[FoRK] inflation / deflation etc. (resp. to Andre)

[Jeff Bone]

On Sep 27, 2009, at 1:17 PM, Jeff Bone wrote:

> (To be honest, though, *nothing* comes close to being a valid  
> analogy to what we're seeing here today.  It's just too unique in  
> too many ways.)

Ken asks:   is this true?  And references Japan...

Japan's not a good analogy for many reasons, but the biggest factors  
that are unique in this situation are:

   - the USD's historical role as the de facto central currency for  
decades
   - the degree to which US treasury debt has been used as an  
inflation sink by others

These factors, along with others, make this a truly unstable situation.

Re:  Andre, I agree that the central bank's bias will change in the  
future;  but I worry that by the time this happens, its ability to act  
effectively may already be significantly limited.  It's all about  
timing the tipping point --- with this one being more delicate than  
previous examples, and even in those previous examples the Fed's  
timing is suspect.

$0.02,


jb