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An in Depth Look at the Inflation vs Deflation Debate

Whether it is the deflationists or the inflationists who end up being right, one thing they all seem to agree on is that Federal Reserve’s policies will ultimately fail.

Economy and Finance

An in Depth Look at the Inflation vs Deflation Debate

The following is an excerpt from the November 2010 issue of the Schaef Report. You can view the full report online at the Schaef Report web site.

Even the deflationists admit that the Fed can create hyperinflation if they successfully monetize all debts that could possibly default (both public and private), but they simply don’t think the Fed will be successful in doing that. The inflationists think they will be successful in doing it. I see flaws in both these arguments. 1. The deflationists believe that a banking cartel that has been controlling money and credit for the past 97 years will all of a sudden no longer be able to control money and credit any longer, and 2. the inflationists actually believe that the Fed will succeed in doing something they set out to do. After all, even if their policies result in hyperinflation the Fed will see that as a much more positive thing than any kind of deflation because everyone’s 401ks and homeprices will go back up (not to mention eventual increases in income will help Americans pay off their excessive debts). Of course I have my own beliefs about what will happen, but what do I know? It all seems to hinge on whether the Fed stays in control and how aggressive they end up getting with their policies. That part of American history is yet to be written.

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