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Hyper-Inflation

It's actually deflation that we've got to worry about right now. From last November:

Housing prices have been falling for a year. Beginning in August, the prices of commodities such as corn, copper and oil began to drop. The price of automobiles crumpled. In September, stock prices commenced their swan dive, but it is only in the last few weeks that the price of everyday things has begun to tumble.

It has been sixty years since this has happened, but there is no reason to jump for joy. As the Wall Street Journal said in publishing the news, this is the "largest single-month decline since before World War II, a broad-based drop that creates a new challenge for policy makers: avoiding a bout of deflation, a prolonged period of falling prices throughout the economy."

Deflation, the continuous drop of prices--the exact opposite of inflation--sounds on first acquaintance like a walk in the park on a fine spring day, but in fact it is perniciously destructive. The Journal explains that deflation "would raise real borrowing costs for individuals and businesses. That's because both must repay fixed amounts of debt, along with interest, even as underlying prices and their own earning power are falling. It could also give households and businesses an incentive to hoard cash, since the value of having cash on hand rises as prices fall. The process can feed on itself: Consumers and businesses delay spending, worsening a downturn and leading to more debt defaults."

A few months of falling prices may be welcome. After that we have cause to worry. Most economists are saying that the chance of a full-blown deflation is remote if it exists at all, but most economists have been mistaken in their predictions about everything these last few years.

They said the price of housing would not go down; they said that the only place to put your retirement money was in the stock market and that, while things might go slack for a while, there would be no recession. As for the chances of a full-blown depression, perish the thought. A disconcerting number of economists, analysts and prestigious commentators on matters economic have turned out to be woolly-headed professional optimists, stock market shills or house whores for the financial institutions that have brought the country to the edge of ruin.

No matter what these people say, the chances of a major deflation are anything but remote. If history is any guide, curing a deflation will be a more difficult and chancy operation than correcting an inflation. Though it may be painful, we know how to stop inflation. We have no such handy recipes for dealing with deflation.

The last major deflation was one of the hallmarks of the Great Depression. Correcting it was one of President Franklin Roosevelt's most intractable problems. His first attempt was to take the country off the gold standard and devalue the dollar.

That worked for a while, but cheapening the dollar as a means of stopping deflation is not a path open to President Obama. In 1933 the United States was the world's largest creditor nation--as China is today; in 2009, it is the world's largest debtor nation, and as such it dare not devalue its currency, which would be the same thing as cheating the nations and people to whom it owes money. The consequences would be horrific as panicked creditors would sell their US securities in the run to dump dollars.

The New Deal also tried to stop falling prices by suspending antitrust laws so that competing companies were allowed to enter into price-fixing agreements. Such an arrangement can work only if all competitors abide by the agreed-upon prices, and that is not possible without coercion, which was attempted but ruled illegal by the Supreme Court.

The threat of deflation is the result of twenty years of inflationary policies, which made the credit bubbles possible. Their puncture has brought on the price collapse we now suffer through. Such are the wages of governments' manipulating the values of their currencies instead of making sure they have a steady store of value that neither swells nor shrinks.

Whether or not we fall into a prolonged painful period of deflation depends on the imponderables of a storm-tossed economy. If wholesale wage cuts and layoffs occur over the next five or six months, that will be a sign that deflation is upon us. If, however, incomes and jobs remain steady, we may not get back to prosperity--but at least we will have avoided the disaster of a full-scale fall.
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SeanH said:
LOL, this is your attack mode, it's because you have nothing else. You're a Hannah Montanah ersion of A-J. You must be so proud.
Click to expand...

What's an ersion? Montana now has a H at the end? Who knew? Your speech is slurring.
 
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vetteman said:
It's two years from now you have to worry about KO.
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Sooner than that, actually.

The CBO warned Bam-Bam, Pelosi, Reid, and the Congress: your dog won't hunt.

The Fed will have to crank up the presses -- hike up the interest rates to get anybody to show even the slightest interest in their $1 Trillion PER YEAR debt float -- lol -- and as we know, the inflationary spiral is not always governed by supply and demand -- it is often governed by the fear, anticipation or apprehension of future price increases. Thus, retailers hike up the prices more than necessary so as to protect them from what they fear will be a large FUTURE price increase.
 
it's not about kk's trust fund
age,
weight,
gender,
existence...

or for that matter,
any one poster's
political cred...

all of that shit
has been bored
into
thud-thud-thud submission.

the op remains most valid.



when the change
in this fedgov
has committed
more than 16 trillion (with a t)
in various backstops,
stimuli,
takeovers and other guarantees
in what had been
predominately a private sector...

and at the same time
the ceo in chief
fires one ceo
then grandstands a kick-off announcement
to the
second hundred days
that should have been made
by a guy named nardelli...

if a system is broken,
bringing on undeniable financial upheaval,
is the labor component
of that system without responsibility?

two failed enterprises
are now to be federally guaranteed
and administered by
the squeeky clean uaw.

... and this is just a small example...

the kernal to the fallacy
was in who the president derided
in his iacocca moment...

investors.

yes... investors;

who simply held out on the chrysler deal
to get a better deal
on their original investment;
who were systematically being
nationalized at pennies on the dollar
and ousted from exercising any control...

the fedgov isn't rescuing.
it's buying!

(cue lionel barrymore)

it's not just buying.
it's throwing out all the rules,
creating the new 'market'
and hand-picking the participants;
excluding of course...

the 'grease'.

it's handing control to labor
(lots of precincts to tweed in that),

and it's...

absolutely destroying whatever confidence an investment pool might have in the foreseeable future.

when this changed economy emerges;
and it will eventually emerge,
the cost of borrowing...

all that persnickety grease
that not only maintains, but spurs
initiative,
will be more dear than ever!

hyper inflation?
you bet your Oss!

for who will lend
if the venture is not fedgov guaranteed, backstopped...etc...?

who will lend,
unless factored into the return is the risk
that the fedgov may/can step in
and change all the terms with impunity?

who will lead,
when the fedgov can arbitrarily determine payscale?

who will trust,
when commercial paper
has no force?

and who/how will we pay
for an orgy of fedgov activity
when the only viable option
down this weary road
will be for that same fedgov
to change
the terms on the very money it owes?

...that's where this whole magillah gets shit-scary....
in oh...
about an election cycle or two down the way...

yet to come...
universal healthcare
and some changed foreign policy.

china?
germany?
japan?

still wanna finance our spending?

botswana?
maybe lesotho...?

anybody?
anybody?
bueller?

*back to your sniping*

it's bigger than a thread
wrapped in an alluring cult of personality...

here
or in the much scarier
out-there...
 
Karen Kraft said:
No, but he was a democrat.


Hahahahahahahahaha.

Ha.
Click to expand...
And he has been revered as a hero throughout history.

Hahahahahah
hah
hahah

heh.


Now don't pop a vein... lol... no ultra capitalist aside from Reagan is remembered fondly throughout history. :D
 
vetteman said:
Read this:

Dick Morris

Coming next year: Obama's inflation
By Dick Morris
Posted: 03/03/09 04:25 PM [ET]
In the last five months, according to the Federal Reserve Board, the money supply in the United States has increased by 271 percent. It has almost tripled.

Have car sales tripled? Home purchases? Consumer spending? Corporate investment? Not only have they not tripled, they have all declined more sharply than they have since at least the recession of 1981-82, and perhaps since the Great Depression.

So where is the money? If it isn’t being spent, where is it?

It is being parked, squirreled away. Consumers are using it to pay down their credit card balances, pay off their mortgages, reduce their student loans, make the payments on the car sitting in their driveway — not the one in the dealer’s lot. Businesspeople are buying T-bills, investing the money and saving it. They aren’t spending, either.

But one day this recession — despite Obama’s best efforts — will end and things will begin to look up again. Then we can expect all of this money to come out of its parking space and get back on the highway of commerce. All at once. The inevitable result will be double-digit hyperinflation.

Since the spending and borrowing splurge is not confined to Washington, but is being mimicked all over the world, the inflation will not strike just one country but will be global in scope. The first global inflation in our history (except, perhaps, right after World Wars I and II), it will confront our policymakers with yet another unprecedented challenge and send them back, once more, to their economics texts. There, they will find that the only remedy for global inflation is global recession, a la Paul Volker. Having just emerged from a ruinous depression, nobody will be in the mood for more unemployment, but that is just what will have to happen to cool off the inflation and break the inflationary psychology that is likely to set in.

The point of this gloom and doom is that all this pain is entirely preventable. It will be caused by Obama’s excessive spending and trillion-dollar-plus deficits. This spending, of questionable utility in overcoming the current recession/depression, is so far out of line with what the economy can handle that it will do more harm than good when the inflation hits.

Proof that his spending will have little impact on the depression is the vast increase in money supply with no commensurate improvement in the economy. Providing money, via spending hikes or tax cuts, does not guarantee that the money will be spent. Tax cuts can be saved and spending increases, while surely spent once (on the initial project), can rapidly lose their multiplier effect as wage-earners on the government payroll bank their money just like those who get tax cuts will do. Getting out of this economic mess depends on consumer and business confidence, a faith that Obama is eroding with his looming tax increases as rapidly as he tries to kindle it with his excessive spending.

None of this should come as any news to Obama. He likely knows all this. But he is determined to pass his agenda of bigger government, nationalized healthcare and vastly greater spending even at the price of inflation and subsequent recession. He puts ideology first and the economy a distant second.

The stock market has figured out his priorities and is responding accordingly. One can only hope that voters also eventually realize what is going on.



http://thehill.com/dick-morris/coming-next-year-obamas-inflation-2009-03-03.html
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As we type, they are trying to figure out some convoluted logic to make the pending and most certain Obama inflation nightmare somehow "Bush's Fault."
 
Hyper-inflation is likely to start in early January 2011.

Just in time for 20% underemployment.
 
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Karen Kraft said:
Hyper-inflation is likely to start in early January 2010.

Just in time for 20% underemployment.
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I flatly challenge this. I say hell fucking no.

We won't see out of control inflation any time in the next 5 years. We MAY see higher than usual inflation but not anything close to hyperinflation.

Gasoline prices can provide quite a push but there simply is not the supply shortage of goods, anywhere, to support hyper inflation. Gasoline prices are rising because of supply manipulation, not a straight lack of supply; this bodes ill for hopes for a return to $147/gallon oil. Unless we have an embargo, which was the whole cause of the last era of "Stagflation".

You're going to see inflation come under attack from things like clothing swaps, farmers markets, dollar tree stores and so on. Hell, we have people turning Mountain Dew into car fuel.

You call hyperinflation by Jan 2010. I call bullshit. I hope people are marking this to see whose prediction is more accurate.

Hell, if hyperinflation does happen it won't even matter who's right...
 
Le Jacquelope said:
I flatly challenge this. I say hell fucking no.

We won't see out of control inflation any time in the next 5 years. We MAY see higher than usual inflation but not anything close to hyperinflation.

Gasoline prices can provide quite a push but there simply is not the supply shortage of goods, anywhere, to support hyper inflation. Gasoline prices are rising because of supply manipulation, not a straight lack of supply; this bodes ill for hopes for a return to $147/gallon oil. Unless we have an embargo, which was the whole cause of the last era of "Stagflation".

You're going to see inflation come under attack from things like clothing swaps, farmers markets, dollar tree stores and so on. Hell, we have people turning Mountain Dew into car fuel.

You call hyperinflation by Jan 2010. I call bullshit. I hope people are marking this to see whose prediction is more accurate.

Hell, if hyperinflation does happen it won't even matter who's right...
Click to expand...

Well, okay then. The predictions are set. We shall see.
 
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