To show why deflation comes first and why hyperinflation then becomes a distinct possibility, Mike compares US tax receipts to the Wilshire 5000 Index. What is immediately apparent is the high correlation between them—until recently. It takes two consecutive quarters of falling economic activity to officially declare a recession, but it’s clear we’ve entered one now. This is the deflation. As Mike explains, the reason high or hyperinflation is in the cards is because the falling tax revenue causes the deficit to explode. And how does a government typically cover its deficits in that scenario? They run the printing press! (Or more accurately, enter digits into a computer). This has occurred many times before in history. One effect of all this fallout could be bank
Topics:
Mike Maloney considers the following as important: Mike Maloney, News
This could be interesting, too:
Daily Pfennig writes Currencies Rally Overnight…
Mises Institute writes Understanding the Action Axiom
Mises Institute writes It’s Time for a National Divorce
Mises Institute writes Per Bylund: Silicon Valley Is Bad At Entrepreneurship.
|