Three things:


1. Stagflation: There is not going to be growth (real growth, GDP could improve) and meaningful reduction of unemployment, while at the same time prices are going to go up. Keynesians are still in denial about stagflation. They keep repeating that salaries can not go up as long as unemployment is high, and therefore prices can not go up either. This is utter bullshit, salaries and prices are already going up while unemployment is high and it will accelerate. If anyone is interested I can go into more detail why.

2. Banks want prices to go up. People keep saying that they want prices to go down so they can buy everything on the cheap. It this were the case they would have already done it. Banks have what they want and are in the bussiness of debt, not running bussiness. Why do banks need prices to go up? Because otherwise they go broke. The banks have a lot of underlying assets for the loans they gave. Those assets have plummeted in price and they are technically broke. Thats why one of the first mesures of the USA gov was to remove mark to market. Banks have assets on their balance sheet marked to inflated prices because otherwise they can not meet the reqired ratios. They need those assets to regain their previous prices so they can go back to normal. Its important to understand that if prices of those assests dont go up banks will eventually have to admit they are broke because they are blocking the credit system. And its important to understand that those prices were inflated and wont be inflated again, so they need the whole price level to rise a lot.

3. "The Fed is out of bullets" Everytime I hear this I ask a question and never get an answer: Whats stopping the Fed from monetizing more government debt? (apart from the fear of producing hyperinflation).