This is not the 30's and not Japan.

I have been following the news and the deflation inflation debate has been raging. I agree with both sides but I am getting sick of people comparing this to the 30's or Japan. There is no evidence to support that.

In the 30's depression and in Japan both government's had excess trade surpluses to spend on stimulus and other programs. Both populations were savers, Japan at 11% and US at 8%. The US was just beginning its rise as a nation and as one of the worlds leading oil exporters. I know that sounds crazy but we did indeed lead the world in oil exports at one time. The US was an agriculture and manufacturing based economy. So when the government needed bread for the bread lines we had it. We are able to produce and sell oil and other goods to the world and that at least kept unemployment from going to 40% or higher and creating a collapse of the country.

We are not as fortunate this time around. Its pretty clear that everyone is broke. The states have no money and Goldman Sachs put 11 of them on bankruptcy watch and recommended insuring their bonds. California alone is 41 billion in the whole and there is simply no hope they will climb out of it. Asset prices will continue to plummet and people will lose their jobs. There was a great article on biggest fears of bankers (link below) and its unemployment. If unemployment rises above 10% then losses and defaults could go parabolic. Nobody knows and from the article nobody wants to try to predict what could happen. All we know is it won't be pretty.

http://online.wsj.com/article/SB123293202890614265.html?mod=googlenews_wsj

Once everyone loses their job and house there will come a time when deflation will stop. The last 2 days have produced 75,000 lost jobs. If you think this is going to slow down buckle up. There will be nothing left to deflate and the need to house and feed some 25 million Americans or more out of work will still be there. How are we going to do that? The nation is broke. The only solution is to print money. A lot of money. If anyone is actually reading this then I am sure someone just went...we'll borrow the money! China will buy our debt! To that person leave now. You are far too retarded to be reading this. China is as broke as we are. We are going to see Hyperinflation or we are going to see outright collapse. This time we have nothing to sell the world, we became a net importer of food in 2007 and if the IEA is to be believed peak oil is here and we are not ready for it.

This time its different, this time its the end.