Fight Club Without All That Punching And Whatnot

The "elimination of consumer debt" that Project Mayhem accomplished can be done in an explosion-free manner if inflation is rampant. If the dollar is worthless, then credit card debt, car loan, mortgage, etc, become meaningless in real terms. Example:

You are one of the lumpen. In February 2005 you purchase a yin-and-yang coffee table for $400US. This is the equivalent of one ounce of gold.

Being lumpen and all, you probably are only paying the interest on this coffee table. Thus, in May 2006, you still owe $400US. This is now the equivalent of a little more than half an ounce of gold. If it rises more (and it will), you will soon owe your credit card company the dollar equivalent of only a few grams of hard assets.

Not that you'll have those hard assets to give them, or anything. But someone will probably have printed you a wheelbarrow full of dollars, so no biggie.

As such, why should the lumpen care about inflation? All it can do is take them from below water to level ground. It's the rest of us who used to have a comfortable view from a hill who now have to scramble around and hedge against it.

If the Fed does overshoot neutral and hike us into deflation, however, all bets are gonna be off.