The current economic environment is tough, with the total debts of the US economy amounting to 60 trillion dollars (both private and public) the interest payments alone of 3 trillion a year prove to be a massive drag on economic activity.

Generating inflation is now on the highmark of the agenda of the Wall Street elite, yet doing it in a deflationary environment is difficult. To find out how inflation can be brought into the world and the implications for geopolitics please read
http://financialmarkets2007.blogspot.com/

I look forward to hearing from you

"... a politically painless way for debt-drunk governments to pay off their creditors...use inflated, depreciated dollars to pay off old debts..."

As opposed to using the already inflated currency which was used to establish those debts in the first place?

gotcha.

NYT's Krugman is a quasi-socialist. If inflation is coming, he is partly to blame for encouraging Obama's pointless plans spending trillions of dollars that haven't accomplished anything.

First, read the Bernanke Doctrine. My favorite quote: "The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost." "Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation."

Second, deflation is the natural result of technological progress creating more output from the same input. To fight it is to deny the average working man his share of that progress. Since the US went to a religious (faith based) currency the metrics paint a graphical picture of the majority of the benefits of progress being captured by the top while real median incomes have been flat for over 30 years.

Third, the period that coined the term stagflation is a textbook example that given a faith based currency and a government bent on fighting an unpopular war, and expanding social services without significantly raising taxes can simultaneously create high inflation and high underutilization/unemployment.

Finally, ALL ROADS LEAD TO PRINTING MONEY. China, our biggest lender, is reducing its lending to us at the very time our borrowing needs are the greatest they have ever been. Warren Buffet's own numbers project a nearly TRILLION DOLLAR ANNUAL SHORTFALL between what foreigners will lend us and what we will need to borrow. The gap will be filled through quantitative easing, debt monetization, or printing money (decreasingly fancy ways of saying the same thing).

To touch of the Fed "exit strategy" for a moment to reinforce why it is criminal to use central planning to fight deflation: The entire exit strategy can be summarized as how to keep newly printed money in the hands of bankers and bankers only and out of the hands of everyone else. If the the plan is calibrated and executed with exact precision, it could achieve slight positive inflation in the institutionally accepted ideal range of 1-2%. Think about that for a second, certainly there is an injustice and inherent theft to a system and a plan that gives money only to a select group of rich bankers. The theft and injustice is in denying responsible savers the lower prices they are rightly due and would reap in a money system free from central planning.

Economists should start visiting the nearest supermarkets - food prices have been going up all the time. Our rent goes up all the time, medical insurance, cost of services etc. We can afford less on 80K now than we could on 60K just 6 years ago. Reality check, anyone?

In the past, when tariffs were proposed to protect whats left of the US manufacturing base and associated jobs, we were told that it would produce inflation. If we have to have inflation, why not do it in a way that will benefit this country, rather than lenders?

Tariffs allowed a newborn America to wean itself away from being a source of raw materials to England, right?