[quote=moneymaker]Inflation is definitely government caused. Historically it has been by printing too much paper. Now the government has taken a new course, instead of printing money they are borrowing from themselves, i.e. the credit card method. As everyone knows, with a credit card it can only end 1 of 2 ways. Either you end up paying more in the end (which will cause inflation) or you go bankrupt (deflation). Which do you think it will be for our government?[/quote]
Doesn’t matter if the government borrows or prints. Whether you use your credit card to buy something or cash it spends the same and causes the same demand. Now if you use credit you pulled forward that demand and will pay a price something in the future if you intend to pay the debt off but our government doesn’t intend to pay the debt off because they can’t. Increasing the demand side of the equation while waiting for the supply side of the equation to catch up is always going to cause an initial inflationary effect.
Bottom line whether the government prints and spends or borrows and spends it causes the same initial inflationary effect. Now if the government does pay that debt back or defaults it will cause an deflationary effect but it they just print and pay off the debt it won’t. If they do print and pay off debt it could cause a hyper inflationary event. I.e. a loss a faith in the currency, but it shouldn’t create a major inflationary event since the money has already been spent as credit.
My expectation it it’s likely we’ll see see deflationary pressures for a long time (a la Japan) and/or a shorter deflationary depression that might result in a hyper inflationary event. Depends on what the government tries to do to prevent the deflationary cycle from playing out.