Comments on: Underreported Money Supply may be Disguising Hyperinflation

By: Me

Me — Thu, 31 Mar 2011 03:36:57 +0000

The idea behind this article is illogical. Regardless of whether any monetary creation has been “hidden”, it would be impossible to hide hyperinflation. Prices have only increased 3% y/y.

Wake me up when we have a real crisis and not just a manufactured one.

By: JR

JR — Mon, 29 Mar 2010 15:11:10 +0000

The current administration has already added over 1 trillion in new money into circulation. This is roughly equal to the total amount of money in circulation. History tells us that new money added to circulation doesn’t always manifest its inflationary effects overnight, so we may have another year or so, but it could happen sooner – a TRILLION is a lot of money. How can we not have hyperinflation??

Once high rates of inflation are apparent, foreign governments will see the value of their US bonds falling and will probably begin dumping their holdings of dollars, thus accelerating hyperinflation. Once the cost of everything is skyrocketing, the government will not be able to collect taxes fast enough, and it will have to resort to printing even more money (as happened in Germany about 100 years ago when 99% of their government spending was with printed money and only 1% from tax receipts) further speeding up the hyperinflationary death spiral.

What seems to matter as far as initiating hyperinflation appears to be when government deficit spending via printing money increases to about 1/3rd of revenue. When a country crosses this line, hyperinflation starts sometime in the future, but nobody really knows how long in the future. The USA just crossed this line for the 1st time.

Inflation, or in a severe case, hyperinflation, is a local event; it does not affect currencies in foreign countries, and may even help their stock markets via shifting purchasing power to unaffected countries. It will be very bad for anyone who is not prepared.
http://swisssolution.webs.com/

By: Charles Anderson

Charles Anderson — Sun, 07 Mar 2010 01:15:13 +0000

If we enter into hyperinflation will the government modify mortgage loan balances to track inflation in order to protect the banking system, not to mention Fannie & Freddie? The government has already stepped in and modified mortgage loans in favor of families (lower rates, forgiveness of principle, change to fixed rate, etc) “for the good of the country.” So the precedent is already there. They might protect the banks next time through mortgage loan balances being tracked to inflation.
Also, what about long term liabilities like social security and medicare that are indexed to inflation? On one hand if the social programs aren’t indexed properly such as this “hidden inflation” suggests, or in the case of hyperinflation, the elderly will revolt. On the other hand if they are indexed to hyperinflation, if hyperinflation does happen, then the country will be in a similar debt trap as before, but everyone US citizen will have their wealth destroyed. Foreign governments and companies would buy up everything and anything for rock bottom prices due to their currencies being worth so much when exchanged for dollars.
If this nightmare occurs and the dollar does lose its value, then it’s also possible that the whole western world engages in money creation to eliminate their debt, but then we would end up obliterating the global economic structure and trade = great depression.
Is this financial / economic nightmare even close to being over?
I foresee China coming across the Bering Strait with 100,000,000 people into Canada and the western US. An equitable trade for their worthless dollar holdings?