PPI History of the Producer Price Index. What this shows is a virtual quadrupling in 30 years. The important question at this point relates to monetary aggregates and the unimaginable effect of stuffing several hundred billion dollars into one quarter.. The analogy is like a pig moving through a python.

A number of scenarios are possible

- Banks loan out the aggregates (they refuse)

- Banks are the mattress and a deflationary spiral ensues (there is other credit sourcing in smaller banks)

- Ever more bailouts bail out the bailouts. Weimar America.

There is no parallel to the monetary aggregate formation to the period of 1929 to 1932. In that time, the Fed stopped lending to stop speculation. The Fed is behaving the opposite now. Deflation is the present, but inflation is the future.

In the last few months have seen greater M3 growth then seen in US History. M3 spikes, as data show, tend to precede a major recessions.

Spikes in M3 are followed by contractions in supply because the broader aggregates like Commercial Paper and longer CDs get paid off by M1. When that happens, money dries up. GDP contraction ensues. We must ask, how much and how far. Data seems to say - huge asset price drops, followed by huge asset price increases.