Competing Shapes of Monetary Collapse

Rise up, gather 'round
Rock this place down to the ground
Burn it up let's go for broke
Watch the night go up in smoke
--Def Leppard

Fine explanation of the fiat money/business cycle dynamic that fuels the 'crack up boom.' Not sure I quite concur w/ the conclusion, however.

Based on the work of Mises, the author notes that 'big' inflation and deflation are both viable outcomes of a fiat money collapse. Inflation would result if the govt tried to 'print its way out' of the problem. Deflation would occur if the bad projects built on a foundation of cheap credit would be permitted to collapse.

Yes, it seems a 'given' that govts will elect the former strategy and reach for the printing press to postpone pain. But could it turn out otherwise? For instance, some countries such as Germany have experienced hyperinflation before. Perhaps institutional memory will prohibit the re-creation of the hyperinflationary nightmare.

Then again, perhaps not. After all, the author happens to be a professor at a German university and he it not inclined to weight the deflationary scenario highly.

However, if Germany blinks and refuses to inflate away bad debt, then the EU comes apart...with global consequences.