| #4 Inflation is of two types, consumables and assets. The bubbles we have seen were the result of asset inflation. The overextension of credit against these assets and the subsequent collapse of confidence in their value led to the credit crisis we are now enduring. To solve the problem, the Feds will pump money into the system, $1trillion so far, in an effort to reflate the asset values so that the assets value covers the amount lent. The result will be inflation in consumables as well, particularly as the low cost labor of China disappears in political disruption. Everyone will be screwed before this is over. |
