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<p>[QUOTE=&quot;Cloudsweeper99, post: 1571312, member: 3011&quot;]I&#039;ve said many times that I think the probability for deflation or inflation is about 50/50 depending on policy decisions that haven&#039;t been made yet.&nbsp; The unfunded liabilities are irrelevant to the dollar.&nbsp; They are not debt, and most probably won&#039;t be paid.&nbsp; For the $16trillion in actual debt, the normal outcome of having more debt than can be serviced is default.&nbsp; Now, they won&#039;t call it default.</p><p><br /></p><p>For example, it could be determined that all of the treasury debt held by the Federal Reserve and Social Security System is wiped out.&nbsp; Would that change anything?&nbsp; No.&nbsp; And a lot of the debt held overseas could be converted to perpetual trade credits.&nbsp; It is non-callable so there isn&#039;t much anyone can do about it.&nbsp; The normal outcome of debt default is deflation - falling markets - as folks scramble to acquire dollars to service the debt.&nbsp; This might result in a stronger dollar, not a weaker one.&nbsp; Remember, under the present system every dollar in circulation is backed by a dollar of debt.&nbsp; This provides a natural brake on inflation when the debt grows to the level where buyers disappear and move to other asset classes.</p><p><br /></p><p>To be perfectly clear, none of the above are predictions.&nbsp; I don&#039;t know what will happen.&nbsp; But I think it is over-simplifed to believe the establishment will just print paper money to pay everything and watch the dollar go to zero.&nbsp; They are much smarter than most people give them credit for.[/QUOTE]</p><p><br /></p>

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