Episode 91: GoldMoney’s Andy Duncan speaks to Mike “Mish” Shedlock about the entire global financial situation, but particularly focusing upon the debate between those who believe in deflation of the money and credit supply versus those who believe in inflation. As a believer in the former scenario, Mish argues that many Austrian economists have ignored the role of credit in economies, and that “hyperinflationists” are too US-centric in their analysis. He argues that in the short-term, he sees 2008-style “credit events” as more likely to occur in Japan, China, and Europe. Shedlock also mentions the deflationary impact we can expect from the increasing use of robots in manufacturing, and how the currency wars are affecting the inflation/deflation dynamic.
They discuss the Federal Reserve’s potential treatment of excess reserves, the use of helicopters by Ben Bernanke to stem deflation via bundles of money produced via the Fed’s printing press, and the similarities of the situation between America’s current position and that of Japan 20 years ago. Mish outlines what he would do if he was put in charge at the Fed.
Following on from this, they talk about the recent agreement of the Bank of Japan to follow prime minister Shinzo Abe’s instructions to follow a 2% price inflation target, as well as discussing the financial situation in the eurozone and the UK.
This podcast was recorded on 22 January 2013.