[lehighguy]

We aren't going to have a contraction of the moeny supply because Bernanke is going to print dollars like crazy and destroy the currency. Hyperfinlationary recession or deflationary recession, take your pick. The fed can't create any real wealth by fiddling with this stuff. Eventually we'll be at 0.2Euro/Dollar and gas will be 6$/gallon or worse. Inflation will be unfathomable.

The dollar is losing its place as world reserve currency. World banks are tired of trading ever greater amounts of real goods for a continually depreciating paper currency. China is experiencing ever higher inflation because we export it too them. Central banks around the world have announced thier intention to diversify out of (i.e. dump) the dollar. Our currency has lost astonishing value in the last five years and especially the last month. This will only continue as Helicopter Ben lowers rates.

The dollar as a reserve currency has allowed us to expand the money supply at astonishing levels without fully experiencing the resulting inflation. Those extra dollars have led to an astonishing and reckless expansion of personal, corporate, and mortgage debt as well as unfathomable malinvestment. Now all of that inflation is about to come back to us as they sell off these reserves.

Your right about the gold standard. Foolish foriegn central banks could try to devlaue in response to our devaluation, causing huge worldwide inflation. Luckily the ECB, BOC, BOE, BOJ, and others haven't been retarded like that. Thier countries will get by.

I'm not going to try and predict what kind of retarded trade policies the pols could come up with in a deep recession. Only that the power that they wield today is far far greater then FDR ever had.