I first began to fear hyperinflation in my post “Obama and Inflation in Zimbawe“, on February 6, 2009, after learning of the absurd $1.4 trillion budget deficit. These days, however, there are many economists and investment advisers warning of deflation. The current pullback in the stock market seems to vindicate their position, though the current price of gold and Wallmart’s decision to increase its prices would not. Meanwhile, my friend Keith is asking when is the inflation going to happen in earnest. I don’t know when, but I am going to hazard a guess about when inflation is going to make its presence known.
Today in the American Thinker Anthony Kang points out a video from Opinion Journal, in which Jason Trennert says that the US government could be the next Bear Stearns because over 60% debt of the USA is due within one to three years. What happens if the creditors decide not to rollover their treasury notes? The Federal Reserve will have no choice but to monetize and that will likely put more of the debt back into circulation which will require printing more money (with real printing presses this time). Will creditors continue to rollover their debt? If so, then inflation may not hit in earnest until these creditors choose stop funding the US deficit.