We are in a very dangerous situation. But where does the danger lie, in ice or fire? I fear ice -- Dante's 9th Circle of Hell. That is deflation if the central banks misjudge what is before them, and overreact.
Most fear the fire of inflation. It is a lively debate.
This is Morton's Fork:
Inflation: Prices go up. Unemployment rises. Living standards go down.
Deflation: Prices collapse. Unemployment skyrockets. Living standards go down.
I'm still awaiting the Unknown Event.
A major Western city destroyed by catastrophic earthquake. (No, the world could survive that.)
An audacious terrorist attack. (No, I doubt that.)
Factor X.
While everyone is busy scrutinizing the money, I still wonder about the world that money exists in.
Whatever X is, it has to be of such magnitude that it literally changes everything.
Then again, it could be a lot of little things happening all at once.
Meet metastability.
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