Friday, September 24, 2010

The Coming Collapse and Hyperinflation

Aren't those mutually exclusive?  Not exactly.  Three weeks ago, I ran a piece based on an article by Gonzalo Lira on How Hyperinflation Will Happen.  The big insight "money quote" in there was:
If we think that hyperinflation is simply inflation on steroids—inflation-plus—inflation with balls—then it would seem to be the case that, in our current deflationary economic environment, hyperinflation is not simply a long way off, but flat-out ridiculous.
But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same. 
This week, Mr. Lira wrote a second piece further explaining how it's likely to happen.   He says,

I usually don’t do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the United States, clearly struck a nerve. 

It was a long, boring, snowy piece of macro-economic policy speculation, discussing Treasury yields, Federal Reserve Board monetary reaction, and the difference between inflation and hyperinflation—but considering the traffic it generated, I might as well been discussing relative breast size in the porn industry. With pictures.
How can you not read a piece with an opening paragraph like that?  Go read.  Read them both.  Do I need a warning that there's some "adult language" in there?  Things like, "Buy when there’s blood on the streets." and many descriptions of economic collapse.  Oh, and a couple of F-bombs.  

I can lead you to many, many quotes from people who really know their stuff, including my frequent link, Karl Denninger,  who will tell you that seriously bad times are coming.

Remember, Even in the midst of Apocalypse, things will get better. to quote Lira. 

Let me leave the last quote to Lira:
This new normal might well have unsavory characteristics. I tend to be a pessimist, and just glancing through history, I can see that just about every period of hyperinflation has been stabilized by some subsequent form of autocratic or totalitarian government. The United States currently has all the legal decisions and practical devices to quickly transition into an authoritarian or totalitarian regime, should a crisis befall the nation: The so-called PATRIOT Acts, the Department of Homeland Security Agency, the practical suspension of habeas corpus, etc., etc.
Go read.   And for God's sake, try to sock away some food and other supplies. 

1 comment:

  1. I might as well been discussing relative breast size in the porn industry. With pictures.

    That made me laugh out loud, Thanks

    But yep we are in alot of trouble and I´m not smart enough to see any easy way out of it. Financial trouble is like any other type of trouble, easy to get into and hard to get out of.