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Inflation? Soft Landing? Or?
Darryl Robert Schoon

We are going to have the worst of both worlds. The global banking system is disintegrating in hyperdeflation; the irredeemable dollar will survive only to succumb to hyperinflation later. In the meantime, it will be depression that may eclipse the Great Depression of the 1930’s.  -Professor Antal E. Fekete,  The Mechanism of Capital Destruction, October 20, 2008

Professor Antal E. Fekete wrote those words in the 2008 financial crisis. Since then, the velocity of money—the measure of economic activity—responded accordingly; plunging in a hyperdeflationary descent to levels lower than even during the 1930’s Great Depression.


The collapse of two massive financial bubbles—the 2000 dotcom and the 2008 subprime bubble—unleashed deflationary forces beyond the ability of the Fed to reverse. In 2009, the Fed cut interest rates to zero and created trillions of dollars via quantitative easing to replace money rapidly vanishing into deflation’s ever larger black hole. 

Invented in China in 1024, fiat paper money eventually always succumbs to excessive money-printing and hyperinflation. But fiat money version 2.0, issued by central banks, has an additional Achilles’ heel—hyperdeflation. Both possibilities are now in play.

Hyperdeflation means that the velocity of money circulation is getting ever lower, in fact lower than any given velocity, however small. The important thing to note is that this is happening regardless what the central bank does…Everybody is expecting hyperinflation, but what we are getting is hyperdeflation. -Professor Antal E. Fekete

In a hyperdeflationary collapse, aggregate demand contracts, debts default, credit tightens, the velocity of money plunges and money, i.e. circulating credit and debt, disappears. In the 1930s, deflationary Great Depression, money literally vanished. The money supply fell 33%; and it’s happening again today.

Today, central bankers are acutely aware current rate hikes have not yet contained inflationary pressures. Even with banks failing, more rate hikes are coming. They will continue because the alternative, i.e. hyperinflation, would render central bankers’ fiat paper money worthless.

Today’s investors are desperately hoping for an economic soft-landing; a scenario similar to hardened heroin addicts hoping that withdrawal after lifetime of addiction can happen with little or no pain. While the sentiment is understandable, the possibility is non-existent.

Bank Run version 2023

A Fed pivot, if it happens, will result in even more inflation and even more rate hikes. Today, trapped between hyperinflation and hyperdeflation, central bankers have no easy answers. In fact, they have no answers at all.

No one is more acutely aware of this than Japan’s central bankers who have been fighting a losing battle against deflation since the collapse of the massive Nikkei stock market bubble in 1990, the greatest deflationary collapse since the U.S. stock market collapsed in 1929.

In my book,  Time of the Vulture, I described what happened:

During the 1980s, the Japanese economy was booming. Its exports dominated virtually every market they entered and its balance of trade with the US was the largest in history. As a consequence, money was flowing into Japan at an unprecedented rate. Prices were beginning to move upwards and new money was flowing into the stock market at an unprecedented rate, causing the Nikkei to rise faster than market fundamentals might dictate.

By the mid-1980s, the Japanese Central Bank decided to slow the economy down by raising interest rates. This action would dampen any inflationary tendencies and prevent a stock market bubble from forming. However, as logical as this solution was, it was to be opposed by the US government and never implemented.

At the time, most of the Japanese money was being invested in US Treasuries, as the Reagan administration was borrowing heavily to fund its military buildup. During Reagan’s presidency, US government debt tripled from one to four trillion dollars, the greatest percentage increase of US debt in history.

The US knew that any rise in Japanese interest rates would slow the flow of Japanese funds to the US. Japanese investors would much prefer to keep their money in Japan if interest rates were high enough.

But during this time, the Reagan administration needed a constant flow of foreign dollars to pay for its military expenditures and when it heard about the plans of the Japanese Central Bank, it did more than register a protest. It threatened Japan with economic sanctions.

If the Japanese went ahead with their interest rate increase, the US threatened to retaliate with import tariffs on Japanese automobiles, electronics, and consumer goods. This threat was real enough to cause the Japanese to cancel their interest rate increase.

As a result, the US military buildup continued and the price of Japanese real estate and stocks, fueled by excessive amounts of liquidity, exploded upwards. Japanese real estate prices increased 70 times over and stock prices increased over 100-fold, with the Nikkei reaching a market top at 38,992 in January 1990. 

As with all speculative bubbles, the Nikkei collapsed—and the collapse of the Nikkei in 1990 unleashed deflationary forces not seen since the Great Depression of the 1930s. Prices of stocks and real estate in Japan began a long and steep multi-year descent.

Commercial real estate lost 80 % of its value in the next decade and the Nikkei fell from 38,992 in 1990 to 8,237 in 2003. Deflationary cycles are long and protracted and if not stopped will become deflationary depressions, an economic phenomenon for which there are no ready answers.

To combat deflationary riptides unleashed by the Nikkei’s 1990 collapse, Japan lowered interest rates from 6% in 1990 to a negative -0.1% today. In 2023, however, because of rising inflation, Japan is about to do what it didn’t do in the 1980s—raise interest rates. 

In 2023,  Japan’s rising rates will affect $3 trillion in Japanese investments around the world which would be sold and reinvested in Japanese assets. In the 1980s, the $3 trillion US military buildup would have been affected. Today, it will be the global economy.

In November 2016, well before today’s inflationary concerns, I wrote:

Today, central bankers are attempting to offset the growing global deflationary riptide by ‘inflation targeting’, i.e. using cheap credit and inflating the monetary base to artificially induce inflationary demand. So far, deflation is winning; but should inflation gain the upper hand, hyperinflation, not inflation, will result as the monetary base is now too large to limit any inflationary surge.Hyperinflation Versus Deflationary Collapse

Today’s hyperdeflationary collapse was the subject of my talk,  The Worst Depression 2009, (sound begins at 0.30) at Professor Fekete’s Gold Standard University in Hungary.


In  Time Of The Vulture (2007), I described an economic crisis that most did not see coming. The crisis began in 2008 and is today approaching its cataclysmic resolution. My new book,  Docking At The Mothership, predicts a far-better world will emerge, a possibility that appears even more improbable than did the possibility of a severe economic crisis in 2007. 

In a recent discussion/interview titled,  Death of the Evil Empire? (I join the discussion at 33 minutes). I explain why I am certain better times are coming. 

Buy gold, buy silver, have faith.


Darryl Robert Schoon
email: [email protected]
Schoon Archive




In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.

In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that - preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.

In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be "out-of-the-box" thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.

When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148-page analysis, "How to Survive the Crisis and Prosper In The Process."

The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, "How To Survive The Crisis And Prosper In The Process" was made available at and I began writing articles on economic issues.

The interest in the book and my writings has been gratifying. During its first two months, was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and, has been created to address this interest.

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