Trigger To The Inflation Time Bomb

Will the trigger to the inflation time bomb be setoff soon?

According to Dr. Antony Mueller

Look at these two curves as if they were electrical wire all it takes a little twiggle of the money multiplier to surge and the bomb will explode. While it would be hard and enduring task for the central bank to reduce the monetary base, it only takes a whiff for expectations that determine the multiplier to shoot up. The bomb that will be ignited has already a name. It's name is "hyperinflation".

Mainstream have long been fixated about deflation.

But like Waiting for Godot, this has not occurred yet, and will unlikely happen unless the Fed accedes to the environment of shrinking liquidity at the risk of the implosion of the US banking system.

Ironically, this would defeat all their trillions of rescue efforts to the politically privileged industry. (As we long have been saying---bailouts were directed NOT primarily to save the economy but the political-economic class that depended on the benefits of seignorage from the US dollar standard.)

Also as we have long spelled out, the US yield curve cycle has a 2-3 year lag period from which we should expect it to generate “traction” by the last quarter of 2010.

And given the recent marked improvements in the credit markets of the US as shown below...

From St. Louis Federal Reserve...

From Northern Trust...

Not only is the yield curve cycle being validated, as US banks become more “open” to issue loans rather than seek safety in securities, but this also heightens the risk of the proverbial "pulling of the trigger" to the inflation time bomb.