Is deflation a worse threat than inflation?

[AztecWilliam]

We hear many warnings these days about the threat of inflation. How will we ever be able to pay off the absolutely enormous debt being run up by the Obama administration (much, much greater than the Bush era national debt)? Will we not have to print more and more money in order to pay off our Chinese pay-masters? Will that not bring on runaway inflation?

Here is one writer who thinks deflation is a worse threat. That's Paul Krugman's bugaboo as well. Could we not have deflation now and inflation later? This author virtually ignores the long-term effects of the debt, so I don't know where he stands on that question.

One reader comment following the article is worth noting . . .

tomperanteau at 8:21 AM July 17, 2010

Bottom line is that, with all that the government thinks it can do to control the economy, there is no one that understand the metrics enough to be able to do it.

www.latimes.com/business/la-fi-petruno-20100717,0,3298652,full.column

AzWm

[aztecwin]

Jul 17, 2010 9:32:24 GMT -8 AztecWilliam said:

We hear many warnings these days about the threat of inflation. How will we ever be able to pay off the absolutely enormous debt being run up by the Obama administration (much, much greater than the Bush era national debt)? Will we not have to print more and more money in order to pay off our Chinese pay-masters? Will that not bring on runaway inflation?

Here is one writer who thinks deflation is a worse threat. That's Paul Krugman's bugaboo as well. Could we not have deflation now and inflation later? This author virtually ignores the long-term effects of the debt, so I don't know where he stands on that question.

One reader comment following the article is worth noting . . .

tomperanteau at 8:21 AM July 17, 2010

Bottom line is that, with all that the government thinks it can do to control the economy, there is no one that understand the metrics enough to be able to do it.

www.latimes.com/business/la-fi-petruno-20100717,0,3298652,full.column

AzWm

That comment by the reader is one of the themes that I use repeatedly. You can not possibly know all the elements of an equation or complex problem like the economy or the environment. This is why changes to those complex systems should be done piecemeal with ample time to observe the results.

You should pretty much ignore Krugman on our current economic pickle since he advocates Keynesian methods that have never worked.

[The Great Aztec Joe]

Deflation is a definite possibility. A lot depends upon the global Economy, and after the coming American collapse into 30 percent unemployment, the world may follow. Imagine that! 30% unemployment and Deflation at the same time. Oh well, if you have your dollars stuffed in the family mattress, you might weather the next two years.