The United States has two options.

1. It can stop printing money and default on all its obligations. If it does this we will experience a deflationary depression that will make the 30's era look like they were among the best years in the country's history. But it will be over fairly quickly.

2. We can continue to print and gradually ease into a greater and greater inflation (which will in all likelihood go hyper at some point down the road). Politicians hate to have bad things happen on their watch because thit ends their career, so this is the course they invariably choose. The politicians are no longer constrained by a "gold standard" so they are free to do as they wish.

During the deflationary 30's the government did pump money into the system. Modern day (non Austrian) economists claim the deflation happened because they didn't pump enough, fast enough. Bernanke did his college thesis on the subject and in effect swore it would never happen again in this country with him at the helm.

Which will they choose? That is the only question of any importance when looking forward past the next day or two. The answer is clear. They have already chosen and it's unlikely they will change their mind midstream. They are printing (quantitative easing), they are injecting money into the banking system but little has hit the main economy yet. It will. It has to. Meanwhile other country's not wanting their currency to get too strong relative to the dollar will debase their currencies so as to not have a trade disadvantage. Worldwide the currencies have been, are, and will continue to be debased. It is impossible to have a deflation until this mess blows up in their face.

Inflation is always a monetary event. "Deflationists" miss this point thinking that money and credit are the same and affect the economy in the same way. They don't. I recently read this brilliant example but cannot remember who to attribute it to. If I told you I was going to give you $100,000 you would be ecstatic. If I told you I would give you a loan for $100,000 you would certainly not have the same reaction. Money and debt, likewise, do not affect the economy in the same way.

After the inflationary blow-up, then the world (if it is still in existence) will see the mother of all deflationary depressions. If you don't believe that bebasement is and has been going on for eight years or so already check my chart # 17 on Stockcharts public listing charts. "Investor charts by PuzzleMan." There is no country on earth big enough to have its currency listed and charted at Stockcharts that is increasing its currncy value relative to gold.

Gold (for the most part) never changes in value. In the long, long run one ounce of gold still buys a nice hand tailored suit for a gentleman. Currently it is not able to do that so it is underpriced, but it will get back to normal. Meanwhile the currencies of the world still look bad against gold. The countries will continue to debase them until they go out of existence.

If every political leader on earth got together and agreed that the course we're heading on will lead to extended pain (as in no quick correction), then they could also agree to write off all the bad debt, let the chips fall where they may and start over with the foolish having defaulted and the wiser now heading up what remains of the business world (very painful but also over very quickly). But political leaders will never do this; its like the scorpion being transported across the river by the turtle (frog in some iterations of the story) who stings the turtle. The turtle turns and says, Why did you do that? Now we'll both die." To which the scorpion responds, "I couldn't help it, it's just my nature." If you know the nature of politicians (who care for no one but themselves and cannot see beyond the next election you know what's going to happen in this world.

Whether $930 holds or not can affect how we look at today; it is not important for the future.

P.