Posted on 10/03/2013 3:17:32 AM PDT by Mozilla
David Buckner, the founder and CEO of Bottom Line Training and Consulting, an adjunct professor at Columbia University, and the author of “Permission to Think,” explained on the Glenn Beck Program Wednesday why America hasn’t yet seen hyperinflation — but why it could be just around the corner.
Buckner said that in discussing hyperinflation, people often refer to the Weimar Republic, Zimbabwe, and Bolivia, but say “it could never happen here” because a “certain kind of layering has to occur” that America hasn’t seen.
That layering, he said, or the “recipe” for hyperinflation, is:
1) Economic Implosion
2) Collapse in tax revenues
3) Raise taxes
4) Lenders unwilling
5) Austerity or print
Beck seemed shocked by the list, saying all five have occurred.
But Buckner said some still squabble about certain points in the list — and regardless of whether we satisfy the recipe, people still say three things in America are “different,” and set us apart from the standard formula.
First, it is said that “everyone wants to buy our debt,” and no one will ever stop wanting to do so. But Buckner countered that China is already quickly shifting our debt quickly to gold, and analogized the situation to a restaurant where China, the chef, lends the United States money to eat at its establishment. Pretty soon, he said, there will be other customers, like India, who can pay outright.
Second, some also claim that “we’re not printing money” because “we’re exchanging an asset – a bond – for cash.”
“What they’re not saying is where that bond’s coming from – treasuries. As soon as the government puts it out there, the Fed comes and takes it,” Buckner said. “It’s circular, it’s absolutely circular. So we are printing money.”
The third factor that many say differentiates America is that we are a “productive” country, but Buckner said he disagrees there, as well.
What exactly does America produce these days, he asked? We have Apple, but the products are primarily manufactured overseas. We have a good financial sector, but can we depend on that in tough times? Others cite the country’s many innovators as something we “produce,” but Buckner noted that innovators are “produced” elsewhere, also.
“And everybody says, well you’re not seeing hyperinflation,” Buckner said, but that’s because, “the interest rates are so low, nobody’s putting that cash back into investments in the United States. But they are putting it into desperate countries in Europe. They’re putting it into other investments. And the money’s going out there, so the second Bernanke raises the interest rates, all of the sudden the money sucks back into the United States and we have hyperinflation.”
Beck asked Buckner if we need an “event” of some sort to trigger such a meltdown.
“We’ve had an event, but…we’ve become comfortably numb,” Buckner said. “So there’s been a lot of hidden stuff that’s going on. The treasuries continue to go out, and Bernanke continues to buy debt. [But] anytime he starts to back off the markets freak out, because they know. The markets know. But we don’t, the people don’t. People who are retired, pensioners, elderly, people who are holding money are going to be devastated.”
When Beck asked for a timeline, Buckner said that by January of 2015, if not by October in 2014, we are likely to see “an increase in interest rates which will start the domino.”
“When Bernanke announced that there would be a tapering, the markets just dropped because they knew that even if the interest rates changed one infinitesimal amount, it was the beginning of the domino,” he said.
“How fast do the dominoes go down?” Beck asked.
“Three months,” Buckner replied without hesitation. “You listen to many of the economists — within three months. And it’s going to be perception more than real price. You’re going to see hoarding, you’re going to see fear. It’s not the actuality. So if they can put a glaze over everybody…it’s may slow it down. That”s the problem, is we’re dealing with an illusion. It’s an illusion of what is real. We don’t have the money. So the interest rates go up, you’re going to see a domino.”
Paper anyway. In my opinion, you’d be better of with a few pounds (or more) of silver dollars.
Those who started prepping at the beginning of 2013 did the right thing. They have been spared the steep rise in prices for everything a family needs. It’s time to prepare for the worst.
I started prepping when it looked like baraq would become president. Went all Dave Ramsey. Still prepping. This will get worse and it is weird having to live in two worlds. Working as if everything is normal, but at the same time, prepping for the zombie apocalypse.
in 2008 I used to spend an average of $150 for my usual groceries
now, I am lucky to get out of the store spending less than $350 for the same things
You think gas is bad try buying propane.
I do not expect hyperinflation. No major nation has ever had it.
Hyperinflation is caused by a lack of confidence in the currency.
Deflation is now a far larger threat.
So you don't think Germany is a "major" nation?
Hyperinflation is too much money in the market. Low interest rates contribute to increasing money suppy. Raising the interest rate has the effect of taking money out of the market. This article doesn’t make sense.
Inflation is here because of the continuing philosophy of low interest rates combined with Helicopter Ben dropping cash by the billions/trillions into the economy. The business world is hoarding cash because Obama is a crazy marxist. When/if companies decide to spend we’ll really see inflationary numbers....IMHO.
China and Russia are now trading in oil denominated in Chinese yuan. China has invited others to join. The other BRICS will soon. Once Japan as a buyer and some other suppliers (Venezuela, Mexico) join the dollar is finished. It will be the preference cascade that leads to hyperinflation. It is coming soon.
At what point do we call what is happening a Depression?
After WWI, there was an intermediate government that failed. It was a shadow of itself at that time. The failure of the currency set the stage for the rise of Hitler.
Most interesting, the new government stopped the hyperinflation, not by backing the money with gold, but with real estate.
> In the local grocery store I just saw a 12 ounce package of brand name bacon for more than $12 !!!
Just saw some for $14.95! but it was for a pound. I guess we eill start seeing a new lower cost meat that tastes like chicken on the market after the Obamacare death panels kick into full gear.../s
The “luxury” items that EBT card holders like to buy with “free money”, bacon, lobster, steak etc. are going thru the roof. This prices the non subsidized consumer out of the market for those items.
It doesn't take much dirt to grow 12 lbs of tobacco.
BTW, commercial tobacco tastes like crap compared to the homegrown.
/johnny
All money today is blips on an electronic ledger. The bills and coins thought of as money are physical representations of ledger entries. That is the Fed ledger.
I presently almost never use physical money. I need $14 to pay my barber but that is about all. Almost all my income is transferred directly to my electronic ledger from other electronic ledgers. I have two clients that still mail checks but the others make direct deposits.
Payment is made by debit or credit cards. If a check is required, the bank bill pay ledger will write and mail the check. Or, if it knows the account will deposit ite funds directly.
Regarding hyperinflation, I don’t think so. There will be inflation but it will be at a maximum rate of toleration. I have pegged that rete at <7%. That inflation is the way the debt will be paid. The debt will be devalued by the inflation. Payments will be made in $$ haveing less value than those borrowed.
The problem is unemployment. So long as there is massive unemployment there is a greater supply than demand and thus labor prices are very stable. It dawnwd on me last weekend that the vehicle is Obamacare.
Obamacare is going to drive up the price of everything. The increase in money outflow for the mandatory insurance will produce a hue and cry for an increase in wages to compensate. Once begun, the wage inflation will continue for a very long while.
Obamacare is the way the debt will be devalued and the problem solved.
> The “luxury” items that EBT card holders like to buy with “free money”, bacon, lobster, steak etc. are going thru the roof. This prices the non subsidized consumer out of the market for those items.
I see “minorities” with two shoppimg carts full of groceries with every type of meat you can imagine and a$$ widening snacks almst every time I go to Wallyworld using EBT cards. Depressing when my income is way down and I have a half-full cart that costs me anyhere from $150 - $200. I wouldn’t be able to qualify for food stamps anyway; I’m white, pay my bills on time, and don’t have a substance abuse problem...
I just bought 1.7 lbs of Perdue chicken breast for $10.18, and they were asking $2.19 for a 6 ounce can of solid white tuna.
In 2010, I bought 50lbs of frozen bacon for $1.49/lb; now it’s over $8.79/lb.
Pigs and chickens are the new Gold and Silver.
When entry-level preppers ask what to stockpile for the Apocalypse, one recommendation might be to get some piglets and baby chicks.
Carter's Stag-flation was when prices skyrocketed, the economy sucked and unemployment was high.
Obama-flation is just Stag-Flation ignored by the press and the government.
Fear. We live in it. It shackles the soul.
There is a better way.
pretty much.
Land would be good as well, especially land with a mortgage as you can pay it back with inflated $.
Land to feed you.
Silver to trade with.
Gold to preserve wealth to “the other side” of the crisis.
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