One issue that people have kicked around a bit is the risk of inflation embedded in the current fiscal and monetary policy being used to fight the recession and credit squeeze.

With respect to fiscal policy, the concern is probabilistic--will it be possible to fund the massive budget deficits, and now creation and expansion of new government policies, without at some point resorting to monetizing the debt. It is hard to see how, especially if heavier regulation and slower-growth policies are adopted.

Perhaps less-known but more frightening is the incredible growth in the money supply over the past year or so. I first found out about this a few weeks ago in this post by Peter Robinson which links to this extraordinary graph from the St. Louis Fed. Note the 2009 figures (and below the chart you can click on it to see different benchmark comparisons).

Why has this incredible boost in the money supply had no impact? Presumably because the "velocity" of money has remained low--people and banks are hoarding money, rather than spending, borrowing, and lending it. Assuming velocity rises again, however, we may be looking at an inflationary spiral like we've never seen before in this country.

Peter says it well, "We've Never Been Here Before."