Posted on 10/31/2009 5:32:23 AM PDT by blam
United States Catching The Argentinian Economic Disease Of Hyperinflation?
Economics / US Debt
Oct 31, 2009 - 12:54 AM
By: John_Mauldin
I have been in South America this week, speaking nine times in five days, interspersed with lots of meetings. The conversation kept coming back to the prospects for the dollar, but I was just as interested in talking with money managers and business people who had experienced the hyperinflation of Argentina and Brazil. How could such a thing happen? As it turned out, I was reading a rather remarkable book that addressed that question. There are those who believe that the United States is headed for hyperinflation because of our large and growing government fiscal deficit and massive future liabilities (as much as $56 trillion) for Medicare and Social Security.
This week, we will look at the Argentinian experience and ask ourselves whether "it" - hyperinflation - can happen here.
[snip]
Coming soon:
THE WEIMAR REPUBLIC PART II
In this episode, socialists once again destroy a major Western country by means of HYPERINFLATION thus launching famine, poverty and revolution.
Lights! Cameras! Action!
At this time, there is little sign of inflation. Folks can’t believe we won’t eventually have it, given the exorbitant rate that the Fed is printing money, but it’s not here yet. And it may never be here.
What we do have is government consuming ever more of our hard earned income. Taxes are taking a bigger bite. Private spending is going down. But government spending on endangered species and welfare handouts is increasing.
Much more likely folks such as Erik Rohm and Adolph Hitler took advantage of Weimar's long term and exceedingly difficult unemployment problem among young men and WWI veterans.
You'll notice we have a similar unemployment problem ~ with the vast majority of the unemployed being young men. We face the same risk.
We’ll be “Argentina with nukes.”
Doesn’t sound like a recipe for stability or prosperity. Not with our ingrained social problems festering like smoking volcanos.
Don't get out much? Try shopping for groceries and then tell me prices are stagnant or falling. In y world, I have seen many of those things costing more (sometimes MUCH more) than I paid last time. I am beginning to hoard.
I have seed and fuel storage, and food enough for a year. I even made sure that Spot has plenty of vittles.
You can't continuously print money without it becoming worth less.
Rising food and energy and tax burdens will seriously reduce the US standard of living.
Yes inflation will come soon.
It will take 10+ years to rebuild the economy with the idiotic irresponsible fiscal policies of our goobermint.
Still no changes in the regulation of mortgages with the continuation of liar loans w/ banks just now allowed to indicate on their books upside down mortgages as performing.
Add that the fact there are no regulations being put in place to control banks exposure to the derivatives scheme as to reduce the amount of leveraging, etc., etc., etc nor the fact that CDO's and CDS's are still being allowed to be repackaged with untraceable assets and liabilities.
What do you really think is happening?
Those in the goobermint want everyone to drink from their poisoned well.
“United States Catching The Argentinian Economic Disease Of Hyperinflation?”
It will if the Communist White House has anything to say about it. They need a “good” crisis to bring off their shady coup.
In my view, none of those things will impact inflation until we have excessive GDP growth at home, or possibly if we have shrinkage of productive capacity. Printing money causes inflation because of the classic line, “too much money chasing too few goods.” We don’t have that now. We have a lot of money, but it’s not circulating very fast. Once the velocity of money picks up, then you may have a problem, but that is no where in sight. Additionally, the Fed could put a damper on that by tightening the money supply as velocity increases. Of course, all this assumes that the Fed will do the right thing at the right time, but if you say inflation is inevitable, then you are in essence assuming that it won’t. I really don’t think there is any more validity in assuming that. It’s all in the future, and none of us can know the future.
I would focus on what we’ve got now. We’ve got more serious problems right now. Personal income is static. Personal spending is going down. The libs say that we’re coming out of the recession because of the stimulus. But the reality is that the recession would come to an end by itself. The primary effect of the stimulus has been to divert vast wealth from the private sector to the government. Even if we are coming out of the recession, the diversion of income to the public sector is not a good thing, and in fact pretty much nullifies the gains that are being had from the improvement in the overall economy.
Check the prices for red meat.
In the past, when beef prices plummeted, as they currently have in my area, it has indicated that many ranchers are rushing steers to market, as they can't afford the upkeep of their herds. At such times slaughterhouses are very busy, and retail groceries try to push the sale of the excessive supply of beef they CURRENTLY have with low prices, special deals, and frequent clearance sales. So, low prices for red meat are not necessarily a positive indication.
Meat will always drop in price before it goes UP out of sight. If you have no feed, you can’t “top” them. Farmer’s are just now bringing in crops which are decidedly lower. Add to that the “ethanol miracle” and we are in deep doodoo...
Bump.
Huh?
Expected bumper crop is good for some, but not for everyoneWATERLOO - The U.S. Department of Agriculture expects a bountiful harvest nationwide, especially in Iowa.
Whether it is good for agriculture and the local economy depends on a person's perspective.
Based on Sept. 1 crop conditions, the government believes corn and soybean fields are bursting at the fences. If predictions are realized, Iowa's corn crop will be at record highs. At the national level, soybean productivity is expected to be the best ever.
Harvest is just getting under way in the state. A few combines are rolling locally. Numbers popping up on yield monitors and recent in-field ear and pod counts - except in hail-damaged areas - back up government estimates.
It appears the state's farmers are destined to pick their sixth monstrous crop in a row. Ample corn and soybean supplies are good news for livestock producers, grain processors and some farm-related business, but not so good for others, especially those producing the products. [emphasis added]
"This year's (records) will keep pushing down prices," said Chad Hart, Iowa State University Extension grain economist. "It'll definitely help (grain) users like livestock and ethanol since it'll bring input costs down. If there is a loser, it's the producer themselves - they have great production, but take a hit on price."
[excerpt]
WCF Courier, September 27, 2009.
My wife, who shops for food, has been down with the flu so I have been doing that task. I was aghast, people. AGHAST. The price of a loaf of good bread astounded me. Bread, butter, the staples left me bug-eyed.
You did nail it exactly with your analysis with regards to the GDP.
Problem is with the current yahoos now in the WH and the Congress, the GDP is inaccurate as it takes into account goobermint spending.
Anyway you cut it, the private citizen and private industry pays for the ingredients, the labor and the resources that make up the economic pie that all of us eat from.
The reduction in the standard of living here is happening with the net buying power of the average private citizen eroding at an alarming rate.
The bozo's on Humpback Hill think they can print money and then dole it out to its kool-aid drinkers as a means to increase the velocity of money.
With current conditions, that's a wet dream shooting blanks. (sorry about that statement, but it does apply on the mark).
The only way for the economy to rebound and the dollar to strengthen is to cut the size of goobermint, reduce taxes, tighten credit, raise the interest rates, pay down the national debt, remove the strangleholds of over regulation to industry, reduce corporate income taxes as it is the only means stimulate manufacturing. We also need to institute fair trade, not free trade.
As a country we need to invest tax dollars now into infrastructure vs art work and ACORN, as examples.
A nation's true wealth is derived from manufacture of domestic goods from domestic resources with balanced domestic consumption. Also, private investment (savings) is a must to allow for technology improvements within domestic industry. If I had a billion laying around, no way would I invest it in a bunch of strip malls or condos now (as examples).
Finally, we need to stop playing political footsies with special interest groups w/ regards to energy policy. We have the resources now to develop an independent energy grid and we need to do it. Nuclear is way lagging in that regard.
INHO, people do not want to accept reality and fact. In reality the NWO wants to bankrupt us and is well on the way. Greed and deceit are well and alive and growing.
I've seen this game before.
Higher prices means we're doomed. Lower prices means we're gonna be doomed.
I wanna play.
Milk last year, $4 a gallon, solid proof inflation is out of control.
Milk this year, $1.88 a gallon, shows the Fed prints too much.
How'd I do?
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