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It's happening much faster than I thought possible.

I've believed for several years that the US would eventually be forced to inflate the dollar. As I see it, they really had no other choice. They either had to let the money pipes run dry, or else fill them up with newly printed (that is, loaned) dollars.

And letting the pipes run dry here in the US, even for a few days or weeks, would cause trading halts, many bankruptcies, bank closures, an effective halt on real estate sales, and so forth. The result, and quickly, would be that no one could transact much business, except for barter. Trucks might even stop moving for a time, messing up the flow of goods, including food.

That scenario is just too disruptive. Of course our "leaders" will continue to cave to the most obvious short-term fixes, because that is how our system is structured now.

What surprises me is the quick appearance of these widespread, almost synchronized food riots. It's true that in theory, food should be the next problem, but I thought that would begin slowly with sporadic trouble in various places, followed by government intervention, rationing, feeding stations and so forth. It didn't occur to me that even before actual shortages appeared, food would become too expensive for most people (globally) to afford.

If this is what "demand destruction" looks like at $110 per barrel, I conclude that the world is going to be changing faster and sooner than even the pessimists expected.

by Ralph on Thu Apr 17th, 2008 at 11:30:46 AM EST

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