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Originally Posted by $5 submissions
What do you think of the inflationary consequences of the debt accumulation?
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We won't get German style hyperinflation unless wages are fixed to the rate of inflation and adjusted on a weekly or possibly monthly basis.
If the government devalues the dollar to make our massive debt easier to pay off then people saving dollars will see their purchasing power killed. Bush and Cheney both said deficits do not matter. In January Obama started saying the same thing. Clearly the government already has a plan to either kill the dollar and introduce a new currency or hugely devalue the dollar. Either way the long term prospects for the dollar are awful. That said, for at least the rest of the this year and possibly for several more years we will see the dollar index take off through the stratosphere.
The game changer here is the pound and the euro both are in a world of hurt. This could give the dollar another decade or more of life. We will likely see dollar/euro parity. We could see dollar/pound parity. 2009 is the year the world realizes how fucked Europe is.