Amusing Prediction

Right now, everyone thinks that Ben Bernanke is trying his damnedest to create inflation, and is failing.

(In reality, a deflationary crash will be a great opportunity for the Treasury to sell longer maturity debt at attractive rates.)

Once the Treasury has refinanced its $1.8 trillion in outstanding bills with 10 year Notes at, say, 1% yields, it will make sense to start "inflating it away."

It occurs to me that, by that point, the current crop of Treasury bears will despair of the prospect that Bernanke will ever fire up the money helicopters and start inflating.

Perhaps they will give up and buy Treasuries, creating one final surge in price. That's when I'll want to be short.