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Ash,

Would you mind filling me in on TAE take on FOFOA? I have to admit that guy scares the hell out of me sometimes. His recent post on Peak Exorbitant Privilege made a lot of sense; namely, that our perpetual trade deficits are no longer funded with recycled dollars, but w/ Fed printing, which means that for the last few years we’ve been pumping dollars out of the country – dollars that have not come back to us in Treasury bond purchases, but are being used instead to bid up oil, metals, real estate, and other actual stuff. More dollars chasing the same amount of goods and services…

FOFOA’s conclusion – “I’m talking about a near-term dollar super-hyperinflation that will make your hair curl and make Weimar and Zimbabwe seem like child’s play in the rearview mirror.”

OK, that our trade deficits are more inflationary now then when our trading partners used the surplus to buy our debt is clear enough. How you get from there to a super-hyperinflation I don’t quite understand. Apparently he thinks this glut of dollars we’re creating abroad is akin to an inflationary pressure cooker, poised to explode without warning.

https://fofoa.blogspot.com/2012/04/peak-exorbitant-privilege.html

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