Deflationary Depression or Hyperinflation?

In summary, the following analysis / argument concludes that Depression is a far more likely outcome than Hyperinflation.

…No one can tell for certain if the floor under the velocity of money will hold or collapse. If it collapses, we will have a Depression accompanied by deflation. If it holds then


The ultimate problem is that the engine of the world economy is no longer capable of pulling it. In simple English, the question is: Will there be sufficient industrial activity across the planet to generate the economic wealth required to feed, clothe and house the masses. (And a definition of the masses is difficult to agree, because we now have 2 billion additional people in China and India who form part of the new world economy, and 2 billion people in Europe the USA and Latin America who form part of the old economy).

Clearly, if there is double the number of people who need to be accommodated and we have passed Peak Oil, then the answer to the question of hyperinflation vs depression vs healthy economic growth will depend on one thing and one thing only: Will we find a new energy paradigm that is powerful enough not only to replace oil and coal, but that can provide DOUBLE the energy that oil and coal were able to provide in combination?

Market Oracle