As Voltaire said, “Paper money eventually returns to its intrinsic value -- zero”. The US seems to have very predictably chosen to try to inflate its way out of all the debt it has taken on. That means massive deficits and low short-term interest rates as far as the eye can see, with the dollar’s value an afterthought. So the process will continue as long as the global financial system is willing to accept dollars and dollar-denominated debt.
But once investors and central banks realize they’re being scammed and demand a much higher rate for US Treasury bonds, we’ll enter the final stage of the process, in which the Fed buys ALL the bonds issued by Treasury directly. Or perhaps we’ll simply print the money the government spends, with no borrowing needed. At that point, no sane person will want to hold dollars and we’ll see a wholesale flight out of the currency and into pretty much any real asset. We’ll define this as inflation but it will really be the total loss of confidence in the currency.
The process might not be linear though. It’s easy to see interest rates spiking in response to rising inflation, which would have a horrendous impact on the interest costs of consumers with adjustable rate mortgages and credit cards, and governments like the US that have to roll over a lot of short-term debt. This could cause the financial markets to freeze up, sending us back into a 2008-style financial crash. So for a while it might appear that deflation is winning out after all.
The world’s central banks would of course respond to another financial crisis with even more printing. And since their ability to create new currency is infinite, they’ll just pick a number deemed to be big enough to do the trick, click “send”, and the banks or consumers or whoever will find themselves with nice liquid accounts once again. And the currency debasement game will go on until its inevitable conclusion.
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