Tuesday, March 17, 2009

hyperinflation in the US


Yes, we CAN avoid hyperinflation, despite flooding the US economy with liquidity.

what we can't do is avoid hyperinflation and keep interest rates down. Low interest rates stimulate the economy.

Mihov believes we'll raise interest rates and shut down lending facilities. That would be the rational choice. Unfortunately, we just passed the EAWA; a Canadian was turned back at the border for trying to buy American goods to bring to Canadian stores because a border policeman thought he was "stealing American jobs"... and the border policeman has not been disciplined; we have a "Buy American" proposal for steel in the stimulus; and a number of cities and states are looking at imposing price controls on things from rent to oil to milk.

So assuming the US government will act rationally in an economic sense by suppressing growth at the end of a recession/depression may be pushing it.

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