I have a simple mind. I'm not especially good at figuring things out so I just tend not to believe what I'm told.
Have you been told that inflation is coming? Let's count they ways how:
The stock market was at record highs, fueled by massive earnings spurred by Federal spending
Then, the Fed dropped rates even lower, and there were rumors of negative rates
Quantitative Easing to Infinity
Reserve rate to zero (banks can create infinite amount of currency through lending)
Nobody buying Treasuries, so the Fed buys them all, monetizing debt
Bi-partisan Fiscal Stimulus to the Moon
The Government sends you a check
The Fed says it will not hold to its traditional inflation target, seeks more
The Democrats win control of the White House and Congress
Zero rates forever
The Government sends you another check
They say it wasn't big enough
Nearly half the US dollars in existence were created within the last 12 months
The messaging couldn't be louder and more clear if it was on a bull horn in front of your house on Sunday morning.
"Everyone" is getting the message. At least all the cool people are.
Personal Consumption Expenditures (Consumer Spending) pauses early during last year's shutdown, then rockets: https://fred.stlouisfed.org/series/PCE
Almost everything is on fire: houses, gold, silver, the NASDAQ, cryptocurrencies, food, building supplies, semiconductors, guns, ammo...
Retail investors want equity securities with 1000:1 P/E ratios rather than cash
Mortgage lending soars
Your wife's cousin's grandma bought Tesla stock for her grand-daughter.
In short: Everyone is shorting the dollar, mostly because they were told to do so.
The US Government desperately needs inflation. Without it, the cost of servicing it's debt will be too high in real terms. Therefore it has both signaled and convinced the world that it will "print" dollars into oblivion to make it happen. What if it doesn't happen? What I mean is, what if it doesn't happen soon enough? What if there is a "short squeeze" on the US dollar and while everyone is waiting for the effect of zillions in Fed liquidity, there is the mother of all margin calls?
There are numerous scenarios where this is possible, but like I wrote, I am simple minded. I don't know to predict what sequence of factors could cause it, but I do know that inflation of:
the currency supply
the stock market
will not provide debt relief sufficient to turn bad debts good. The minds at the Fed and Treasury appear to believe that debt deflation is the boogey-man, and not inflation. Their strategy is to reflate and use fiscal stimulus while providing debt relief through inflation. Their track record of creating debt-relieving inflation is poor. If they can't make inflation happen and happen in a way that debt relief happens for other nations, for businesses, and for consumers, the write-off's could destroy currency as fast as they can create it. They've got everyone convinced that they can run the presses to infinity and beyond. The whole market is worried that they'll run them too far, but they don't seem to be concerned that inflation won't even work the way it's hoped. The more the indicators point to deflation, the more radical and extremist the Fed and Treasury get. The expectation of inflation is implicit faith in the Fed to create it.