[quote=Nor-LA-SD-guy]OK I just don’t see inflation happening,
Really have you guy’s thought this through,
You need near full employment to have inflation I would think, and we really can be self sufficient in the U.S.A believe it or not, it may take five years but we have the ability to do it (the point is they need us a lot more than we need them who ever they are).
Deflation I think is still the rule of the day, maybe in five years we can talk about inflation again but the world will be a different place in five years so it is almost pointless to speculate.
If the China bubble does burst commodities will bust too, I think that will go a long way toward easing inflation as well but I am not a big believer that china bubble will burst anytime in the next few years either.[/quote]
You confuse price inflation with monitary inflation. I am sure there are a thousand threads on piggington playing with this, and a billion or two on the WWW, so I am not really gonna go into it. But the Fed can ‘print money’ and buy US bonds, allowing the government to repay our foreign creditors. That is monitary inflation, and isnt guarenteed to do anything to our prices here in the USA. As long as that money stays off shore, and people are willing to accept it, it wont hurt us too bad. Please see the ‘print and deny’ comment.
And you dont need to have full employment to have price inflation as you talked about.
[quote]Both the civilian unemployment rate and the rate of change in consumer prices deteriorated in the second half of the decade. Between 1970-74, the average annual unemployment rate was 5.4 percent, while the average annual change in the Consumer Price Index (CPI) was 6.6 percent. From 1974-79, the figures edged up to 7.9 percent for unemployment and 8.1 percent for the CPI. [/quote]
And while I agree that the world will be a very different place in 5 years, we do need to worry about it because the AVERAGE length of treasury debt right now is something like 4 years. You live in a very narrow world if you think 4-5 years is a long ways off.
