I didn't say that. I said hyperinflation is one likely course (long-term stagflation is another, as is defaulting on our debts). However, if the deflationists are right, QE isn't likely to help us any more than it did Japan. QE1 was a failure. Regardless of Bernanke's recent PR spin, QE's purpose isn't creating irrationally exuberant stock rallies, either.
It's a moot point regardless of which side of the fence you sit on, mainly due to the fact that the Fed's actions create inflation (sometimes where they don't want it) while deflation rages on in other sectors of the economy. Basically, there is concurrent deflation and inflation at any given moment, the hyperinflation fear has played itself out in the recent past. The problem is how we define inflation and what it applies to. For instance, housing costs, tuition costs, medical costs, property taxes, etc, etc all went thru a very acute hyperinflationary burst IF you had the misfortune of NOT OWNING a house or had TO PAY for college tuition during that period. Nobody can tell me that a house that sold for $100,000 in 1996 that was selling for $700,000 10 years later didn't go thru a hyperinflationary burst. The only people who tell me it wasn't are the ones who had the fortune of buying it in 1996, not the poor schlep who happened to buy it 10 years later and had a mortgage 7x the original buyer AND the property taxes to boot. The devil is always in the details of these sorts of debates, but it's easier to just sit around and speak in generalities. Of course, the Federal Reserve is at the very epicenter of each of these episodes.
What about US citizens, whose currency has collapsed in value in the last 2 months, or US pensioners, whose savings yield pathetically low amounts, or people in the US on low and middle incomes, whose costs of living are now going to be higher? What about responsible savers and investors, whose investments are gyrating like yoyos based on artificially distorting the price of assets? Speculators are the best able to exploit Fed policies, it's the average person with no financial market experience who gets hosed by them, not the George Soros's of this world.
It is not necessary that we will end up either with hyperinflation or a Japan-like situation. There is a broad spectrum of possibilities in between that your crude, boundary value, approach to this issue fails to recognize. The price of gold reflects the fact that others have the same idea as you. Just that. These others, no matter how many they are, can be proven wrong and IMO they will. Also, do not confuse hedging decisions with Economic reality. I also have gold in my portfolio. You should try to find out what the allocation is of those who buy gold. Mine is 10%. The panicked massed buy just gold where those that move the market buy gold as a small proportion of their portfolio. The crowds that are fueling the gold rally at this point will once more proven wrong. The few in proportion that buy gold as a hedge will not lose either way.
Ben is right to a certain point. The extra liquid will be offset by institutions and individuals hording money and by out flow of dollar over seas with better opportunities. But if the speed of dollar devaluation reachs a point that oversea countries refuse to accept or limit the dollar circulation. The dollar had no choice but repatriate to U.S. Then you will have a domino effect and a hyper inflation in U.S. It is a dangerous game, to prosperity or ruin.
I agree with what you stated. There has to be a certain amount of deflation especially in the housing sector to get houses back to affordable and sustainable levels. That said it has to be a measured deflation, to much deflation and the boat will sink and sink fast. I agree there is certain sectors that on the surface appear to have inflation, but for example the ag sector has many people from around the world that are entering the middle class and can now afford to put some of our ag products on the supper table. As for gold, where else do you hide your money? Bonds, not likely.
The dollar is far from collapse, just look at a long-term chart. You are only trying to convey your panick or misconceptions to others. A sliding dollar is good for US exports and the benefots from that outweigh the losses from any rise in commodities and energy. US needs to keep any export jobs left at the expense of a little loss of purchasing power. Loss of jobs hurts more long-term than currency devaluation. Actually, IMO, the FED has not printed enough money. Bernanke is doing now what should have been done long ago.
The Fed is becoming irrelevant. Toolbox is empty. Fed govenors and Bernanke now have their hands in their pockets saying, "what are we to do next"? The only thing left is to watch the dollar slide below 72.
The fed is declaring war on every currency in the known world and no good will come out of it. beware of hubris!!