Alice in ‘Flation Land

‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master, that’s all.’

After Alice left Numberland, she found herself in ‘Flation Land, where she encountered Humpty Dumpty, so robust in good times, now perched precariously on his Wall. Alice solemnly pondered Humpty’s fall. All the King’s horses and all the King’s men had put the many pieces of this delicate egg back together (with the help of scotch tape and a little tarp), but which “flation” would be master, Alice wondered. Would it be Deflation? Stagflation? Inflation? Perhaps even the dreaded Hyperinflation?

Alice knew: Inflation would be master.The magical trillions conjured out of thin air in Numberland had convinced her of that much. It was just a question of when. Inflation, the rise in prices caused by an increase in money supply, is inevitable when so many dollars are pumped into the system. Once the stimulus works its magic, there will likely be a rush for scarce goods and services. Warren Buffett predicts that, thanks to the government’s costly economic rescue efforts, inflation could eventually exceed the highs of the 1970s…

Alice in Numberland

There are days when the downturn feels curiously like we’re Alice in Wonderland, falling down the rabbit hole, with numbers swirling dizzyingly about.

From the largest Ponzi scheme ever, to taxpayer bailouts of countless irresponsible companies, to mind-boggling bank losses, to ludicrous bonuses paid to undeserving executives, we are barraged by figure after staggering figure. What’s more, there is no end in sight to this numerical syndrome…