Go read the Cash Nexus by Niall Fergusson. A fantastic read. Be sure to buy the softcover, not the hardcover, lest you buy an overpriced copy from a book pimp like me. But read it, and understand why inflation makes sense to governments.

Many of the books about the Great Depression that Bernanke studied are Keynesian in nature, like Temin's book. And they all say basically the same thing. "If only we hadn't been bound by the gold standard, we could have increased the money supply and saved the financial system. But, what they seem to forget is that the Fed in 1929 had the recent example of Weimar Germany in 1923 and decided NOT to go that way.

Ask yourself this: would a President rather be Jimmy Carter or Herbert Hoover? Everyone I ask about that says CARTER. Thus, governments anywhere and everywhere prefer inflation. They prefer it to be gradual, but it must be there nonetheless to really screw the masses who aren't aware until it's too late. People today believe that we are too sophisticated to repeat the mistakes of 1929-1933, so instead we will err in a different direction. They believe spending is a good thing, at all times. This cannot always be so.

Finally, since inflationary effects are delayed, and most politicians are only worried about the next 4 years, they tend to prefer inflation over deflation, whose effects are much more immediate.

Do you really believe that the US government and other governments the world over can't flood the world with checkbook money? It's the nuclear option, but the reset button is there for a reason. Sometimes the system has to be rebooted.

We are now at one of these moments.