Austrians and, with varying degrees of finesse, other schools of economic inquiry have elaborated at length regarding the hyper-inflationary consequences of QE and credit expansion. When prodded by commentators in journalistic outlets in regards to the question of how the final scenario will play out, the standard Austrian’s and savvier economist’s reply is that governments and the central banking squires will have to “monetize the debt (hyper-inflation) or debt repudiation”, at which point if any elaboration is ventured, it tends to fall overwhelmingly towards a discussion of hyper-inflation. This hyper-inflation is spoken of, rightfully, as a nightmarish state of affairs that renders savings and real capital kaput and economic calculation essentially impossible.
All well and good.
I speak for the layman who may not understand what these concepts mean at face value. If one is willing to grant that the conversation is generally as I have described, the conclusion one is most likely to reach is that repudiation is the preferable course of action. But nobody seems bothered to elaborate on this or what changes to the economic landscape it will engender.
I am of a mind that this a beneficial and urgent conversation to have.
When Ron Paul, for example, speaks to media outlets or before a crowd, he presents the “hyper-inflation or repudiation” argument and curveballs a talking head or whips an audience into a frenzy on the subject of hyper-inflation. But the non-initiated observer might justifiably be left scratching their head, wondering, “so what is he saying? Is repudiation the answer then? Will that get us out of this? And, if so, how?”
For my tastes, not enough is said about repudiation here. Does anyone have a firm line on this. If I were to have a dinner table conversation on this subject tonight and was asked, “so what are we to do?” and I say, “well, there’s only two things we can do: inflate our way out” and, throwing a crumb to the ‘progressive’ in the audience, “raise taxes to extraordinary levels sufficient to pay down the debt” or “repudiate the debt”. I’d sound quite bright, wouldn’t I? But then one of them asks, “well, what would repudiation look like and how would it work?”.
Rothbard says it well here, I suppose: http://mises.org/daily/1423
I think we need to start speaking more about repudiation as an option and, if not, why.