John Williams : Hyperinflationary Great Depression by 2014

"John Williams (in another interview ): Sure. Before we had the financial crisis that broke in 2007 and 2008, the system was headed for hyperinflation by the end of the current decade, perhaps by 2020. That was just the way the government’s obligations were lined up. We were seeing deficits still averaging 5 trillion dollars a year on a gap accounting basis, completely unsustainable. By 2020 we would have been at a point where the government would have had to print the money to meet its obligations. There is no way it could sustain that with borrowing. We had a circumstance develop in 2006-2007 where the economy started to turn down sharply, particularly in the housing area, which helped to trigger a financial crisis. The economy helped to trigger the financial crisis, the financial crisis exacerbated the downturn in the economy, and we saw almost a collapse in economic activity going through the year 2007, into 2008, even to 2009, and it has been pretty much bottom-bouncing since, irrespective of the official pronouncements out of Washington. But in August/September of 2008, the people in Washington realized that they had so loused up the system that they were on the brink of a systemic failure, that the banking system was going to collapse if they didn’t do something. They weren’t kidding about that. We shouldn’t have gotten to that point, but having gotten to that point, they had to do what they had to do and put forth all sorts of emergency spending, lending, guarantees – they created whatever money they had to in order to keep the system from failing. I will contend that they will continue to do that so long as the markets will let them get away with it. The problem is that the cures that they put forth did nothing to resolve the problem. It bought them a little time in terms of systemic stability, but the systemic solvency crisis continues. The banks are not healthy. The big banks are still in trouble. We have another crisis that is brewing here. The U.S. economy did not recover..."

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