25 March 2011

Inflation; The Real Tail that Wags the Dog

While it is no shock that the news has been fairly down trodden this week, an excellent analogy from the guys over at the Daily Reckoning on how inflation is the "bad dog" on the street.

Unfortunately, inflation is the politically expedient way for the US government (and Federal Reserve) to reduce the burden of the budget and trade deficits.  In effect, monetary inflation to decrease debt burden in real terms is defacto debt default.

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