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Hyperinflation, deflation, or neither?

Asked by critter1982 (4120points) November 20th, 2008

Hyperinflation” is runaway inflation. This is what Germany (Weinmar Republic)experienced in the 1920s’s, where people had to literally pay barrels full of German marks to buy a loaf of bread. People were burning their money because it was worth more as kindling than as a currency.

Deflation is what the U.S. experienced in the Great Depression, where most people had no money to spend, hire employees, or do much of anything.

If we’re going into hyperinflation, then investments like gold – which tend to hold their value in inflation – are best. In this case, the government should stop printing money like its Monopoly money.

If instead, we’re going into deflation, then cash or treasury bills hold their value the best. Because prices go down in a depression, each dollar is worth much more, and is a good thing to hold onto for investing purposes. In this case, the government should spend more to get things going.

Or do you feel that we tend to think of things as all or nothing. Do you think the US is going to shift somewhere in the middle?

What are you doing at this point to make sure that you and/or your family will be alright in the future. Are you stockpiling food? Are you buying gold? Are you starting to grow a garden or learning to hunt? Are you taking your money out of the banks, out of the stock market, hiding it under your bed? Are you doing nothing?

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