The Hyperinflation Hype: Why the U.S. Can Never Be Weimar

The Atlantic ^ | March 21, 2012 | Matthew O'Brien

[ChildOfThe60s]

How are the United States' historic budget deficits, money-printing and depressed economy any different from the country's that have experienced hyper-inflation? The three-part answer is:

(1) we don't have any problems selling our debt

(2) we aren't actually printing money; and

(3) the United States is a highly productive economy that is nothing like bombed-out Budapest.

[ChildOfThe60s]

This article is 2 years old but still quite pertinent. It clearly demonstrates the economic insanity of liberal big government. And why we are now in QE forever (not forever, just until it collapses).

My responses to the above excerpt:

1)We do have a problem selling out debt. The Fed is not exactly a volunteer buyer.Even if we didn't, it would still be a serious problem.

2)We are indeed "creating" money electronically. Typical leftie to say that since it's not printed paper, it doesn't count

3) The US is not a "highly productive" economy. If it were wee wouldn't be getting our regular pack of fiddled economic stats every week from the BLS et al. Inflation, unemployment, GDP are all so manipulated as to be nothing but sh1ts and giggles.

[Secret Agent Man]

To affirm your points:

1) I have read many stories the last few years discussing how the Fed has been buying most if not all the debt at certain times when bonds have been released. This is basically a bookkeeping trick to keep “things running smoothly” for the ponzi scheme that is running with the fiat currency in place, backed by nothing but good vibrations.

2) The banks create money out if thin air by fractional reserve lending. The vast majority of “money” is electronic and not in physical form.

3) Barry’s been working hard to make sure our productivity keeps going down, using multiple vectors.

[Red Badger]

(1) we don't have any problems selling our debt

And our enemies have no trouble buying it......

(2) we aren't actually printing money; and

That's soooo 20th Century. Computers are much faster than printing presses......

(3) the United States is a highly productive economy that is nothing like bombed-out Budapest.

We have a defacto SERVICE Economy now, need nails done? No problemo. Need nails? Get them from CHINA........................

[a fool in paradise]

Didn’t Obama want to crank out a couple trillion dollar coins?

[Vigilanteman]

The vast majority of “money” is electronic and not in physical form.

I read from a credible source several years ago that physical cash transactions are less than six cents of every dollar. We're probably lucky if it is a nickle now.

[circlecity]

This is nonsense. The only thing propping our economy up is the fact oil is pegged to the dollar. If that ended our economy would implode in a month.

[mrmeyer]

Matthew O’Brien is a special kind of stupid.

[navyguy]

This is why no sensible person reads The Atlantic.

Read the actual history of the Weimar Republic. We are on a very similar trajectory (if for different reasons). Once BRICs is thoroughly aligned against us (already happening) and the dollar is dumped as the international reserve currency we will be well on our way to Weimar territory.

[ChildOfThe60s]

Liberals are nothing but hubris. It is the feeling of invulnerability that comes from knowing one is so superior to all the other ingrates surrounding oneself.

[Zeneta]

Deflation is a Bitch.

What would you do, or have done if confronted with the most serious reality of deflation, if you were at the FED?

Let the inevitable depression happen or use whatever tools you had to forestall it?

Inflation can easily be dealt with, while Deflation is a wholly different problem.

[GeronL]

they make the recession or depression last much longer than if they did nothing

[griswold3]

of course, “Progressives” never have to face the consequences of their actions. They always have a convenient scapegoat available.

[mike70]

This is a piece of my post on a prior topic, but is appropriate here:

Printing (creating) money will eventually result in inflation for goods the money is used to buy. 40 years ago those goods were real (remember Carter), so prices of goods went up dramatically.

Today printed money is being used to prop up the stock and bond markets. The PTB can point to the markets and say, “Hey, look. The markets are strong so the economy must be good.” Actually, inflation from newly created money is showing up in stock and bond prices, not in the prices of goods.

That’s what happens when printed money goes to Wall Street and not to Main Street.

[Billthedrill]

In his defense, the author was careful not to say "never". However, his case that some sort of catastrophic foreign influence such as war or reparations for war is a proximate cause fails with his second example:

Unlike most hyperinflations, Zimbabwe's wasn't the consequence of war or revolution. It was self-inflicted. In 2000, the Mugabe government broke up the mostly white-owned farms that formed the backbone of the nation's agricultural sector into smaller ones. As a matter of social policy, trying to undo the enduring iniquities of the colonial era made sense. As a matter of economic policy, it was suicidal.

Yes - countries absolutely can do this to themselves in the absence of malign foreign influence. And there are a number of determined political movements within the U.S. with ideas of this broad a scope, notably draconian environmental laws, deliberate demographic changes through massive and illegal immigration, and socioeconomic changes such as the socialization of health care. Yes, it can happen here.

[refermech]

We have so much stuff that has value regardless of currency. The economy has so much inertia it would take some natural disaster to upend it.

[dfwgator]

Never say never.

[Zeneta]

The US Dollars value being based or pegged to Oil is substantially better than that of Gold.

Oil is the best barometer of economic activity. Oil is life.

Gold is arbitrary, it’s not a necessity.

[bajabaja]

Point 3: Budapest was part of Germany?

I stopped reading right there.

And the Fed is “printing” money — it’s called Quantitative Easing.

Two out of three ain’t bad/.

[Mad Dawgg]

"2) The banks create money out if thin air by fractional reserve lending. The vast majority of “money” is electronic and not in physical form."

AND, when the treasury issues bonds money is created. Also Fractional Reserve Banking is not bad in itself much like a single cigarette is not bad. The problem comes when you make lending so cheap and easy that EVERYONE borrows and uses credit cards constantly and the majority of the citizens are always in debt. You bloat the money supply AND at the same time you get asset bloat in the stock market because a 3% dividend on AEP suddenly looks like the big bucks when compared to a money market or CD that gets 1% or so if you are lucky.

[tbw2]

We would be more productive if we produced more oil and energy at home, not having to import any from abroad, and lower energy prices would stimulate the domestic economy.