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Inflation is basically necessary at this point in order to collapse the various asset bubbles without causing a mass default spiral on the debt issued to financ
by ThrustVectoring 7y ago
Inflation is basically necessary at this point in order to collapse the various asset bubbles without causing a mass default spiral on the debt issued to finance it. The housing crisis is a good portion of this; we cannot build our way out of housing without putting homeowners underwater on their mortgages en masse, and young people cannot tolerate the current trends of housing prices near areas of economic opportunity indefinitely. The only way out of this double-bind is to inflate away homeowner's mortgage debt as we make more available housing to prevent housing prices from inflating along the general trend.
- dpc_pw 7y agoAgreed. But ... can there be A Beautiful Deleveraging https://www.youtube.com/watch?v=wI0bUuQJN3s https://www.youtube.com/watch?v=wI0bUuQJN3s ? I don't think so. It is all a dynamic system. I think there will be no inflation for a while, and when it appears it will be massive and almost uncontrollable. It is hard to "trade" on it, because I could imagine even a decade of politicians and CBs struggling with a deflation, until they winds change, and all their efforts finally start "paying of" and we have a period of a very high inflation. Or alternatively ... a severe stagflation for a decade or two, where it is hard to pay mortgage (afford a new one) despite prices generally falling - because eating comes before investing.