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News Link • Economy - Economics USA

Our prosperity is owed back plus interest

So yes, Mike Maloney, just like us here at The Automatic Earth, predicts deflation followed by hyperinflation. Only, as far as I can see, he has more emphasis on the hyperinflationary period than on the deflationary period that will -of necessity, as we both realize- precede it. We do not. Here's thinking that difference has a lot to do with him talking that book, which, after all, is gold and silver. As for us, we think that the coming (debt-) deflation will devastate our economies to such an extent that when hyperinflation arrives, it will feel silly, if not worse, to ever have focused on it -contradictory as that may sound-. In short, we see a world far more drastically altered down the road than Maloney seems to do. Still, he has a lot of good points to offer: Mike Maloney: "It could be that the foreclosures that we've already seen, and the crash of 2008, was the deflation, but I don't think so, because there hasn't been enough of the excesses cleared out of the system. We're in this long term cycle, and there has to be what's called a credit revulsion, where people just WILL not take on any more credit. And to get to that point, they all have to get burned. More people have to lose their houses, more people have to lose their margin trading accounts, we need something that happens that will cause these excesses to be flushed out of the system." Ilargi: Maloney then goes on to state that you can’t have markets overvalued for a long time, "with P/E ratios in the stratosphere forever".

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