Head Start

Make it up as we go along
Feet on the ground
Head in the sky
It's ok I know nothing's wrong--nothing
--Talking Heads

Want to evaluate how sharp mainstream media talking heads are? Get them yapping about economic issues and listen to most reveal just how ignorant they really are.

One who, in my view, passes this acid test pretty well is Glenn Beck. Considers both sides of the trade, studies history, conclusions driven more by reason than by politics. Also very grounded in the principle of liberty.

Two recent interviews of interest: with Peter Schiff, with Ron Paul. Both raise the spectre of extreme inflation, perhaps a la Weimar. I've been allocating more attention in this direction as well.

The proposed mechanism: Large industrialized debtor nation needs money>>taps credit markets in huge size>>foreign lenders load up on debtor country bonds>>economic and fiscal conditions worsen>>as foreign lenders increasingly perceive risk of not getting paid back, debtor nation is cut off from credit markets>>debtor nation begins to 'monetize' debt (read: printing money)>>currency gets devalued>>creditors dump debtor nation's bonds>>monetary printing presses shift into hyperdrive>>currency craters>>real interest rates and prices rocket.

Given our massive debtor status, current economic trajectory, and political resolve to do 'whatever it takes' to 'save' the economy via stimulus, it's difficult to ignore the extreme inflation possibility.

I've been assigning higher probabilities to this scenario by the day. And positioning accordingly.