Basically, I think we are approaching the climax of a very long wave of increasing government interference in the economy. This is the first time in history that there is no sound money in circulation anywhere. It has been only 33 years since the last link to gold was severed by Nixon (whether he had a choice is a different discussion), and in that time we have seen tremendous changes in the world economy, none of them favorable to long-term economic sustainability.
As the Austrian school of economics teaches, there is no such thing as a “soft landing” from a great inflation. There are only two outcomes of such an inflation:
1. The government stops printing money. In this case, all the overleveraged debtors go under, and you get something like the Great Depression. However, it would be much worse now because the average person is in much worse economic shape than the average person in the 1930’s. Similarly with the government itself, which is a gigantic debtor, again in much worse shape than the 1930’s.
2. The government doesn’t stop printing money, but tries to print enough to “keep up with demand”. This results in the total destruction of the currency. This is much worse in the short run than the first possibility, as it destroys the division of labor. With no money, no one can pay anyone else to work. However, in the long run, the survivors will probably be better off than with the first possibility, as the government will also collapse, freeing them from that overwhelming burden.
Which of these will happen? I expect that the government will do anything in its power to avoid the deflationary depression, and in so doing will trigger the hyperinflation. But I could be wrong, which is why I won’t overleverage myself with debt that would be wiped out in a hyperinflation.
I’ll be happy to answer any questions you may have.
