Hyperinflation article from ShadowStats.com


By xlr8   Follow   Thu, 21 Apr 2011, 2:37am   1,734 views   16 comments
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This is a rather long piece, but I believe it to be a very worthwhile read.
http://www.shadowstats.com/article/hyperinflation-special-report-2011

It is in almost complete agreement with Gonzalo Lira's predictions.

Main point:

"With no viable or politically-practical way of balancing U.S. fiscal conditions and avoiding this financial economic Armageddon, the best that individuals can do at this point is to protect themselves, both as to meeting short-range survival needs as well as to preserving current wealth and assets over the longer term. Efforts there, respectively, would encompass building a store of key consumables, such as food and water, and moving assets into physical precious metals and outside of the U.S. dollar."

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  1. MarkInSF


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    1   9:35am Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Hyperinflation Special Report (2011) is the fourth in a series of related writings going back to 2006....

    I look forward to the fifth, sixth, and subsequent reports, telling us how hyperinflation is coming suddenly any day now.

  2. fatblond


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    2   2:04pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    What I find fascination in regards to this is that it would require a loss in confidence in the US dollar, but there is a relative element to this which is lost in this Chicken Little predictions. If other countries lose confidence in the dollar and "hyperinflation" explodes, what is happening in the rest of the world? How would we have hyperinflation and not PIIGS? What about the BRIC? For heavens sake, what about just China?

  3. tts


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    3   2:12pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Possibly there would be a flight of capital to those countries which might prop their economies/currencies up, but yea they'd feel some real pain.

  4. Michinaga


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    4   4:30pm Thu 21 Apr 2011   Share   Quote   Permalink   Like (1)   Dislike  

    I read the whole article, but was left with a few questions.

    * Why have they abandoned the conventional definition of hyperinflation (over 100% in one year, or over 50% in one month), which already understates the catastrophic effect of scenarios that aren't classified as "hyper" (like multiple years of double-digit inflation) in favor of "Extreme inflation, minimally in excess of four-digit annual percent change"? They won't classify it as hyperinflation unless the dollar sinks to less than one tenth of its value just a year prior?

    * Why are certain entitlement-spending commitments so "politically untouchable" that the total destruction of both the dollar and long-term trust in the US is preferable to eliminating the spending? Would a Social Security recipient really prefer to be paid thousands of worthless US dollars per month and endure Zimbabwe-like empty supermarkets over some kind of massive cut in SS payments?

    * Gold and silver are up against all currencies, not just the US dollar. Either they're a hedge against global high/drastic/hyper-inflation, or they're a speculative bubble, but they're not just an indicator of trust in the US dollar dropping. The dollar has lost about 20% against the yen in the last two years (and buys only about 60% as many yen as purchasing power parity would imply), but that decline coincided with the drop in US interest rates to levels similar to Japan's, and the concomitant unwinding of the yen carry trade. (Australia and NZ still pay attractive interest rates compared to the US and Japan, and thue their currencies have soared against the US and Japan in recent months.)

    I'm as terrified of inflation as the next person. I'd gladly pay much higher income taxes if it meant the guarantee of a balanced budget and a stable currency. And I'd resign myself to losing future entitlements that I've paid into if it meant never seeing increases in the price level. But this article seems to take for granted some things that don't seem to be as set in stone as the author implies.

  5. xenogear3


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    5   9:56pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    If food and oil price go up, and wage stays the same, what does that mean?
    People have less money to buy a big house.

    I think the US living standard will fall.

  6. sf.irony


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    6   10:09pm Thu 21 Apr 2011   Share   Quote   Permalink   Like (1)   Dislike  

    as Krugman says, why are bond yields still going down?

    this is BS

  7. bubblesitter


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    7   10:12pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    xenogear3 says

    If food and oil price go up, and wage stays the same, what does that mean?

    People have less money to buy a big house.
    I think the US living standard will fall.

    Bingo.

  8. sf.irony


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    8   10:14pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    xenogear3 says

    If food and oil price go up, and wage stays the same, what does that mean?

    People have less money to buy a big house.
    I think the US living standard will fall.

    wages usually go up during inflation. happened in the 70s.

  9. xenogear3


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    9   10:17pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    sf.irony says

    wages usually go up during inflation

    Not when the unemployment rate is 10%, or when Chinese labor is still cheap.
    The bond yield going down is a prediction that we will have another recession soon.

    American companies are not "investing" any more. They just outsource then try to sell back to US or Europe for a quick profit.

  10. sf.irony


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    10   10:20pm Thu 21 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    xenogear3 says

    sf.irony says

    wages usually go up during inflation

    Not when the unemployment rate is 10%, or when Chinese labor is still cheap.

    True - we didn't really have off-shoring in the 70s.

  11. barrister


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    11   5:05pm Fri 22 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    check this article about oil extraction vs employment-

    http://ourfiniteworld.com/2011/04/08/whats-behind-united-states-budget-problems/

  12. tts


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    12   7:31pm Fri 22 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    Michinaga says

    I read the whole article, but was left with a few questions.

    I don't get it, you said you read the article but most of the answers to your questions are in it.

    Re: defintions, they have a section just for that.

    Re: budget lock in see political situation, also see the section the status quo.

    Your last one re: gold is due to nearly all the worlds' countries engaging in competitive devaluation to prevent their economies from importing the financial mess the Fed is trying to export to them via inflation. Many of them also have their own financial messes as well. Gold isn't just a measure of inflation to judge currencies by, when things get really bad it also starts to act as a measure of those countries' governments' stupidity.

    BTW "entitlements" shouldn't be touched no matter what, if anything they should be expanded if the gov. doesn't find a political way to force the insurance companies to drop their prices. We could get all the money we'd need from taxing the super rich more and cutting spending on the military so we stop blowing up brown people all over the world while implementing means testing on SS/Medicare.

  13. CaffeineAddict


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    13   7:51pm Fri 22 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    bond yields going down is indicative of a coming recession?

    I thought the whole point of keep money printing and interest rates low was to keep the stock prices high and "avoid a recession."

  14. monkframe


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    14   9:01am Sun 24 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    "We could get all the money we’d need from taxing the super rich more and cutting spending on the military so we stop blowing up brown people all over the world while implementing means testing on SS/Medicare."

    Hear, hear!

    Wouldn't even need the "means testing" if you take the SS cap off.

  15. FortWayne


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    15   9:03am Sun 24 Apr 2011   Share   Quote   Permalink   Like   Dislike  

    I think that article is very silly.

  16. StoutFiles


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    16   7:50am Tue 26 Apr 2011   Share   Quote   Permalink   Like   Dislike (1)  

    xenogear3 says

    If food and oil price go up, and wage stays the same, what does that mean?

    People have less money to buy a big house.
    I think the US living standard will fall.

    People don't buy houses, banks do. People get huge loans and gamble that they'll keep their job for 30 years.

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