Enjoying the chaos

Jaime wants to discuss today’s column on the economy:

[I]f the economic news is much worse than is commonly reported or understood, what can you do to prepare yourself for the negative climate? Unfortunately, it’s difficult to give precise recommendations at the moment, mostly because the primary question of hyperinflation or deflation remains unsettled. The Federal Reserve’s natural tendency is to pursue inflation, and certainly Bernanke’s refusal to follow Paul Volcker’s lead and aggressively raise interest rates tends to indicate higher inflation is in order. However, inflation rates have been very high for more than a decade and have only made matters worse, and there is also a school of thought which insists that deflation is inevitable even if the Fed unleashes the full power of the printing press and sends out the hyperinflating helicopters.

It’s worth noting, however, that the existing credit crunch was predicted by the deflationists, not the hyperinflationists, even though the sky high prices of oil, gold and other commodities tends to support the latter.