[left:29cq1p9z]Actually, I don’t think that we’ll have a deflationary collapse. We’ll have deflation in the short-term when markets crash and derivative contracts have to be settled at their true market value, but long-term I believe that we’ll have severe inflation.
In the short-term we’ll probably experience the worst of both worlds, meaning devaluing currency and devaluing assets.If you look at what happened in the Weimar Republic, at the very beginning of this crisis in Germany, the top economists were arguing that a deflationary collapse was going to be the outcome of Germany’s economic policies. But eventually hyper-inflation arose.
If you look at the bailouts that Central Banks passed in response to the market crash on Thursday, May 6, you had almost a trillion euros pledged to the EU. I think that central banks have already shown the world that their plan is to devalue all major world currencies into oblivion. You can have a short-term deflationary collapse, but I think eventually a very significant inflation and much higher interest rates are in our future.[/left:29cq1p9z]
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