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    Martenson Report – Inflation vs. Deflation – What Comes Next?

    by Chris Martenson

    Sunday, June 14, 2009, 8:24 PM

There’s a new Martenson Report ready for enrolled members.

Link to:  Inflation vs. Deflation – What Comes Next?

Here’s a snippet:

One of the key questions of our day, especially for those who have wealth to protect, is, “What’s going to happen to the dollar?”  More specifically, do we foresee an increase in the value of money going forward (deflation), or a decrease in the value of money (inflation)? Should we reserve a small amount of concern for the possibility of hyperinflation, which means the rapid and often total destruction of a currency?

There happens to be a lot of discussion around this topic these days. Unfortunately, much of it is confusing and contradictory, because far too much misinformation is included in the mix. So let’s begin by getting ourselves on firm footing before we look at the data.

(…)

Inflation correlates poorly with growth in the monetary base, making that statistic relatively useless as a predictor of inflation. However, inflation correlates extremely well with growth in government spending, meaning that we’d do well to track that statistic closely.

The current economic crisis is being fought tooth and nail by a determined Federal Reserve (in the role of the "enabler") and an equally-determined US government (in the role of the heavy-lifter, assuming all the lion’s share of the long-term debt and risk). Together, these institutions have virtually consigned future generations to the enormous challenge of wrestling with bloated budgets in desperate need of trimming, further compounded by coinciding with periods of high inflation.

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