Thursday, February 19, 2009
Jim Sinclair had an interesting post yesterday on Geithner's confirmation hearing:
During testimony on his nomination, when Secretary of the Treasury Geithner was asked about errors made in the Great Depression, he replied:
There were two:
1. Monetary stimulation ended too soon.
2. Heed was not taken of the dollar foreign exchange position.
Think hard on the implications of both these points.
The dollar rose into the Great Depression, acting as a break on American exports as protectionism was rising everywhere. You can be sure the present dollar rally as a place of refuge has no meaningful future.
You can be sure that [the] estimate of $20 trillion in total monetary and fiscal stimulation is conservative.
What's Sinclair saying?
That Geithner and the boys will probably print more dollars than anyone imagines - at least $20 trillion dollars - and that the bailouts and "stimulus" packages will continue for years, thus destroying the dollar and ushering in hyperinflation.
Remember, though, we are in deflation now, and it will probably worsen before inflation kicks in.