hey albert,

just to clarify i assume by "inflation" you mean rising prices, weaker currency, less purchasing power, erosion of savings.....that type of stuff.

while debt monetization can cause that in weimar-style hyperinflation, i think the greater concern is in debt monetization causing a run on the dollar. meaning when other countries see debt monetization that makes them less likely to buy dollar denominated assets (which in turn creates a greater need for debt monetization) and also could lead to quick dollar sell off. this is what happened in argentina in 2001. here is an article i wrote for my trading site comparing the current scenario in the US with argentina in 2001. (and on the broader topic of inflation vs deflation, here is a video i made on the subject).

the US govt is now like a leveraged hedge fund; they are borrowing money for their "stimulus" packages. if these stimulus packages jumpstart the economy and increase tax revenue (thus decreasing the need for deficit spending), then they worked. if you or fred were the ones making the investment decisions for the stimulus packages, i'd feel much more comfortable in the value of the dollar and the ability of the US govt to finance itself. somehow i think obama is more interested in helping his cronies than in helping me, you, or 99% of american taxpayers get a fair and strong economy going again.

also, i dont think the world can continue to buy treasuries for much longer, which in turn will fuel further debt monetization. debt monetization is a sign of desperate economy and there are already grumblings out of china, russia, and south american countries that they are concerned about the dollar's value due to the fed's debt monetization.

america is an empire, and empires end when they lose the ability to finance themselves. historically, empires do not simply come to their senses, step back slowly, and apologize for the trouble they caused. instead, they typically self-destruct violently under their own hubris. judging by the folks who make the decisions and the willful ignorance of the american people, and that military spending continues to increase when it is obvious that this military spending is driven not by moral righteousness but by deception and hubris, it seems to me that history is on the verge of repeating itself.

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