Stagflation Versus Hyperinflation: for those predicting hyperinflation, my question would be: what is it about the United States now that looks different to you from Japan in say, 2000? Big budget deficits and high debt? Check. Huge expansion in the monetary base? Check. And yet Japan’s GDP deflator has fallen 9 percent since 2000.
I would add:
- The people putting their money on the line in financial markets are really, really, really not expecting any inflation.
- The inflation bugs have been expecting an imminent rise in inflation within the yert for two and a half years now--since the fall of 2007; thus there is something wrong with their analysis.
- If there were signs of inflation we would be in a much healthier situation--because people would then be trying to buy real assets rather than Treasury bonds with their money, and that would push demand up and unemployment down.
Barring a complete turnover of the Federal Reserve Open Market Committee, I see no way in which there can be even a moderate outburst of inflation here in the United States until the government budget situation becomes truly dire--but that is not projected to happen until the 2020s (and, if health care reform passes and we continue down the road it puts us on, may not happen at all).