Sequential Depression

Step by step, one by one
Higher and higher
Step by step, rung by rung
Climbing Jacob's Ladder
--Huey Lewis & The News

Mr P helps clarify why we'll experience a signficant period of debt destruction (a.k.a. deflation) prior to 'big' inflation. Essentially, there's too much debt out there, and the Fed and other government bureaucrats can't pyramid enough new credit thru our monetary system (a.k.a. inflation) to compensate for the deflation.

He also helped answer a question that I had. Why can't the Fed just do an 'end around' the dysfunctional credit system and just drop money from helicopters right into spenders' hands? Mr P thinks that foreign debt holders such as China have told the Fed in no uncertain terms that they will dump US bond holdings if dollar devaluation gets out of control.

At some point, the Fed will almost certainly trash the dollar regardless, but that's 'out there' sometime in the future. That's why Mr P has currently returned to the US--he sees a nice trade during this deflationary phase. Then he'll be gone. Perhaps for good.

position in USD