Wednesday, November 13, 2013

Mike Maloney: Expect First Real Deflation, Then Hyperinflation

In this video, Mike Maloney is being asked where he sees the economy going in terms of inflation vs deflation. To answer that question, he refers to the book he wrote about a decade ago, in which he wrote the following:
“First the threat of deflation, followed by a helicopter drop, followed by big inflation, followed by real deflation, and then followed by hyperinflation.”
Why does Maloney think so? Because the gigantic expansion of base money (which is the monetary base as created by the US Fed and visible on its balance sheet) is being offset by a collapse of the other monetary aggregates, a trend started in 2008.
Furthermore, the deflation could be much, much worse than the ones the world experienced in the 30ies. Why? Because of the scale of the ongoing emergency measures. This scale is not clear to most people. These are truly emergency measures … for 4 years in a row. For the Chairman Mr. Bernanke coming out not willing to taper is an admission that the whole system is ready to crash again and that there is no recovery.
“This type of monetary measures cannot come without economic consequence.”

No comments:

Post a Comment