i think we must face it ..........., page-19

Welcome back BH!

From your chart the USA currently has $9Tr of debt, which presumably includes public and private debt. As banks delever from ratios of 50:1 to pre-credit bubble levels of 10:1, don't you think the overall debt will eventually diminish as the amount of loans and therefore money in the economy reduces? Would this not mean a continuation of the demand for USD and therefore deflation until much of the debt is repaid? Call this Scenario 1, which you obviously think won't happen except perhaps in the very short term.

Instead are you saying that while the banks delever over the next few years, government debt will explode to more than compensate for fewer loans to the private sector? Call this scenario 2. Do you have figures for private versus public debt as it currently stands, and how you see these numbers changing in the future, perhaps next 12 months etc?

If I understand you correctly, you seem to suggest that the debt will continue to rise and the USD will collapse resulting in high inflation. But collapse relative to what, all of the other currencies or just gold? Interested to hear more of your thoughts as I battle the deflation vs inflation scenarios in my own mind

Rowingboat.