True, but it would still be a stretch for real asset prices to fall, while commodities rise. If you're arguing for a collapse of the dollar, then real estate, automobiles and equipment, even labor--must go up in price. And that's simply not what's happening in the economy.
#100 | POSTED BY RIGHTISRIGHT
The money supply is not the only factor that affects prices. Human psychology affects perceived value. It is for those reasons why we will have both debt collapse AND dollar collapse. The trend is inexorable, but it can't be timed or quantified beyond the observation that this county and the world economy is in the final years of a hundred year inflation cycle.
Remember, fiat currencies have no tangible value. They are dependent on a common trust that they can be exchanged for real goods. Even with common trust, they are a poor store of value - a dollar today will not buy what a dollar could buy ten years ago. Inflation has had the long term effect of discouraging savings and encouraging debt. That's why we live in a debt based economy ~ $60 Trillion. Debt collapse explains the deflationary side.
The last stage in an inflationary cycle is when a contagion takes hold, when common trust disintegrates and there is a mass exodus to exchange dollars for real goods. This is what happened to the Weimer Republic. Germans who lived through it say the hyperinflation came suddenly without warning. With the debt this country is carrying, I don't think it will take much inflation to wipe out the dollar. The more Obama and maybe his successor try to bail out the economy by monetizing debt, the sooner foreigners will refuse to accept dollars for real goods. That explains the inflation side.
In sum, deflation has domestic roots; inflation has international roots. Real wages will continue to deteriorate like they have for the past forty years. There is no chance of a recovery until the debt is extinguished, the dollar is tied to real assets and Americans become net savers - when savings exceed debt.
