Hyperinflation Nonsense

Townhall.com ^ | May 26, 2011 | Mike Shedlock

[ctdonath2]

Will take me a bit to kick around the numbers properly (not my field), but here’s a small & startling start:

There’s about $1500B in cash floating around. When economic times get dire, people want cash - not loans, not promissory notes of deposit, they want cash. That’s about $5000/person - not a lot, really. Let’s overlook the fact that a huge fraction of that cash is in overseas vaults (China comes to mind).

The federal government alone is running a $1800B annual deficit. If those bond sales fall flat and stay flat, QEn starts and we print as much cash as is needed - at the rate of $5B/day. The longer those presses run, either the longer bonds don’t get bought because the value of the dollar isn’t worth it, or interest rates rise fast to attract interest in a plummeting dollar. Remember, bureaucrats and entitlees demand payment or the whole political system crumbles; pols WILL keep those presses running.

That means in one year we will DOUBLE the cash supply. Total value hasn’t changed, so the value per dollar drops 50% - and that’s without the impact of everyone dumping their imploding dollars ASAP.

Ok, it’s not quite that simplistic in reality - but that’s the framework. It all depends on whether we can sell $5B in bonds every day indefinitely ... and that’s coming into doubt; cross the tipping point, and show me how we _can’t_ have hyperinflation.

[Mr Ramsbotham]

People use the word “hyperinflation” in lieu of simple “inflation” for the same reason that police officers refer to a common thug as a “gentleman.” It has more syllables, and thus sounds more impressive.

[SeeSac]

People use the word “hyperinflation” in lieu of simple “inflation” for the same reason that police officers refer to a common thug as a “gentleman.” It has more syllables, and thus sounds more impressive. Uh, nope.

[green iguana]

The US has, by far, the largest manufacturing output in the world. We’ll likely lose that to China at some point, but that will take time.

[DannyTN]

Thanks for posting that.

[OB1kNOb]

.....cross the tipping point, and show me how we _can’t_ have hyperinflation....

I think that tipping point is a lot closer than most people think.

[central_va]

Our steel output is pathetic. I consider the ability to make steel a critical factor in national security. We are at third world levels in steel production.

If you don't think our heavy manufacturing base and our ability to produce critical war materials has been seriously degraded by Free Trade™ than you are just plain stupid.

[TexasRepublic]

+1

[samtheman]

The writer is an idiot.

Of course unfunded liabilities are the problem.

And of course inflation (maybe not hyper, but definitely inflation) is the PLANNED SOLUTION.

What other way is there?

(Excluding free market solutions, which virtually no one in government is interested it. Just a few of the more “radical” “Republicans”.)

[samtheman]

Obama/Soros and their crew want hyperinflation because it destroys their enemies, concentrates power in the hands of the guy with the most thugs, and makes the vast majority of people completely dependent on handouts.

Maybe one of the most important sentences ever posted on the internet.

[green iguana]

It's "then you are just plain stupid", not than.

[hattend]

Bump for later

[central_va]

It's "then you are just plain stupid", not than.

Instead of worrying about my diction why don't you TRY to address the point I was making. The reason is you can't. I am right.

[DB]

Steel production in this country was wiped out by three things, endless environmental laws increasing costs, high energy costs which is a major part of the cost of steel production and unions.

[central_va]

All I know is the nation is at risk due to offshoring and Free Trade™ in order to save a few pennies on the dollar. Our grandfathers are spinning in their graves....