Economies typically do not function well in hyperinflation. The real value of government debt might disappear, but the economy is likely to disappear with it.
Sentiment: NEGATIVE
Hyperinflation can take virtually your entire life's savings, without the government having to bother raising the official tax rate at all.
Businesses that have gone through an episode of hyperinflation become understandably alert to the threat of it: at the first hint of inflation, they're likely to increase prices, since they've learned that if they don't, and inflation hits, their businesses will be wrecked.
The Fed has the ability to put money out, it's got the ability to take money back in, and if they don't do that, we will have hyperinflation worse than we had in 1980 and 1981.
I continue to think many of the factors holding down inflation are transitory... We want to be careful not to jump to a premature conclusion about what's in store for the U.S. economy.
Governments can inflate their way out of debt, but that has consequences, doesn't it?
Well, I think the global economy is in the position for continuing good growth with inflation well in check.
The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.
The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.
I have never believed that central banks should have rigid inflation targeting. That is not a good thing to stabilize. There is nothing in economic theory to back this.
We have to keep our eye on inflation, but so far inflation remains reasonably in check on the global stage.
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