Comments on: Do the Facts Support Impending Inflation? http://www.dailyreckoning.com.au/inflation-impending/2008/10/20/ An independent perspective on the Australian and global investment markets Mon, 22 Mar 2010 08:52:13 +0000 http://wordpress.org/?v=2.8 hourly 1 By: John http://www.dailyreckoning.com.au/inflation-impending/2008/10/20/comment-page-1/#comment-47842 John Mon, 20 Oct 2008 23:41:27 +0000 http://www.dailyreckoning.com.au/?p=4096#comment-47842 You didn't mention what happens when interest rates go up. Once the market catches on to the double-digit inflation, they will demand double-digit interest rates before they lend any money to the government. Let's not also forget that the US has managed to slowly convert its entire national debt from 30-year fixed-rate debt to short term treasury bills, meaning once rates go up the government will suddenly have to pay 15-20% on ten trillion dollars just to maintain the debt level. Do the math and compare that to the $3 trillion budget, and you've clearly got a problem. You didn't mention what happens when interest rates go up.

Once the market catches on to the double-digit inflation, they will demand double-digit interest rates before they lend any money to the government. Let's not also forget that the US has managed to slowly convert its entire national debt from 30-year fixed-rate debt to short term treasury bills, meaning once rates go up the government will suddenly have to pay 15-20% on ten trillion dollars just to maintain the debt level. Do the math and compare that to the $3 trillion budget, and you've clearly got a problem.

]]> By: Curt http://www.dailyreckoning.com.au/inflation-impending/2008/10/20/comment-page-1/#comment-47747 Curt Mon, 20 Oct 2008 16:29:10 +0000 http://www.dailyreckoning.com.au/?p=4096#comment-47747 I agree with your aguments. I think deflation is temperary as assets are liquidated, like cars and houses. But, make no mistake about it, inflation will return with a vengence within a year or two. So, now is the time to prepare for it. I agree with your aguments. I think deflation is temperary as assets are liquidated, like cars and houses. But, make no mistake about it, inflation will return with a vengence within a year or two. So, now is the time to prepare for it.

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