Blog Why Not?!

What they both agree on
The great deflation inflation debate
Economics, 090914

So, I ended a previous blog entry concluding that I did not not whether to trust the deflationists or the inflationists, thus I wanted to find out what they both seemed to agree on. Okay, so what I have found is that they both believe that there will be fire and brimstone and so forth... besides this I discovered that inflationists, just as the deflationists, believes that there will be deflationary processes at work.

Or put in another way: both inflationists and deflationists believes that there will be deflation in reference to gold. In a recent blog entry I visited the idea of investing in gold and now there is apparently a reason for a revisit to that line of thought.

What they disagree on, is if there will be inflation in the dollar or not. Put in another way it goes like this: will the FED be running the printing presses? Who knows? I do not. Never the less, it seems to me that there is a mutual understanding, that the Americans total purchasing power will diminish. On top of all this we then have issues related to an aging population and a consumer culture that is built on debt and sheep energy.

Right now I am playing with the idea that the faith in the dollar, rests on the idea of a strong economy backing it all up. I mean, it is fiat money with no intrinsic value so it only has the value which it represents. Being as ignorant as I am, having only a rudimentary understanding of economics and the forces involved, I fail to see how all the issues I mentioned will strengthen USA. Is the economy backing up the dollar, a sound economy that is growing stronger?

- Aramis

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Blog Why Not?!
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