Comment: Maybe

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Maybe

It's hard to predict the 'when', which is why Austrian Economists usually predict the 'what' and the 'how', basically just calling the cause and effect. Timing is extremely difficult for the infinite variations that can pop up. However, last year I did predict summer of 2012 and it seems like a pretty reasonable guess as we see everything winding up.

To your specific question about if they could keep this up for years. I think the answer is that they already have, and this is the final culmination which is evidenced by the Eurozone cracking, after that falls we'll see a rush to the dollar and Treasury Bills, which itself is a bubble. However, that won't last long because our own finances are in such a disarray with the debt and deficit spending we will see foreigners sending all those dollars floating around overseas back to the US, and that's when you'll see the hyperinflation. Prices going haywire, it'll be a little scary.

How does the Bond Bubble pop? Not sure, honestly. I assume it has to be a crisis of confidence, because in other bubbles the issue is that if the credit expansion (inflation) isn't cut off (which is one way to bust the bubble) then eventually we'll see the raw goods are not actually in existence as they are called upon. The analogy that Mises uses is that a home is being built, they plan out a house that requires 1000 (or whatever number) bricks, they get 70% done with it and realize they only had 700 bricks, the resources weren't there, only the empty promise (credit expansion / inflation).

That's how it works with real assets.

Mises.org is a fantastic resource for Austrian Economics.

On my blog I've also written a series about Economics if it interests you: http://www.dawnoftheweak.com/2010/09/economics-coming-disast...