"Monetary inflation is currently mitigating the price declines we are witnessing, meaning those prices that are declining would have declined much more were it not for the inflation ...." Indeed I posted the same argument on this site about 6 months ago. At the time I was toying with the ideal we should be talking about the the momentum of money rather than its velocy .

The M's are in my view just derived indicators that may be input as one variable along with others in economic formula. Allan Greenspan correctly implyies that the Ms are nebulus and imperfect. The usefulness of any (performance) indicator depends on their use AND the validity of the overarching analysis. Mr Greenspan is pointing to REALITY that in the current circumstances, the M' measures, by themselves should NOT by themselves be used as depictions of economic momentum.

Will a debasement of the US currency will also debase the US economy to the same degree? The previous view was that all the debts could be inflated away, household income and asset prices (in debtor countries) would fall to sustainable levels and all would be well. What the pundits did not count on (and what Greenspan may be alluding to) is the severe impact of a dollar debasement on creditor countries and commodity prices AND the ripple back effect this will have on the US and Australia.

At the moment I'm not that bullish about anything. I'm just hedging my super (in cash option) against some energy and gold speculatives with no assurance that such a hedge will work.

Cheers

If only.
When people buy and sell money, debt, etc... I see it as yet another ponzi scheme. Compund interest is another ponzi scheme.