My understanding is that the Great Depression was studied and the conclusion was that when deflation occurs or financial collapse is imminent it is critical that the government flood the system with money essentially canceling the deflationary signal with an inflationary one.
This time round the government is trying it. I believe it is the first time. We will see if it works. I believe that the fed can end inflation easily by driving us into recession. They can do that by driving interest rates up to double digits. Ending deflation is a different matter. So if the current crises eases I would expect the fed to tighten as quickly as they can to prevent inflation. They will stop not only their stimulus but pull back all over as the budget needs balancing as well. That means that we will need "austerity measures" if this thing works. But that is healthy. Since Obama was elected and he seems to have picked competent managers we at least have a shot at it. Still no one has ever done this before in practice. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""Minds Eye"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/Minds-Eye?hl=en -~----------~----~----~----~------~----~------~--~---
