I honestly don’t understand what to do or think.
Japan has had deflation since 1989. 21 straight years of outborrowing and out-spending the U.S.
Why does so much spending not lead to inflation?
Debt.
Debt is deflationary.
Moreover, debt is cummulative.
In contrast, spending is temporary. Yes, spending can give an economy short-term inflation...unless a nation has accumulated so much debt that is dragging the economy down.
Happened to Japan in 1989, and is still going on today.
Happened to the U.S. in 1893 and 1929, too.
We’ve seen all of this before.
It’s not the 1970s (an inflationary period).
It’s the opposite: falling home prices and falling salaries: deflation.
Debt is deflationary.
I honestly don’t understand what to do or think.
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One of those times we hold the same position.
Then don't! The politicians are depending on that!
In a more serious vein, I don't know what this author is thinking with the pollyanna ending. If the world monetary system collapses how does he expect to build a new one? We have heard the myth of the Phoenix rising from the ashes, we saw Europe rebuilt after WWII, the world survived the Great Depression but in those cases there was always a winner still standing. If the dollar collapses so does everything else, as the author points out.
How do you reflate the balloon after all the air is gone? Oil, gold, land, etc. all will still have value but with no accepted money how will transactions take place? No one can carry barrels of oil around with them, or the deeds to their property, or pounds of gold to exchange, in a world of varying values.
Without an accepted medium of exchange nothing moves.