I’ll see your Rogoff and raise you one Niall Ferguson. Inflation may end up being popular as there are a lot more debtors than creditors and the creditors are barely hanging on. Whether there is some super-duper process for doing refi or writing down face amounts of mortgages, everyone’s debt will be forced to shrink. What will be the social effects of a collective decision to cancel debts, whether outright or in effect? We are about to breach a psychological boundary and once we do that, we will have developed a taste or tolerance for breaching boundaries. There are also more than a few savers out there. What about when they see even 15% inflation eating away at their remaining savings after already having lost so much?

More than awkward diplomatic moments or attacks on Rush, the kind of social upheaval that would go with even the mild scenario of Rogoff could do some really serious damage to the Obama presidency in ways that are not yet clear. When you combine the dislocation with the scolding, finger-wagging tone of Obama, much bitterness may ensue.

I know the latest talk is about emulating Europe. My question is: Europe of which decade? Just my $0.02