Why the Fed may not inflate like expected, page 1

for the financially astute

Is the petro dollar/World reserve currency defended by international financiers and a complicit U.S gov't or a U.S gov't who has it's own power in mind (w/o being overriden by globalist forces/financial powers)

the answer to this question may determine wether the U.S.A decides to try to throw "everything it can" at this deflationary deleveraging financial crisis or just half aZZ it, and let a depression take over. granted we may have a depression either way, only one way would be more hyperinflationary and the other deflationary but the answer to the first paragraph's question i think would answer what path may be taken.

perhaps BEN B is just talking the talk regarding "he won't let deflation happen here" in order to maintain inflationary expectations in order to keep consumer consumption elevated as well as private investment and bank lending up..

those that take him at his word believe he will devalue the currency like other govt's have done historically when faced with similiar debt burdens and deflationary unwinds.

the reason why he may not follow history's script is that the U.S gov't is one of the few country's who can ever say they had the world reserve currency, a honor that gives the country ITS POWER (financial and military) and wether this World Reserve Currency is a tool of internation finance (which would mean it is expendable as global conditions change) or wether this is mainly a U.S gov't strength (not internation financiers) this would lead a rational person to believe that the gov't and it's chosen apointee's of banking (federal reserve) would inflate only so long as they could be assured they could maintain there world reserve currency and keep OPEC happy enough for them to go along with this (and keep there pillar of power) , meaning they may not decide to inflate/devalue at all costs to avoid deflation, if they would lose there pillar of power (petro dollar by doing so)

And sure when you look at the U.S allowing the deflationary path to be followed , you can run into problems with being able to make intrest payments on national debt and threaten to default on these promises ( unless foreign country's forgive portions of U.S debt in exchange for direct investment in company's , etc/ which has mostly been stifled by the U.S gov't in the past)?

and on the other side of the coin, if the international bankers are running the show and the u.s gov't jumps when and where they tell them to then they would in all likelihood the U.S gov't would inflate/devalue the currency (like most country's have faced with a similiar scenario) and abandon the petro dollar system when it becomes not only unprofittable but when there is a better more functional global system that can be set up.

any thoughts on this by the financially astute?

perhaps we block the strait of hormuz (attack iran) to increase oil prices and keep OPEC happy, whille we allow a deflation to occur and yet sustain the world reserve currency. from there the U.S could choose to attack any MID EAST country's that try to create a new GULF currency? that threatens the petro dollar hmm

[edit on 30-11-2008 by cpdaman]