Posted on 09/23/2010 2:50:01 PM PDT by blam
Gonzalo Lira: What Hyperinflation Will Look Like In America
Gonzalo Lira, Author's blog
Sep. 23, 2010, 5:04 PM
I usually dont do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the United States, clearly struck a nerve. It was a long, boring, snowy piece of macro-economic policy speculation, discussing Treasury yields, Federal Reserve Board monetary reaction, and the difference between inflation and hyperinflationbut considering the traffic it generated, I might as well been discussing relative breast size in the porn industry. With pictures.
Essentially, I argued that Treasury bonds are the New and Improved Toxic Assets. I argued that, if there was a run on Treasuries, the Federal Reservein its anti-deflationary zeal, and its efforts to prop up bond market priceswould over-react, and set off a run on commodities. This, I argued, would trigger hyperinflation.
The disproportionate attention my post garnered is indicative of peoples current fears. As Ive said before, people arent blind or stupid, even if they often act that way. People are worriedtheyre worried about the current state of affairs: Massive quantitative easing, toxic assets replaced by the full faith and credit of the U.S. government in the shape of Treasuries, fiscal debt which cannot possibly be repaid, a second leg down in the Global Depression that seems endless and only getting worsepeople are scared. Many readers gave me quite a bit of useful feedback, critiques, suggestions and comments on the piececlearly, what I was discussing touched on a deeply felt concern.
However, there were two issues that many readers had a hard time wrapping their minds around, with regards to a hyperinflationary event:
[snip]
(Excerpt) Read more at businessinsider.com ...
Interview With Marc Faber: It Is Not A Matter Of If With Hyperinflation, But When
We know something's sitting out there. No one can do the things we're doing in this economy and not have a major price to pay... how long can we hold our breath?
Day before yesterday, I went to the same store. Cost me $14.99 for two 20 lb. bags of Kingsford charcoal.
The difference, $3.00, is exactly 25% of $12, the price I paid last year. Up 25% in one year.
The real clincher is the weight. A kilogram is 2.2 pounds, as you probably know. So the total amount of charcoal I got for my extra 25% cost was about 9% less. Total price increase on a weight-for-weight basis: 37.5% in one year. What cost me 54.5 cents per pound last year now costs me 75 cents per pound.
I think the Documentary on YouTube concerning the Collapse of Argentina to be a good view of what we are in for.
Argentina’s Economic Collapse - Part 1 of 12
http://www.youtube.com/watch?v=rH6_i8zuffs
You might enjoy a fictional take on something similar, from “JohnGaltinFla”’s blog:
“The Day the Dollar Died”
for later
I disagree with his belief that civil society will not collapse. I think that is an ongoing process begun in the 1960’s, and is independent of the economy and the monetary situation, but may have some of the same root causes.
bfl
I agree with you Dave. I think economic problems will accelerate troubles that already exist.
bookmARk
in ecconomics it is countries vs corporations.
100 years ago corporations needed countries to provide favorable laws and corporations had to abide by that.
NOW corporations can move or close only a part and deny power to the politicians.
Michigan’s rust belt should be allowed to close so we may progress beyond the models of 100 year old factory systems.
bfl
BookMarked
Thanks. Just watched #1...Others later.
I think we’re going to invent a new method of hyperinflation. Printing paper dollars is inefficient and, as Zimbabwe recently found out, eventually nobody will exchange ink and paper for your worthless currency and you can’t print any more. A hundred billion dollar bill couldn’t buy a banana.
We’re going to develop some kind of Direct Deposit hyperinflation. The President will make a speech from the Oval Office and add two zeroes to everybody’s bank account.
“I agree with you Dave. I think economic problems will accelerate troubles that already exist. “
I’m notr sure of that. I AM sure that the two problems have the same root cause - liberalism. Spending money on everything but the basics, like law enforcement and defense, is creating the sovereign debt problem, which is rendering governments at all levels unable to afford those basic functions, allowing the uncivil to remain uncivil.
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