I sort of see the point but I'm unclear how the money printing would differ from what is currently occuring. Nobody gets paid in cash these days, so the nearest we get to printing money is for the government to send cheques out to everyone and borrow the money off the Fed to pay for it, i.e. the Fed buys the Treasury debt with money it has created out of thin air, quantitive easing if you like. This is already happening! Think stimulus checks, cash for clunkers etc. Yes, the total credit in the economy has increased but it all debt owed by the Federal Government to the Fed which will never be repaid. It will just keep getting rolled over. When did the national debt ever fall in nominal terms. In my book this is money printing, pure and simple, but cleverly disguised to keep the masses fooled.

In the UK we are running a deficit of £175billion this year. By a bizarre coincidence (I don't think), the BofE's QE programme is for that same figure. That means they have indirectly monetised the entire UK Government gilt issuance for the year. What the hell happens next year when the deficit is £200billion I don't know. I guess they keep doing it or else interest rates goes through the roof to attract foreign buyers back. People think the Government and Central Bank are somehow not the same thing. This is just another illusion. The BofE is an arm of the UK Government. How can you lend money to yourself? It is just a con to keep people fooled. They might as well just mint up £200billion in tenners for all the practical difference it makes.

I think my view is that they continue to ramp up the QE and the stimulus to whatever extent is necessary to prevent deflation. If the economy recovers they back off a bit. If it slips back down they throw some more fuel on the fire. I'm not sure we get to hyperinflation. 14% inflation for 10 years cuts debts in half and in half again. That may be all that is required to reboot the system. A lost decade of severe stagflation. That is what we should all hope for as it is the least worse outcome from where we find ourselves.