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Gonzalo Lira: What Hyperinflation Will Look Like In America
The Business Insider ^ | 9-23-2010 | Gonzalo Lira

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 don’t 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 hyperinflation—but 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 Reserve—in its anti-deflationary zeal, and its efforts to prop up bond market prices—would over-react, and set off a run on commodities. This, I argued, would trigger hyperinflation.

The disproportionate attention my post garnered is indicative of people’s current fears. As I’ve said before, people aren’t blind or stupid, even if they often act that way. People are worried—they’re 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 worse—people are scared. Many readers gave me quite a bit of useful feedback, critiques, suggestions and comments on the piece—clearly, 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 ...


TOPICS: News/Current Events
KEYWORDS: deflation; economy; hyperinflation; recession
The original article was posted to FR a number of times. I will provide a link to one of the original articles next.
1 posted on 09/23/2010 2:50:03 PM PDT by blam
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To: blam
How Hyperinflation Will Happen
2 posted on 09/23/2010 2:51:40 PM PDT by blam
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To: blam
Posted earlier today:

Interview With Marc Faber: It Is Not A Matter Of If With Hyperinflation, But When

3 posted on 09/23/2010 2:53:43 PM PDT by blam
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To: blam
The disproportionate attention my post garnered is indicative of people’s current fears.

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?

4 posted on 09/23/2010 2:58:42 PM PDT by GOPJ (http://www.freerepublic.com/focus/f-bloggers/2589165/posts)
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To: blam
Last year I paid $11.99 for two 10 kg bags of Kingsford charcoal at BJ's.

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.

5 posted on 09/23/2010 3:01:04 PM PDT by Steely Tom (Obama goes on long after the thrill of Obama is gone)
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To: blam

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


6 posted on 09/23/2010 3:01:48 PM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: blam; All

You might enjoy a fictional take on something similar, from “JohnGaltinFla”’s blog:

“The Day the Dollar Died”

http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died-a-blovel-entire-series-single-thread-not-edited-for-content-yet/


7 posted on 09/23/2010 3:04:40 PM PDT by dynachrome ("Our forefathers didn't bury their guns. They buried those that tried to take them.")
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for later


8 posted on 09/23/2010 3:13:43 PM PDT by Gipper08 (a real conservative for Congress... travishankins.com)
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To: blam

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.


9 posted on 09/23/2010 3:17:46 PM PDT by Daveinyork
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To: blam

bfl


10 posted on 09/23/2010 3:18:55 PM PDT by kevao
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To: Daveinyork
"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."

I agree with you Dave. I think economic problems will accelerate troubles that already exist.

11 posted on 09/23/2010 3:31:38 PM PDT by blam
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To: blam

bookmARk


12 posted on 09/23/2010 3:34:03 PM PDT by silverleaf (The lesser of two evils is still evil.)
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To: Daveinyork

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.


13 posted on 09/23/2010 3:39:23 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: blam

bfl


14 posted on 09/23/2010 3:59:08 PM PDT by katykelly
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To: blam

BookMarked


15 posted on 09/23/2010 4:29:16 PM PDT by Para-Ord.45
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To: Kartographer
"Argentina’s Economic Collapse - Part 1 of 12"

Thanks. Just watched #1...Others later.

16 posted on 09/23/2010 4:41:01 PM PDT by blam
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To: blam

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.


17 posted on 09/23/2010 5:59:56 PM PDT by Colinsky
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To: blam
From the Seeking Alpha piece, "Gonzalo Lira is an American novelist and filmmaker. He lives in Santiago, Chile."

There are several great gaps between cause and effect in Gonzalo's arguments. For one, he omitted the fact that agriculture adapts quickly to market fluctuations in the USA. Another is that foreign manufactured product prices will go very high after a default (which default would follow the bond collapse)--the very products that he claimed would fall to worthlessness.

The real main effect of a bond collapse and default will be the layoffs of most government employees and employees of corporations who depend on the government. And that may be what some of the "hyperinflation" screamers are really afraid of: their family hens coming home from their jobs to roost and cluck. How many of you are afraid of small government--government that could not afford to appease and enrich Third World labor interests?


18 posted on 09/23/2010 10:23:03 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96, Duncan Hunter or no-vote.)
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To: Kartographer
"I think the Documentary on YouTube concerning the Collapse of Argentina to be a good view of what we are in for."

They allowed Italians and other foreign interests to take over all of their production while building up their big, fat bureaucracy ruled by overpaid, socialist government employees (teachers, administrators and the like). After they caused their default, they sought to use riots to force the government to resume their regime of debt (impossible). That's what "progressive," politically correct, globalist policies bring.


19 posted on 09/23/2010 10:42:49 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96, Duncan Hunter or no-vote.)
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To: blam

“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.


20 posted on 09/24/2010 4:23:46 AM PDT by Daveinyork
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