I believe this is almost certainly be deflationary.Why?Look at...

I believe this is almost certainly be deflationary.

Why?

Look at the markets. They are all tanking. People can't pay back their debts and there is huge deleveraging going on. This all points to deflation.

Bernanke can try and print but it won't work because demand for credit is dropping off a cliff and you can't stimulate demand when the mass psychology expects deflation. This is why interest rates of 0% in Japan and a huge supply of money did nothing for asset prices there. All it did was introduce the carry trade and that is the best the US and over indebted nations can expect. This is a classic debt deflation pure and simple.

If Bernanke literally drops dollars in the hands of people he might think he can stimulate a hyperinflation. But who will then trade with the US for their worthless dollars? How will they support their oil habit? What will happen to yields on treasuries (they will shoot to the moon) and who will take on new loans then? The printing solution wont work because the dollars will not get into the hands of the populace fast enough and when they do they won't be going into over priced US assets.

Finally, the rich and powerful don't want a hyperinflation. The well off are loaded to the hilt with dollars at the moment. You think they are just going to print everyones debts and give free houses away? Think again - they want deflation. The wall street types don't really care that the system is about to collapse. They have already made their dollars through ridiculous bonuses over the last umpteen years and are cashed up ready to exploit.

If we were about the have inflation the markets would be shooting to the moon. They are doing the exact opposite. I think hyperinflation is wishful thinking.

Expect this to play out like Japan 1990. I hope it does. Every hyperinflation has resulted in a fascist regime change. At least the Japanese enjoyed a sound quality of life.

I give deflation about and 85-90% chance of happening and hyperinflation a 10-15% chance if Bernanke and CBs around the world can write off enough stimulus checks and get people spending. If they do this, expect political upheaval and revolt. Those in power don't want to see you get a free lunch so don't expect it to happen.