Are we headed for hyperinflation?

[fskimospy]

I know what the econ textbooks say, although I don't think it is necessarily correct from what I observe. Deflation means paying back loans in the future is more difficult because you are paying them back with dollars that are worth much more than what you borrowed. It means the rate of borrowing will plummet (as real interest rates skyrocket) and thus the rate of money creation within the banking system also plummets.

Once the rate of borrowing plummets people will default en masse because the money doesn't exist to pay back their loans, as loans temporarily create money until repaid. Hence we need to loan ever increasing amounts of money. It doesn't matter if its a bunch of small loans for college or house prices rise or whatever, the loans MUST get bigger or more frequent. Aggregate demand is a fluffy concept to me. Seems like it is just code for borrowing to the hilt.

The reason for no inflation is very simple. The banks are sitting on the excess reserves instead of loaning them out. Everything is actually very simple.

Yes, we are currently in a liquidity trap. The funny thing is that more inflation would be just what the doctor ordered.