[quote=Rich Toscano quoting John Hussman]In any event, unemployment emphatically does not prevent the inflationary consequences of reckless creation of government liabilities.”[/quote]
If I read Hussman’s view correctly, he’s only saying that if the govt wants, it can always create inflation. (Which is pretty much Bernanke’s view as well) So, that begs the question, is it your view that the govt will print enough money to cause inflation? (And I guess what measure will we use is another issue.)
While I could easily be wrong, I suspect they won’t print enough to cause significant inflation for three reasons.
1) While they are doing all they can to reinflate the various bubbles, they will stop (and put on brakes if necessary) as soon as the bubbles appear to be reinflated. (This is because although they don’t admit it, I bet they are scared of bubbles getting out of hand after the last couple of years)
2) To cause inflation they have to print enough money to compensate for all the lost money due to defaulting loans, and then some more.
3) Like most experts, the fed overestimates their abilities and powers. We see that today as they talk of how the recovery is progressing and there won’t be a double dip. Thus they are currently coming off the money printing throttle. If they are wrong, that’s all the more money they will have to print just to fight deflation.
I will grant you however, that if they get particularly out of hand they could create inflation. I just don’t think that they’ll get that out of hand.
