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.”
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