Re: Financial topics
Posted: Wed Apr 21, 2010 4:43 pm
http://www.marketwatch.com/story/paulso ... genumber=2
Alternate view on inflation:
Alternate view on inflation:
And (from page 1 of the story) Greece:Paulson said Wednesday that the firm still expects inflation in coming years and hasn't changed its position on gold, which is seen as a good hedge against strong inflation.
Through quantitative monetary easing, the U.S. government has increased the monetary base by roughly 150% since before Lehman Brothers Holdings Inc. collapsed, Paulson said.
Excessive growth in the monetary base over real economic growth creates inflation, he argued. "Unless this can be removed, it's likely to find its way into the money supply and hence inflation. We haven't changed our view."
Inflation will take a while to develop, but in three to seven years, Paulson added, he expects to see higher rates of inflation.
For the money supply to expand, there has to be economic growth and banks have to expand their assets while unemployment falls, Paulson noted. "But that's what's happening now. I wouldn't be surprised to start seeing signs of money-supply growth in coming months."
Paulson added he was concerned about a potential double-dip recession and a possible default by a Southern European nation. "I'm currently much less concerned that either those two issues will happen."
Greece's problems are much better understood now and are being dealt with, he commented.