Deflation drivers: - an shrinking economy with weak consumer demand - falling asset prices, leading to debt defaults, and a contraction in the money supply
Inflation Drivers: - the fed importing new high tech TURBO printing presses to print more USD... the way to save the American debtors is to cause high inflation- which will lead to asset inflation. - a falling USD leading to higher import prices.
Which will win out??
The most likely scenario is a slight uptick in inflation, followed by deflation.
I think the forces of asset prices falling is all too powerful for the fed to handle- Japan couldn't handle it.
Deflation will wreck havock on the US economy- the deflation debt trap is the most powerful force in economics.
The more leveraged a economy, the more potent the force.
The falling USD is likely to mean that America will slowly export their deflation globally... if this occurs, we're all fuc*ed!
