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Good discussion....
If hyperinflation doesnt happen, then deflation will.
However, deflation can be prevented but only through hyperinflation. Governments have been doing that for centuries. They spend, accumulate debt and run large deficits and ultimately they keep printing money (to prevent deflation) until its value collapses. It's happened over and over again.
What you have to realize is that if deflation occurs here, it will put the economy in a 5-10 year depression- that will take massive reflation to get out of. The debt and deficits are too high for deflation to occur. The Fed and everyone else is scared of deflation.
BlueWire is right- deflation occurs after inflation or hyperinflation. Good deflation will occur after this hyperinflation though.
Whoever posted about reflation was exactly right- however, the Fed is getting ready to reflate everything again. Also, if you look at around the world, governments are debasing their own currencies in order to keep up or down I should say, with the dollars debasement in order to protect their balance of trade.
The Fed people are not inflation busters. The Fed creates inflation along w/government. Inflation is the creation of more money...the effect is rising prices. The government and the Fed have altered the CPI so many times to deceive the public. Not to mention the Fed doing away with reporting M3 (the money supply gauge) as its getting ready to skyrocket. Not to mention the tens of trillions of unfunded liabilities. We can only pay for them by printing the money.
One thing I want to note is that gold stocks have actually done well in deflationary periods.
Anyway, fundamentals as well as technical analysis is signaling hyperinflation. The reflation that is about to occur will go into everything...stocks, real estate, commodities. Hyperinflation is a few years off at least but its good to build your ark now. Focus on the metals and other commodities.
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