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Darbio16's avatar

Coming Hyperinflation? What's Your Take?

Asked by Darbio16 (767 points ) August 31st, 2009

According to stats posted by Shadow Government Statistics the U.S. Economy is in for a disaster.

http://www.shadowstats.com/article/hyperinflation

Read the article and give your thoughts.

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20 Answers

Sarcasm's avatar

Read the article to me instead.

eponymoushipster's avatar

According to a website i read once, Jesus was a space alien and every US president was an android. that must be true, too, since i read it on the internet.~

dpworkin's avatar

These are no longer valid questions, they are trollbait, and I think it’s about time to flag them.

Sarcasm's avatar

@pdworkin HEY MAN. THAT’S FASCISM. GET OUTTA HERE WITH YOUR COMMUNAZI PROPAGANDA!

Darbio16's avatar

I get the same 3 douches on every question. any diversity here? you don’t have to leave a comment or even read this question. its totally voluntary. Troll bait brings trolls, so that’s why you guys come right?

eponymoushipster's avatar

@pdworkin dick cheney gonna git you!

augustlan's avatar

[mod says] Let’s stick to the actual topic, please.

eponymoushipster's avatar

ok. no i don’t think that’s the case.

i think this conspiracy theory bullshit is for people who’ve got too much time on their hands, not enough to think about and far too much energy for useless dribble.

anyone can set up a blog and write whatever the hell they want.

hey, there’s an idea…

Saturated_Brain's avatar

Sir! Your article is 24 pages and almost 8000 words long! Not many of us here have that sort of time or economic interest to hold out for that long on such an article. Is there any way you could condense the info into a few short points?

cwilbur's avatar

@SaturatedBrain: I suspect I can do so without even reading the article.

* The Federal Reserve is eeeeeevil.
* Because each dollar represents a fraction of the national assets (basically, GDP minus deficit) and the GDP is not growing while the deficit is increasing, the value of each dollar will go down.
* The way we experience this is inflation.
* Did I mention that the Federal Reserve is eeeeeeeevil?
* Fiat currency is eeeeevil too.
* Oh, and Obama is a fascist because he’s in bed with the corporate world, who are also eeeeevil.
* You should buy gold, because that’s what all the cranks on late-night radio are doing.

ragingloli's avatar

We had Hyperinflation in Germany. That was the time when a loaf of bread cost you several billion Reichsmark. We are not anywhere near that.

JLeslie's avatar

I have been worried about inflation for 5 years now. I am STUNNED we aren’t in the middle of it. I am not that knowledgable about economics, and the little I know seems to leave me guessing incorrectly. I wish I had locked more of my money into CD’s earning 4.5%, I had hesitated, because I thought rates would double.

The_Compassionate_Heretic's avatar

I refuse to worry about hypothetical futures which I have no control over.

JLeslie's avatar

@The_Compassionate_Heretic So you are always in the moment? No planning for bad things that might happen?

critter1982's avatar

I think the risk that we fall into hyperinflation is low for a couple reasons. First, housing prices are falling, and historically speaking the US has never seen inflation with falling house prices. Second, when people consider the amount of money being printed by the Federal Government we never take into account the destruction of wealth which to date is around $3 Trillion. Third, the banks are only lending to low risk borrowers. If the problem to begin with was too much lending then wouldn’t the solution be less lending. Even with the trillions of dollars being printed, banks are still not lending to just anybody. However, our glorious government loves to spend money. If banks begin to increase their lending the Fed will need to simultaneously remove the massive amount of liquidity they surged into the country. It might be difficult to get this right and inflation will become an issue but I think hyperinflation is far beyond the realm. Possible, but not likely.

cwilbur's avatar

@critter1982: The risk for hyperinflation is very low, but inflation is likely.

Basically, suppose there are 10 trillion dollars in circulation. This means that the value of a dollar is one ten-trillionth of the value of the United States’ assets, minus the United States’ liabilities. When the Congress authorizes deficit spending, that means that the value of the United States’ liabilities goes up, which means that the value of a dollar goes down.

Now, this is not an immediate relationship, and it has a lot to do with perception. So what the President and Congress are hoping is that deficit spending now will cause a chain reaction to increase the value of the United States’ assets within six months to a year. If the value increases enough quickly enough to offset the deficit spending, there won’t be inflation. If it doesn’t, there will be inflation.

ragingloli's avatar

there is always inflation. except when there is deflation.

wundayatta's avatar

There is only inflation when the amount of currency in the economy far outweighs the goods and services available. Inflation is a way of balancing the books. Too much money around, and things become more expensive as a result.

Deflation occurs when there is too little currency around for the good and service capacity of a nation. In such times, you need to pump more money into the economy to right the balance. Some economists argue that deflation is far worse than inflation, because it just stops the economy. When money becomes more valuable, people have an incentive to hold onto it, waiting to spend it when they can get more for it. No one buys, and no one sells, and no one needs to make anything because there is no market.

Inflation, at least, encourages production and spending, since people want to buy before their money loses some of its worth.

So let’s think. Before the housing industry went bust and the financial institutions collapsed, we had a certain industrial and service sector capacity. We had a certain amount of capital goods stocked up. After the recession, did we have any less capacity? Were there any fewer goods available?

Pretty much no. Except that due to a lack of confidence, people stopped purchasing things, and so capacity was idled, people were laid off, and the cycle continued to the detriment of all of us.

What we have now, is too much capacity for the demand. The balance between money supply and capacity has shifted to too little money available for all the capacity we have. What we need is to stimulate demand in order to get that capacity back into production. What we need is to pump more money into the system, so that demand will increase, and the productive capacity will be put back to work.

The trick is to balance money with capacity. We don’t want to overshoot the mark, because that does lead to inflation. However, it seems to me that the Fed has been pretty good at matching money supply to capacity. Generally they are far more cautious about printing money than I think they should be. If there is a hint of inflation, they will drive up interest rates right quick so as to slow the economy down. They will not let hyperinflation occur. That can only occur if we flood the market with more and more money, even after the available supply of goods and the capacity for generating new goods is far less than the money chasing those goods.

No one is going to let the money supply get that far out of whack. It is extremely unlikely that we will see hyperinflation. People who think that, I believe, have little fear monsters running around in their heads making them paranoid about the world government conspiracy and the power of big corporations to ruin life for the little guy. If I were their doctor, I’d prescribe clonazepam!

Tenpinmaster's avatar

Hold on to your wallets folks and brace for impact. The spending is bad! The repercussions of the irresponsibles of our elected leaders is even worse. The inflation that is going to aftershock from our rapidly deflating monetary system will hit like a tsunami and will grip the economically weak and those who are on marginally getting by. Small businesses and people who fall into this category will be destroyed and will drive the economy from a recession into a depression. I don’t know how any nation can pay back 11 trillion dollars of anything! It’s just crazy to even think about. Wouldn’t it be nice if money didn’t exist and people did jobs because they want to better humanity and better themselves. Our greed will be our undoing…

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