usual inflation/deflation point is: for all of you calling for run away inflation, what currency will the dollar plummet against, to cause this rampant inflation?

Walmann · March 2, 2009 5:54AM

The money supply is increasing while GDP is decreasing.

What is keeping inflation in check at present is that velocity has slowed.

People are currently saving money as much as possible.

At some point the velocity will increase and inflation will result.

ProofCollection · March 2, 2009 6:13AM

<< And my usual inflation/deflation point is: for all of you calling for run away inflation, what currency will the dollar plummet against, to cause this rampant inflation? >>

Gold, and other fixed assets.

dbcoin · March 2, 2009 8:36AM

There are more than 2 ways out of this mess

You mentioned taxing and inflating.

There is also repudiation of debts and depopulation of undesirables. All of these methods have been tried and tried again throughout history.

ProofCollection · March 2, 2009 8:42AM

Technically, inflating is taxing. In fact, inflation is the closest we'll probably ever come to a "flat tax."

DoubleEagle59 · March 3, 2009 1:48AM

<< Anyone who says HYPER inlation is coming, Is way off base IMO, Of course I realize the this board is coming from a distinct point of view in general

We could have inflation at some point and I hope we do, because that would be better than spiraling deflation. but that is down the road, not now or near term

Curly, in essence you have simplified the argument and your point is quite valid

And my usual inflation/deflation point is: for all of you calling for run away inflation, what currency will the dollar plummet against, to cause this rampant inflation? >>

Keep thinking like that and keep your money in US dollars and I'll keep preying for you.

Sorry to be so harsh, but inflation is the 'printing of money' not the increase in prices.

We have massive inflation right now. It WILL show up in prices sooner or later. THAT you can bet on.

streeter · March 3, 2009 3:07AM

There is also repudiation of debts and depopulation of undesirables. All of these methods have been tried and tried again throughout history.

a. repudiation of debts---an interesting idea--until I think of WHAT DEBT? China? No WAY.....US Treasuries--you mean MY US TREASURIES? Over my broke body.

b. Who is undesirable? An illegal criminal? OK with me-boot them.---- AN undocumented alien who is working for below market wage to feed his/her family in another country and contributing to SOCIAL SECURITY with no assurance of ever receiving those benefits? Those undocumented that are replacing the AMERICAN worker that would have been here if that baby would not have been flushed and the flushing paid for with FEDERAL funds? That is a story for a different forum.

RESPECTFULLY YOURS,
chuck- a FORMER UC Berkeley radical that SAW the 60's and 70's and lived them.

The only way we can possibly get a strong bout of inflation....

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