Posted on 03/07/2011 6:41:10 PM PST by blam
Hyperinflationary Deluge Is Imminent
Economics / HyperInflation
Mar 07, 2011 - 03:59 AM
Tyler Durden
Tyler Durden writes: A deluge of an unprecedented magnitude is both inevitable and imminent. The consequences of the economic and political mismanagement will have a devastating impact on the world for a very long time. And the consequences will touch most corners of the world in so many different areas; economic, financial, social, political and geopolitical.
The adjustment that the world will undergo in the next decade or longer, will be of such colossal magnitude that life will be very different for coming generations compared to the current social, financial and moral decadence. But history always gives us lessons and the one that is coming will be necessary and eventually good for the world. But the transition and adjustment will be extremely traumatic for most of us.
We have reached a degree of decadence that in many aspects equals what happened in the Roman Empire before its fall. The family is no longer the kernel of society. More than 50% of children in the Western world grow up in a one parent home, either being born by a single mother or with divorced parents. Children are neither taught ethical or moral values nor discipline. Many children consider attending school as optional and education standards are declining precipitously.
Most families do not have a meal around the dinner table even once a week. Sex and violence are common place on television and in real life. Both press and television create totally false values and ideals. Everyone must be young and beautiful often enhanced by surgical or digital means. Old people have little value and their wisdom is not benefitting the younger generations.
The Golden Calf or materialism is the ultimate value that is worshipped and no means are eschewed to attain material goals. Since most of the prosperity that has been achieved in the last 40 years is based on printed money and debt, it is totally false and unsustainable.
A major part of the Western world has improved their living standard, by exchanging services and swapping houses at ever rising prices financed by printed paper and credit. The perceived wealth that is created out of this is illusory and ephemeral. We have created a world economy which is based on debt and thin air.
Most countries are already running major deficits which will increase dramatically in the next few years. The banking system is bankrupt and is only holding together due to false valuations of toxic debt and derivatives. This is done with the blessing of governments since virtually no major bank could face an honest valuation of its assets.
Unemployment and especially youth unemployment is currently a problem worldwide and it will get much worse. In 2010, the US government spent 60% more than its revenues. In order to balance the budget individual and corporate income taxes would have to double.
Never before in history has the world run out of real money as well as (affordable) food and fuel simultaneously. But his is exactly what is happening now and it will get substantially worse in the next few months and years.
Financial misery, famine and high unemployment combined with governments that will not be in a position to give real help are a recipe for disaster that will lead to social unrest and revolutions not only in developing countries but also in the West. Hungry people are desperate people and desperate people do desperate deeds. We could see already in 2011 food shortages, and riots both in Europe and in the US.
Finally we are again quoting von Mises who clearly understood that “le déluge” is inevitable:
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
Doug Casey
March 7, 2011
[snip]
What do I mean by that? There’s plenty of reason to be concerned about things financial and economic. But I personally believe we haven’t been bearish enough on the eventual social and political fallout from the Greater Depression. Nothing is certain, but the odds are high that the US is going into a time of troubles at least as bad as any experienced in any advanced country in the last century.
[snip]
Ugh.
What a ray of sunshine!
I’d be a bit careful with the hyperinflation predictions given the continued glut in housing and continued increase of supply. Hyperinflation is a long way off. Right now we are seeing what we did in 2007-2008, (food and energy). without the jobs.
The Market Orangatan writers off their meds again?
I hope these articles are over blown but when they run the numbers they seem to make sense. I just hope they’re wrong.
cool, I’ll sell off a few ounces of gold and pay off my mortgage. Then I guess I’ll be raising chickens and goats. maybe some rabbits. Bring it.
Major hyperinflation has only occurred in modern history where countries have enormous amounts of debt denominated in a currency which is not their own.
The U.S. has large debt - but all in US dollars.
We will be following the path of Western Europe and suffer major deflation.
Poor comparison, IMO. The foundations of the economy are markedly different than 3-4 years ago. The gargantuan debt, primarily financed by printed money, not even real money that was borrowed. And in the context of no chance that will change.
Add to that a significant drop in domestic energy production, as well as serious efforts by DC to kill future production.
Finally, don't forget ObamaCare is already crapping up the economy, and will continue to do so regardless of any court rulings.
No, the fundamentals are much worse now than in 07-08.
I would trust Ludwig von Mises rather than any Keynesian.
tell me if anyone knows....can I drive across the border into Canada and open a savings account?....do I need to declare cash at the border?
well, no point in not having that extra piece of pie then is there?
tell me if anyone knows....can I drive across the border into Canada and open a savings account?....do I need to declare cash at the border?
I’m not sure as to whether or not you would be able to open an account without Canadian residence. I just know that I am glad to be watching the trainwreck from the northern side of the border.
Correction—10K Canadian is presently about 10300USD—still haven’t got my head wrapped around the loonie being above par.
LOL. I understand and may employ that sentiment..shortly.
There is an old saying from the old and notorious Vancouver Stock Exchange, and is that so long as it is going up the public will believe the most preposterous story. Then, when the price fails belief fails and is followed by remorse.
It is not too big a step to consider that so long as government credit is expanding too many will believe in its bounty and blessings. Or will be complacent. However, the changes in the financial markets that began in 2007 are reducing the market’s abilities to fund ambitious government. In April (2010) our work noted the change in the money markets that would soon afflict corporate bonds, stocks and commodities.
-Bob Hoye
A good assumption, provided that the rest of the world plays along and keeps trading in US dollars. A petroleum distributor in India must convert the ruppees to dollars to buy oil. Australians buying rice from the Phiillipines have to convert the aussie dollar to the US dollar to do it. What happens if or when when the rest of the world decides to start trading in remminbi or rand or euros?
An economist I read not too long ago described hyperinflation as an abondonment of faith in a currency, not the way too much money chasing too few goods & services.
Dmitry Orlov describes what he calls "superpower collapse soup" common to both the U.S. and the Soviet Union: “a severe shortfall in the production of crude oil, a worsening foreign-trade deficit, an oversized military budget, and crippling foreign debt.” He believes the U.S. will fare worse during the coming economic collapse because Americans have fewer backup plans than did the Russians.
Huh? How do Argentina, Weimar Republic, and Zimbabwe figure in to this?
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