"path of least resistance"

I think you hit the nail on the head with that statement. That describes it perfectly to me.

The guys like Denninger, Mauldin and those that see deflation get it all right except the outcome because they fail to see that the path of least resistance is what will be taken. They are too smart and logical. As I see it, there are a lot of people that are too smart and too logical to see what will happen. Being smart and logical makes them come to the conclusion that some smart and logical path will be chosen. They think that other smart and logical people will also recognize the logical path and take it.They fail to recognize that it is not the right or correct thing that will be done, but what is expedient at the time to keep the system afloat. The path of least resistance. And that is keeping the current system going by propping up the banks, devaluing the dollar, and keeping things going by not allowing outright default and a reset of the system. The default and reset (like Iceland did) would be extremely painful short term and better off long term. But we will take the "death by a thousand cuts" route because it will be the path of least resistance.

History is full of examples of debasement of the currency. When the currency is backed by nothing there is no natural limitation of the amount of debasement that can take place. There are no easy fixes to excessive debt levels.

John