Moving the analogy to economics I would ask: Is it better to have an economy that degrades and rebounds gracefully under stress or one that bears heavy loads but which fails dramatically when it hits the limits? The first is inherently robust but exhibits many variations in state. The second shows much more stability - but offers fewer indicators of the stresses the system is under.

Which style of economy do we have now? In practice it would seem that there is a spectrum which ranges from bouncy to brittle. Looking at business cycles, it appears that 50 years ago most western economies tended to be a bit bouncy. The exception was the Soviet block economies which exhibited characteristics of the stable-to-failure type. Now, with today's much more flattened economic cycles it would appear that most of the developed world's economies are at the brittle end of the scale. One sees articles proclaiming the end of the business cycle as a fine and wonderful thing - I have my doubts.

It's more than just the flattened business cycles that make me think today's economies are brittle. As I look at things I tend to see a lack of robustness everywhere and this is my fundamental problem with an organization like Wal-Mart. It is big, it is massively wealthy and it can take a lot of stress and it will show little external effect. It is vulnerable though - there is quite a list: long supply chains, dependency on a high value dollar and low fuel prices etc. etc.. Wal-Mart is very strong but because of the centralized simplicity of the organization and the inability of its component parts to adapt it is brittle. Hit it in the right place and it will fail. Its not a matter of running out of money - the failure could take other forms. Perhaps it will manifest itself as a sudden inablity to offer the goods and services it used to provide. This will leave a huge hole in the economy. You don't get that catastrophic failure mode with an equivalent collection of mom-and-pop operations. Wal-Mart's dominance makes it an economic monoculture: very strong but brittle. Too many brittle components and you get a brittle economy. I subscribe to the view point that this is not a good thing.

While reading your blog today, I was struck by a way of thinking and living that I have subscribed to (or tried to anyway). I am tired of being a "consumer / producer," and as such I no longer worry about anything creative that I do as having any commercial value. I simply enjoying creating things. I too play my guitar 30 minutes to an hour a day. I enjoy working on my motorcycle. Even mowing my yard. The end result and the process itself is my reward, and I don't worry too much about what other people think.

While I was scrubbing the bathroom floor yesterday, my mind wandered to the film American Splendor

The illusory nature of artistic success is brilliantly illustrated by the 1960 film The World of Apu, written and directed by Satyajit Ray.

This is only true for federal employees under the Civil Service Retirement System (CSRS). That ended in 1998, and all Fed employees hired since then, like me, do indeed have to pay into SS under FERS, or the Federal Employee Retirement System. I've got SS taxes taken out of every check, and I'm convinced I'll never see a dime. But be assured that some fed workers do worry about social security.

I read your column about Social Security and “who gets hurt” if it goes under. But here’s what makes even more interesting reading: GOVERNMENT WORKERS DON’T HAVE TO WORRY ABOUT Social Security GOING UNDER. They are not covered under it like the rest of us ( yes, us - the ones who are paying for everything) are. THEIR retirement plan, through the good old Federal Govt has our meager Social Security beat all to the devil and is in no danger of being phased out, or going broke in the same way.

I again have had to suppress my disbelief at the world when reading your reader’s comments in your latest blog posting. His assertions that he has a “right” to all his earnings have at least two main problems: he has undoubtedly benefited from a peaceful society, education, and transportation; and society as a whole is likely to suffer from his expenditures (pollution, scarcity of resources).

The fact that he tries to argue that it is “immoral” to tax the rich to help the poor goes against much moral philosophy. The one that I subscribe to is the notion that we should set up a society where we would be happy being randomly assigned any position in it. I for one would not be happy to be assigned a random position in a society where there is a 30% chance that I could end up struggling for life.

Perhaps this reader’s problem is that he equates poor and lazy, when there is a huge literature on the inaccessibility of the higher rungs of our society to those born in poverty.

One last comment on your response to your reader, (re: no taxation without representation), for the past 4 years I have been paying a great deal of taxes, though as a permanent resident I have no right to vote in state or national elections. My wife jokes that the Americans are just getting their revenge on me (as I am British), but I think it also underlies a significant problem that in this age where American elected officials can cause havoc around the globe, only Americans are allowed to vote for them.

I also wondered what would happen if you listed those same countries in your international comparison sorted by GDP per person. I'm pretty sure the U.S. and Japan would be number 1 and 2, just as they are last in taxes on your graph. Not sure the correlation would hold up, but it still should make you think.

The comment that defense has shrunk as a percentage of GDP has always struck me as odd. Just because the country gets richer doesn't mean it costs more to defend. The defense spending should be proportional to the spending of our likely enemies. With the collapse of the Soviet Union, that enemy spending should have dropped dramatically.

Much is made of the potential threat from China or from the middle east, but they really don't spend much. The new threat is the famous "asymmetrical warfare", where we use million dollar cruise missiles, and they use guys with knives or roadside bombs. Not clear to me that any of the current defense spending really prepares us for that world. Improved spycraft might, but that doesn't seem to be happening.

Earn more, spend more, want more

"In the first extract from his new book, psychologist Oliver James explains how the 'affluenza' virus can lead to insecurity and destroy personal relationships."

I see in American pop culture, a lot that reeks of the "affluenza" that the author writes about ,and I think it is destroying us. American Idol, Paris Hilton, Donald Trump and reality tv promote empty values. It frustrates me to see it all the time. I don't know what can happen to change this. It may truly be a horrible side effect of "selfish capitalism".

Keep up the good work. It is nice to read someone who has their eyes as wide open as yours are.

Charles, all this vastly huge Medicaid/Medicare and social security spending is in the future so THAT DEBT DOESNT COUNT!!! future debt isn't important as we will be able to pay for it in some miraculous, painless way!

you are discussing very complex problems and I don't think a lot of the hecklers get it. most people want a sound bite solution. what is scary is that the fact that the gov may never actually pay out the (future) social security payments or healthcare - so is it a debt?! do we need to add that to the budget deficit?

My parents worked for FHA/HUD from the 1960's thru the 1990's. I think if the average tax payer knew the extent of waste in the social programs they would freak.

My mother has now retired and hit the point in which she is now drawing money she never paid in. my grandmother 'retired' 25 years ago!!!! my grandparents were 'dirt farmers' in Oklahoma and they never paid a penny into the system. my girlfriends grandparents (all 4) lived for 20 years on social security.

I try and explain to my mother that the (small amount) of money she put into social security was borrowed (stolen?) and is gone. she is being paid by current taxpayers so she is getting a 'welfare' check just like the welfare recipients she dealt with for 35 years! she thinks my sisters 'corporate' retirement package is secure. she cant grasp the fact that when my sister gets ready to retire in 25 years her company will probably have defaulted/gone out of business and she will have nothing!

I know that massive debt/fiat money leads to ruin but even I cant grasp the fact that the united states could fail! the human mind doesn't think in those terms.

I didn’t take your view about taxation from a moral standpoint but from a correlative perspective. I also take issue with some of your readers linear thinking in regards to complex non-linear social issues. There may not be a moral basis for taxes to support social welfare but what will we do when the poor and disaffected are rising up in revolt. I have no answers, I merely raise the question of whether morality is the only benchmark by which social policy is formed. The poorest members of any society will burden that society to some extent and possibly in ways that are very undesirable.

There will always be waste in human endeavors but we should have systems of accountability to limit them. History has shown us the lesson of the result of letting military preparedness decline. I wonder if fighting a war is more or less expensive than preventing or losing one? Harun

I really enjoyed your comments on the defense industry. Both my parents worked for Lockheed, as well as several family friends during the days of the Tristar days, as well as the older, I forget the name of the passenger plane with the funny tail. they always complained about management sticking with Rolls Royce, and that, at the time, the strength of Lockheed was efficiency of design, efficiency of aircraft, though not in vogue at the time, turned out to be inconsequential, then, but not now. My Dad worked on the Aquila, something that actually got cancelled! I had a neighbor that worked for Ampex and helped minaturize the VCR for flight recording for bombers and was PISSED they sold it to the Japanese. now he makes 1/8 scale WWII RC fighters with EVERYTHING to scale including flaps, twisting landing gear etc.

I guess I am most scared by the "over teching" of the military and communications redundancy. I have a friend in the military who sets up remote command centers for generals. interesting topic, especially if we rely too much on satellites instead of hard assets for communications.

Perhaps the biggest question about the defense industry is at what level of consolidation was innovation, costs, ontime, non-war production efficiency at it's best, which of course is subjective.

My choice is just before the Korean War because we were still unlocking all of Germany's secrets, swept wing design, 2nd generation jets, atmosphere, sound barrier, air and fuel, space, triangulation (in comes the meter again), in air records by all kinds of design's, heady days of people still alive who started their company and were motivated by proof of concept, rather than money alone, on and on. The other eras (again, not wartime, which mostly foster innovation) really pale except the 60's with the dual use platforms which mostly ended up as a military solution (P-3 orion and the british versions come to mind), and of course Skunkworks with Kelly Johnson.

To a man, er woman, they all said Boeing would have done a good job, too. Most said cost overruns are underestimated based on waiting for security clearance while doing nothing, (average of 6 mos?), requirements on procurements, such as complying with the wood source of hammers, making sure the hammer can hammer (labor, etc). Based on some of this, wood source is known, but i don't think anyone would buy a hammer made out of teak or mahogony, but someone still has to run around wasting time making sure the hammer was purchased conforming to requirements. That list is not infinite, but not measurable.

I was talking about your BLOG with a co-worker and even though it is sad to say, we both agree that most spending on "prevention" will do nothing.

Most Americans are so stupid that they would sit watching TV and eating KFC even if the Government paid to send out a personal trainer with a healthy meal every day.

Health care is the one topic that I get more up in arms about than economics and investments. Have you read Politics in Healing by Daniel Haley? Do you know about IV Chelation Therapy? The medical establishment in America has become one of the most shameful aspects of our society. Worthwhile treatments and preventative methods are cast aside because they do not generate enought profit. I know about Chelation because I have studied the subject for close to four years and have been using the treatment for over a year. It works and is, in my opinion and the opinion of many other patients that I have met at the clinic, a much more effective treatment than bypass surgery, drugs et. al.

Check out what Richard Russell says about Chelation therapy. If you can't find it, I have files of his discussion of Chelation from his Dow Theory Letter. Medical expense consumes more of our GDP on a percentage basis that any other industrialized nation, yet we have lower life expectancy that all the rest with the exception of Mexico. See Michael Hodges, Grandfather economic report.

Our country is going to hell and I fear not nearly enough people are aware enough of the situation to make a difference.

I'd like to add to the mix that base health care costs are anomalously high even without poor medical spending decisions, due to the employer-based tax structure of the system. I wrote an extensive essay on the matter here, titled as above:

U.S. Health Care: Addicted To The Thing That's Killing Us.

Gratzer has a book out recently saying basically the same things.

Take a look at the Epilogue anecdotes to my story, and consider I'm just a normal guy, fairly young at that, and my insurance costs are inflated by several hundred percent, and I can pick out instances of compulsory overspending on care by several thousand percent!

These cholesterol trials also looked at total mortality, that is, the deaths from all causes, and found little difference between the study participants who tried to lower their cholesterol and those who did not. In other words, some clinical trials showed that the heart disease death rates were, in fact, lower among men who had reduced their cholesterol levels. But this benefit was offset by a higher rate of deaths from other causes.

Given these unimpressive research results, why is high cholesterol so firmly imbedded in our consciousness as a sure-fire sign of a future heart attack? Dr. Ravnskov said that it all started with the landmark Framingham Heart Study, which began following healthy people in the early 1950s to see who had a heart attack and what distinguished them from the people who did not. High cholesterol was one risk factor--but it was only one of more than 240 others. "They [public health officials, cardiologists, etc.] have confused a statistical association with causation," he observed. "It's as if they saw a house burning and determined that the bigger the fire, the more fireman are present, and then concluded that firemen cause burning houses."

"Anyone who questions cholesterol usually finds his funding cut off," said Paul Rosch, MD, who started his talk with a reminder that half of all heart attacks occur in people with normal cholesterol levels. "Stress has more deleterious effects on the heart than cholesterol," said Dr. Rosch,

...hundreds of people wrote in to say they, too, had experienced severe memory loss while on Lipitor. "Patients are reluctant to report amnesia, or they attribute the symptoms to old age or early Alzheimer's," explained Dr. Graveline. "And doctors are reluctant to see that the drug they prescribed was the cause." Still, the official word on Lipitor is that memory loss is not a statin side effect. "Thousands of cases of memory dysfunction have been reported to the FDA's Medwatch program," he said, "but after two years, the agency still hasn't acted. And most practicing physicians are unaware of the problem."

..."In drug trials, the pharmaceutical companies often divide similar adverse effects into six or seven different categories to keep the scarier side effects under 1%."...

...statin drugs deplete the body of an important anti-oxidant (CQ10) with muscle wasting and heart failure as a result.

..."It has been pretty well documented from biopsies that the severity of heart failure correlates with the people who have the lowest levels of Q10."...

The F/A-18 E/F acquisition program was an unparalleled success. The aircraft emerged from Engineering and Manufacturing Development meeting all of its performance requirements on cost, on schedule and 400 pounds under weight. All of this was verified in Operational Verification testing, the final exam, passing with flying colors receiving the highest possible endorsement. The Super Hornet cost per flight hour is 40% of the F-14 Tomcat and requires 75% less labor hours per flight hour.

I began reading your blog because I agreed with your thesis that the Federal Government was the cause of most of our problems (too low Fed Fund rates, loose lending standards, excessive spending, etc.)

I now find that you are an advocate of very high tax rates, and apparently, a Socialist Welfare state.

Do you regard individuals as merely cogs of the collective whole, happily forking over their earnings to the poor and lazy because it is their duty?

You seem to be a very intelligent person. Can you please state the MORAL justification why I have the duty to relinquish my wealth that I have EARNED to anyone else? And if it is immoral for me to enjoy the fruits of my labor, why is it moral for the recipients of my taxes to enjoy them?

Please don't respond by saying that we should enjoy half of our earnings and sacrifice the other half. We are talking about a moral principle here, that a man has a right to exist for his own happiness.

You'd really have to include state and local taxes in your effective tax rates, especially if you are going to compare internationally. The U.S. states are as large as many countries, and provide a significant portion of services.

And of course when considering tax by income bracket, you would have to subtract the value of transfer payments, which would improve things even more for the low income earners.

As for Social Security and Medicare, I agree they are in trouble, but it's not due to lack of taxes. Currently, both programs are in surplus, with the extra income going to fund other government spending. And that should tell you exactly what would happen to any additional revenue raised in the name of balancing those two programs! The fundamental problems with retirement funding is a) increase in the number of retirees, which we are not planning for, and b) continual increases in the cost of health care, which we are not trying to slow.

You could have linked that TCS article about Denmark in your parting comment on how wonderful it is to pay 50% of your income in taxes. When it comes to brainwashing, many people seem to think Scandinavia and Canada have it made, but articles on the Canadian health care system, or the overall health of the Scandinavian economies show that to be a myth.

I find the absolute faith in government by people on the left to be bizarre. It seems immune to facts. For example, the prevailing myth is that the disaster in New Orleans from Katrina was simply due to the storm (probably caused by global warming) and that the government response was inadequate. In fact, the disaster was entirely due to government incompetence in designing and maintaining the levees. The response was confused exactly because various levels of government fought over jurisdiction and displayed their usual idiocy. And the follow through has not be characterized by lack of resources, but by huge amounts of money spread over the entire area without any consideration of cost management or effectiveness.

I must take issue with some statements you made about our deficit in your January 19, 2007 entry, the most unsupportable one contending:

"Yes, there is massive waste in Pentagon spending, but probably less than in Medicare."

Pentagon Unable to Account for Trillions in Spending

I invite you to review the above CBS news item dating back almost five (5) years, and challenge you to cite anything remotely comparable in the Medicare program, reported before or since.

Here is a list of federal budget adjustments worth looking at, and endorsing:

commonsensebudget.org

Note the distinctions made on this page between mandatory and discretionary spending programs (since your entry did not):

www.sensiblepriorities.org

I am not contending that effective tax rates should not rise, to at least stop the debt hemorrhaging. John Edwards has publicly and emphatically stated that universal health care is a higher priority for him than deficit reduction. While that position certainly is debatable, at least one presidential candidate has expressed a preference. I doubt any others will. But whether for health care or deficit reduction, the military spending must be pared down, particularly since much of the purported Cold War justification for such high (and considerably untraceable) outlays is a past perception. Today, there is but one superpower left in global geopolitics, the United States, which, ironically, may be its own worst enemy.

As a tax professional I can assure you that comparing highest statutory income tax rates year over year is meaningless. A better comparison would be average effective tax rates for example or gross income tax receipts in real dollars.

You should certainly distinguish between a company that fires people because it has moved a plant to China, and a company that fires (or probably just doesn't hire) because it has increased its use of automation. Anecdotally, just watch "How It's Made" on the Discovery channel, and note how infrequently anything is done by human beings.

People say that the current situation is just a race to the bottom to find the cheapest third world country labor. Instead, it's a two-pronged race -- automation vs. people, with the people side being pushed to the third world. But, the cost of doing it with automation represents a ceiling on how much people can make doing that job. The ceiling continues to drop as the technology gets better.

All the robotic arms and such have long been perfected. The only thing that stops automation from being used now is that some jobs involve what amounts to a lot of hand-eye coordination. There are lots of fiddly little parts in a bin, they have to be snapped together or sewn or something. Although the robotic hand could do it, and the cameras could see it, the software isn't up to doing it in real time. As processor speeds increase and vision algorithms improve, more and more tasks can be done with automation. Since the robots are cleaner and more consistent, that really is the preference if it can be done cost effectively. Plus you can locate the plant near your customers, instead of halfway around the world.

It's not just happening in the U.S. I think there was an article a couple of months ago (in The Economist?) about a car factory in France, owned by one of the Japanese auto manufacturers. Renault was taking a tour and were appalled. The Japanese factory was almost completely automated, and so flexible that they could do a different car model on each run, changing the mix from car to car. Ready for custom cars ordered at the dealership or over the web, in other words. The quote from the Renault people was that they were 10 years behind.

I really think the future is not that all manufacturing leaves the U.S. Instead, I think that in 10-15 years, China and the rest of the third world will be grasping for the last dregs of non-automated manufacturing. Since the U.S. has lost so many of those jobs already, it will have little impact on us. The foreign factory will be replaced by a robotic U.S. factory, and no one will notice. In the third world, the result will be devastating however. They don't have time to move a significant portion of their workforce up the value chain. They don't have enough local demand to do it their own way and not worry about exports. They'll just see a steady drop in investment, as companies realize that labor costs hardly matter any more.

Lately I had been thinking that the best business is to mind your own business, so took a look... Basically I took a look at NY State manufacturing and finance and insurance from economic census of 1997 and 2002:

       Paid Employees        Annual Payroll
1997     611,857                 52.5 Bil     Finance & Insurance
           785,891                  26.5 Bil    Manufacturing
total payroll=79(1.06)^5 (79 Billion at 6% per/y inflation for 5 years becomes 105.71)
(Editor's note: official inflation has run about 3% per year)
2002    781,833                 80.3 Bil     Finance & Insurance
          641,434                 25.4 Bil     Manufacturing
                     total payroll=105.7 Bill

Links to Census data:

1997 Economic Census: Finance and Insurance United States

2002 Economic Census Finance and Insurance New York

2002 Economic Census Manufacturing New York

1997 Economic Census: Manufacturing New York

In NY the population increased from about 18 mil in 1990 to 19.3 mil in 2006 which amounts to about less than half of a percent (about .45 of a percent) a year.

Here is the Census data for California's employment 1997 and 2002:

Comparative Statistics for California

We are entering an interesting time, when those who had illusions are drinking sand and checking into reality. I hope the bankruptcy provisions are reversed but in trade off there will probably be an extension from 7 years to 10 years or some other retribution. I am so sad to see my friends delude themselves, one went into real estate mortgage brokering the other started drinking from the debt fountain and can't contain himself. Perhaps this is a lesson in life which will temper their learning for the future. Everyone around seems caught in some sort of irrational behavior enabled by the surroundings. My friend proudly told me that he spent 1500 dollars in 3 days just on going out, clubbing, social status stuff in the spur of the moment. Pehhaps everyone spends the same just I am poor, or do not spend what I don't have.

There is a story (probably apocryphal) of an African potentate who visits a Japanese politician's luxurious home and asks, "How can you afford this on your government salary?" In response to which the Japanese points out through the window and replies, "See that expressway out there?"
"Why yes. A magnificent road. We came here by it from the airport."
"Ten percent."

Later that year, the Japanese visits the African in his pathetically impoverished home country, and, astounded by the Versailles-like palace in which he finds him living, after having been transported from the airport over awful roads in horrendous states of repair, asks the same question.
In response to which the African replies, "See that expressway out there?"
"Uhhh. I'm afraid I must confess, no. In fact, I haven't seen any expressways here."
"That's right. ... One hundred percent."

Shades of gray do matter.

After falling for five years, inflation-adjusted median household income rose 1.1%, to $46,326.

The income gap has widened since the late 1970s and didn't shrink in 2005. The top 20% takes home 50% of the nation's income while the bottom 60% takes home 27% of U.S. household income.

Source: U.S. Census Bureau's Current Population Survey, Annual Social and Economic Supplements

Fred Hickey, proprietor of the wonderful High-Tech Strategist and member of the Barron's Roundtable, muses on the disconnect between Wall Street and the real world, like Nashua, which he calls home. The differences have never been greater, he laments, and the wealth disparity is at the highest level in history. By way of illustration, he cites the fact that the average pay of the top 126 hedge fund managers last year was $363 million, up some 45% from the year before.

If you believe such a crisis is unlikely, please read Benoit Mandlebrot's The Misbehavior of Markets .

Over the past six years, the real estate market absorbed nearly 60 percent of iron and steel products. China's iron and steel output for the 2006-2010 period is expected to reach 250 million tons, which would translate into an oversupply of more than 80 million tons, he said.

His mention of the Plaza Accord is quite off base.

"... It is no coincidence that this started in 1995, which was the starting point of the US stock market bubble. At that time also initiated as a formal policy was the Plaza Accord--the strong dollar. ..."

From Wikipedia:
"... The Plaza Accord was an agreement signed on September 22, 1985 by the then G5 nations (France, West Germany, Japan, the United States and the United Kingdom). The G5 agreed to devalue the US dollar in relation to the Japanese yen and German Deutsche Mark by intervening in currency markets. ..."

He was likely referring to the Louvre accord though that was signed much earlier:

"... The Louvre Accord was signed by the then G6 (France, West Germany, Japan, Canada, the United States and the United Kingdom) on February 22, 1987 in Paris, France. Italy had been an invited member, but declined to finalize the agreement. The goal of the Louvre Accord was to stabilize the international currency markets and halt the continued decline of the US Dollar caused by the Plaza Accord. ..."

Great piece on Japan. All those things you discuss are surely factors in Japan's condition. But I must say there is one important thing you missed.

That is the zero-interest rate policy (ZIRP) since 1994-1995 and total lack of capital controls. These things spawned the now-infamous carry trade, allowing worldwide investors to borrow yen to leverage up and speculate elsewhere. More on this in a second.

But another important aspect to this policy was to drain most productive liquidity *out of Japan*. In other words, the "smart money" left Japan because the basis of returns for the country (set by interest rates) essentially became zero. Think about it: if you were a Japanese investor and faced with ZIRP, where would you put your money? Answer: if you're dumb, in postal bonds yielding 1%; if you're smart, overseas.

As an exacerbating factor, as you say, business conditions are sclerotic domestically, as a matter of other aspects of policy. A double-whammy: there's nothing attractive to invest in domestically, and a low basis for returns to boot.

Back to the first point: the effective flooding of this liquidity abroad--outside Japan.

It is no coincidence that this started in 1995, which was the starting point of the US stock market bubble. At that time also initiated as a formal policy was the Plaza Accord--the strong dollar. Not only did most of Japan's innate liquidity flee its borders, but foreigners additionally borrowed in yen to leverage up and carry trade, and then virtually all of this expanded money supply was poured into the US markets (yielding 5-6% as a basis at the time). Happily, the Fed had just spent 1990-1994 loosening banking controls, most notably the reserves requirement (which essentially became optional), allowing even more liquidity to bloom inside the US. The US mega-bubble was born.

That's where Japan's missing liquidity (and much more) went.

It is unlikely this delicate setup will be repeated, but with the US as the "deflationary" party: the Eurozone is the most likely contender to play the role of the US economy, but the Europeans don't seem to be too keen on allowing broad money to multiply totally unchecked.

I was wondering if you would consider discussing why some experts/ authorities believe the future will be inflationary while others see it as deflationary. John Williams is now projecting it will be hyperinflationary.

This topic became of increased interest to me two days ago when there was great excitement on one of the Motley Fool boards about CDs (3, 5, and 7 yr) yielding 6.25% APY. Several of the more experienced investors indicated they were going to buy quite heavily. Aware of prior warnings about future inflation I queried the board participants as to whether they intended to ladder the bonds -- I thought this would minimize any damage in an inflationary environment.

This led one participant to post a more extensive question on another board seeking input as to whether the future would be inflationary or deflationary.

I too am confused by conflicting conclusions by knowledgeable authorities as to what the future holds.The inflationary/ hyperinflationary path seems much more sensical even to a non-economist type like myself. I just don't understand how some reach the deflationary path. Could there be a short period of hyperinflation followed by a long period of deflation?