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By encouraging Americans to believe prices will start rising at a faster pace, the Fed would reduce inflation-adjusted interest rates and stimulate the economy.
Wait - what? Inflation goes up, real purchasing power decreases, people borrow more from bankrupt banks that aren't lending to make up the gap, the economy grows?
Is this a plan or a comedy sketch?
A structural imbalance of the external accounts is part of the story in all the hyperinflationary episodes that I can bring to mind, with notable examples from the Confederate States of America in the 1860's through the Wiemar Republic, through Brazil in the 1970's, through Argentina at the turn of this century.
I don't think we can predict what the US finance industry will look like at the end (although I'd be willing to bet Goldman sachs do well) but I really doubt they're gonna be in any position to protect the dollar at the end of it.
keep to the Fen Causeway
Where's the downside?
It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II
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