It is becoming pretty clear that the inflationists, or inflationistas, want default. Nothing would cause people to flee treasuries faster. And deflationistas want massive cuts in the budget and a huge stimulus for the wealthy in the form of more tax cuts. This money will likely be used to push up stocks, or in the event that will no longer work, a push into housing creation. Once you have massive bets on housing, you have to have massive lending and easy money flowing.
What ever happened to savings and investment?
So, on the inflationista side we have Soros, Paulson (not Henry), Schiff and the rest of the gold bugs. I don’t think Schiff wants default but he stands to make money on default. On the deflationista side we have Geithner, the big banks, Jamie Dimon, and surprisingly, Paul Ryan.
We certainly cannot have a massive housing bubble springing from rampant inflation. It won’t work. But a bubble can spring from a stock market crash. It has already been tried before. I don’t know if foreclosuregate will slow it down, and certainly it could. But I am just not sure. It seems that the chiefs are getting restless with that issue, as Sheila Bair wants to pay people to go away instead of fighting for their properties.
Mainstreet is left out of this fight. And no doubt mainstreet will be hurt by either outcome. The New World Order will have her way with us no matter what happens.
I just can’t quite figure out Soros, however. He says he wants to protect the American citizen from predatory lending. Yet wouldn’t default and the resulting inflation be hurtful to the same people? The only thing I can figure is that he would want some sort of change in the world power structure if his side wins out. And that uncharted territory is as scary as more hurtful loans, maybe even more frightful.
Based upon the fact that the US dollar is still the world’s currency in crisis, I believe that the Fed will win out over the inflationistas. While savings and investment could win out, more likely will the Fed create a housing bubble out of a deflationary environment. Unless the US starts saving as a nation, we may have a lot of instability going forward.