inflation isn’t the concern, deflation is the concern.
Look first of all economics isn’t a machine science, it’s really the prediction of
human behaviour. It’s applied behavioural pschology. So what matters is
what people will do, not, just what you think.
But say foreigners lose confidence in the dollar, they will demand higher
interest rates. higher interest rates will drive up mortgage rates.
Higher mortgage rates will crush house prices and sales.
now say Obama and Bernanke start printing money like crazy, will
the banks be lending long? hell no. They’ll lend short, or demand
more rate.
