This is truly a unique time in American history when it comes to the economy.
We most definitely have deflation in the housing market and the credit crunch, full blown, would most certainly cause a deflationary collapse, if unchecked (or maybe un-engineered is a better term). So, there are signs that look reminiscent of the 1930's depression.
On the other hand, look at the prices of groceries, oil and the price of commodities? Looks like the Jimmy Carter/ 1970s inflation.
Where are we headed? I have to believe it will be as follows: inflation, hyperinflation and then deflation.
We have the inflation now (with certain asset deflation due to over-speculation that occurs in a fiat and/or inflationary monetary system). So, basically, we can say that housing went thru the cycle of inflation, hyperinflation (bubble, in this case) and deflation before the rest of the economy. That happens.
However, this overall inflation will jump to hyperinflation, in my opinion, because the Federal Reserve is a monetary engineering machine. It would be different if our currency was tied to an asset and we could not print our way out of a problem. Today, if the temptation to print more of an ever increasing worthless currency is strong because it solves temporary economic collapse, they will do this. They will print and print and print until we have Weimar Republic or Argentina style hyperinflation.
They will print until they cannot print anymore- undoubtedly followed by an introduction to a new currency (Amero?).
Strange Days Indeed.
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