Posted on 10/18/2011 7:26:06 AM PDT by blam
The 10 Worst Hyper-Inflation Horror-Stories Of The Past Century
Mamta Badkar
Oct. 18, 2011, 9:36 AM
Inflation numbers have been heating up. U.S. PPI just came in higher than expected at 0.8%. UK's CPI also jumped. In India and China, food inflation has been stubbornly high.
Hyperinflation is more of an extreme. Over the weekend, John Mauldin wrote that he doesn't expect hyperinflation in the U.S. because the Fed can print loads of money without bringing about inflation.
But a crucial aspect of hyperinflation is mounting deficits that are financed by printing money as he explains. When prices start jumping 50% every month and people's incomes and savings get destroyed like they did in the Weimar Republic in the early 1900s, the economy becomes unbearable. Zimbabwe has only too recently lived through it. We've highlighted some of the worst cases of hyperinflation in the last century.
(snip)
(Excerpt) Read more at businessinsider.com ...
There are some advantages to hyper-inflation.
Those deeply in debt can pay off all they owe instead of buying a cup of coffee.
That's just so long as people and businesses sit on their cash (and checking and savings deposits) rather than spend them. However you will soon reach the tipping point where holding cash looks like a really bad idea. That can very quickly avalanche out of control as everyone decides they would rather spend their savings today than watch it lose 10% or 20% over the next year. All those extra trillions the fed and treasury produced will suddenly be hitting the market at once.
I saw a woman in a grocery store reaching for a canned item on a shelf as a clerk was busy stamping each can with the current price. Just as her hand touched the can, the clerk reached across and slapped the can with the new higher price. The look she gave that clerk would have curdled milk into cheese in one second. The moment was literally burned into my memory to this day.
I wonder if we will see that here in this country sooner than later thanks to the idiot in charge.
I have framed and hanging on my office wall a one hundred trillion Zimbabwe dollar note, a one hundred trillion Hungarian pengo note, and a five million Weimar Germany mark note. I dread the day the American dollar joins that collection. It can happen much quicker than people realize.
That’s right, and the fact that the US dollar is the worlds reserve currency compounds the problem. The reserve status is like a dam, holding back the possibility of inflation. But when the dam finally breaks the hyperinflation will be magnified by all these countries and their citizens holding dollars. The hyperinflation will be worldwide.
I'm shocked that someone like Mauldin has that kind of confidence in the Fed. I certainly don't.
What’s scary about reading the examples of hyperinflation is the reasons why each episode of hyperinflation happened. See how often the words, “printing currency” or “external borrowing” crop up? (Of course, the politicians’ desire to fund out-of-control government spending is what drove the money printing and borrowing.) Where you don’t see those words, you see “subsidizing the private sector” or “nationalizing companies and mines.” Our government is doing all of these things except nationalization, and it’s dabbling in that (exhibit A: General Motors).
But no worries, Obama’s got it all covered, right? /s
If they are out of work, work under wage controls, or only have currency-based assets such as bank accounts, they are screwed.
The nice thing about hyper-inflation is that all debts go away.
The bad things are too many to mention. Didn’t mean to imply that it was good, only that there are advantages for some.
My dad went through that drill before he left. He said there was an old lady who had two gold bracelets. She would hock one one week. Next week she'd hock the other, pay off the old one and live off the new balance - rinse and repeat. Dunno how that would work with the "Pawn Stars" boys though. :-)
He said people received life insurance money that was less than the stamp on the envelope that sent the check. When it first started up, sharpers in the city went out in the country and bought out farmers with the ridiculous (to the farmers) high prices (for that week). In the end, they were printing the bills on one side to speed up the process.
As you say, inflation eliminates debts - but it also eliminates savings - and redistributes wealth to the asset rich.
A story from Britain:
Pensioners feel pinch from soaring inflation
http://www.ft.com/intl/cms/s/2/e388cdfa-f994-11e0-a805-00144feab49a.html?ftcamp=rss#axzz1bS1jNqsC
The historian Eric Hobsbawm said that he could remember his uncle, in interwar Austria, getting the proceeds from his life insurance savings, and it was enough to buy a coffee.
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