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Message:: [QUOTE="Morgan1878, post: 607782, member: 17869"]The statement that deflation will be a medium term event and inflation a long term reality is a view also held by more than a few astute bond managers, including the best bond manager in the world.  (Guess his name..he just posted his monthly letter a few days ago on this same topic on the website of the company that he runs.) To finance the stimulus package, the government faces selling huge amounts of treasuries for many years unless the economy can grow annually at an acceptable rate. This is because when we pay for imports with dollars, countries that we import from often convert the dollars they are paid with into Treasury bonds. If this growth does not occur and at the same time we do not have enough buyers for our Treasury bonds, then the U.S. Government becomes the buyer of last resort and has to buy these bonds and pay the interest on them. At a certain point, if this continues for a very long time, the government would default since it would not be able to pay the interest due on the outstanding bonds. Preceeding this, high inflation and perhaps some social unrest would be apparent as our economic situation started to unravel. The price of gold and other hard assets (including grains) would likely increase dramatically. In this situation however, even if you were one of the fortunate ones with enough hard assets to barter or pay, it would not be a pleasant country to live in.[/QUOTE]