Quote:
Originally Posted by pwd72s
How can this not result in hyperinflation? More dollars chasing the same amount of goods...
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Actually, with the slowing economy, we have a situation where "more dollars" are chasing "
fewer goods."
The slowing economy has created a (temporary) deflationary pressure situation in certain markets (like the housing market), but the new trillions of dollars will bring about general price inflation throughout the economy.
The price inflation could happen literally "overnight" due to the situation of the trillions of U.S. dollars held internationally. Any significant flight out of dollars will bring about skyrocketing prices for commodities/goods in this country.
You could wake up one morning and find that suddenly the price of gasoline, steel, bread, milk, sugar, etc have doubled or tripled in price.
The government will likely respond to such price spikes (the prices spiking in response to the dollar crashing) with "emergency price controls" which will create instantaneous shortages -- which will likely lead to things like food riots and martial law in many areas of the country.
It is going to get messy. And when it happens, you can thank people like Greenspan, Bernanke, Paulson, etc. -- along with all those people who wanted to live consuming more than they have produced -- for the mess.