That means that when inflation comes, it will be a worldwide event.

In the meantime, the weight of private debt and the onlslaught of defaults props up demand for currency. The aftermath of a credit bubble is always deflationary, and even Obama and Bernanke aren’t going to be able to keep up with the next wave of mortgage, CRE, muni and junk bond defaults.

And I think it explains why we’re about to have a massive deflationary-inflation! I know that sounds like saying we’re going to have dry water, or cold fire, but here’s what I mean.

The US politicians WILL NOT stop the orgy of spending. Since they can no longer borrow the money from foreigners or investors, the will borrow from the FED. As the worldwide debt defaults increase, and credit shrinks, we will see prices around the world fall for nearly everything, EXCEPT IN THE UNITED STATES!

Since nobody else is going to want our ever more worthless dollars, prices for essentials in the USA could explode to the updside. We’re already starting to see this. We could see oil trading for the equivalent of $25 on the world market, yet gasoline at $15 a gallon in the USA….I know this sounds nuts, but consider: Congress will keep sending checks to pay the $70+trillion in unfunded promises for Social Security, Medicare, Medicade, Health Care, Government Pensions, etc, etc.,

As Mark Twain once said: “There is no native criminal class in America save Congress”.