Short lived deflation, followed by hyper-inflation!!!

One Man's Economic Muse

Hyper-inflation is coming. Soon, you'll be paying ten dollars for a Mc Donald's happy meal. Not only because it’s an unavoidable by-product of all of the “money” created by the American and other Western governments to solve the “Credit Crisis,” but also because it (by happy coincidence) “solves” the otherwise-insoluble problem of at least America’s (and probably a lot of other countries’ as well) mind-boggling national debt. To coin a quotation from old detective movies – “You’ve got the motive (the desire to obliterate all of that back-breaking national debt through hyper-inflation) and the means (the ‘cover’ provided by the ‘We had to do it to avoid a global Depression’ alibi)."

At this point we could use an economic historian: Did Germany ’s (1920s) Weimar Republic experience this particular “one-two punch” – that is, a relatively-short-lived deflation that was followed quickly by the hyper-inflation? Indeed, it would be worth finding out if this “one-two punch” syndrome was in fact something of a standard “scenario” – that is, that most instances of hyper-inflation were in fact preceded by initial but short-lived bouts of deflation? For all I know it may be the standard “scenario” – or at least a frequently-occurring one. It would also be worth finding out exactly what the “scenario” was in all of the other well-known instances of hyper-inflation (such as Argentina and Brazil etc).

Ironically, the guy who is something of an “expert” on this particular subject is none other than our Federal Reserve Chairman, Ben Bernanke! Maybe we should put in a call to Ben and hear what he thinks.