RE: Your number 2 is the aesnwr to your question. Sniglet and you argue that monetization won't cause inflation because it would cause too much inflation, so it won't happen. But they are monetizing already. So far the falling asset values are canceling out the newly printed money. If politicians were able to stop the printing as soon as the bottom in asset values are reached, then there wouldn't be inflation. But we all know that Pandora's box has been opened, and there are elections that need to be won.Monetization without inflation would not bother debt holders. As long as they get paid back, and the dollars they are paid back have the expected purchasing power, then they are happy. What is happening is that the purchasing power of home owners and equity holders is evaporating, and for the time being that offsets the inflationary effect of the monetization. Eventually the asset values will hit bottom, and the bank reserves that are left will re-enter the economy as new loans, and that is what will kick off inflation. Then all the pension funds that are underwater will not be able to keep up, and Medicare and SS also, and Obama will kindly solve that problem by bailing everyone out with more printed money even after the neutralizing effect of falling asset values is over. Rate this comment: 0 0

by Rayan 01:19:34 AM 2013.03.14