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Big Gap in Logic Weakens Hyperinflation Argument
I awakened Sunday morning on three hours of sleep, lucid of mind and filled with dread from an essay linked below that I’d read before going to sleep. Amidst the desiccated hell of Colorado’s, and the entire Southwest’s, pine-forest die-off and a disturbingly winterless winter, even my wife still doesn’t get it. She seems to think that because peak real estate valuations have held up so far in our Rock Creek neighborhood, that they will continue to hold or even rise. It’s difficult to say why prices have stayed aloft in here in Superior, Colorado, which lies just south of Boulder, about 20 minute from downtown Denver. Most likely is that it involves a combination of factors. For one, in comparison to Boulder real estate, where downtown condos with a view of the Flatirons are listing for as much as $3 million, you can buy twice as much house in Rock Creek for half the money. Second, the supply of homes in the development is very tight, since only a few new dwellings were built in recent years. Third, the schools nearby are rated among the best in Colorado, And fourth, there is the planned Conoco-Phillips campus for research into alternative sources of energy. The company has yet to break ground, but once this project is completed the facility will be a beehive for an estimated 7000 scientists, engineers, consultants and other white-collar workers.
Even so, I don’t believe for a minute that Rock Creek will somehow avoid the deflationary juggernaut that has already crushed real estate valuations across the U.S. by more than 30 percent. I predicted here years ago that home prices would eventually fall by at least 70 percent before deflation has run its course, and I am sticking with that forecast. It implies that even after the wholesale price destruction that has occurred over the last three years, the worst is yet to come.
And yet, for the moment, it is understandable that the hyperinflation argument has been enjoying (if you’ll pardon that word) a bold resurgence – one that has caused even me, a hard-core deflationist who has been writing on the topic since the mid-1990s, to second-guess myself. After all, fuel and grocery prices are rising steeply, and Federal debt — $14.270 trillion and counting – has entered a vertical parabola. While this appears to buttress the hyperinflationists’ arguments, and although Peter Schiff’s scenario – hyperinflation triggered by all-out monetization of T-Bonds – remains plausible in theory, it became quite clear to me, lying awake Sunday morning before dawn, why deflation will prevail – will in all likelihood smother an incipient hyperinflation before it even gets off the launching pad.
Total Collapse in Mere Hours
Let me explain. To begin with, we cannot have a Weimar-style hyperinflation for reasons that will be obvious to anyone who has read Adam Fergusson’s classic on the 1921-23 Weimar hyperinflation, When Money Dies. As Fergusson makes clear, this panic fed off a cash economy, not credit; and it required close collusion between the government and trade unions. In contrast, the U.S. economy is cashless and the unions are widely reviled. That said, let me cut to the chase: Hyperinflation occurs when people, fearing their money is about to become worthless, panic out of currency and into physical goods. This is highly unlikely to happen in the U.S. for several reasons, to wit: 1) Whereas Germany’s hyperinflation took several years to ramp up, today’s financial markets are primed for a catastrophic collapse that could conceivably run its course in a week, if not mere hours; 2) under the circumstances, there would be no shifting of financial assets into hard goods simply because any financial assets one holds at the time of the collapse would become worthless before one could sell them; and, 3) at that point, there would be insufficient currency available to drive a hyperinflation, since mattress money is likely to be scarce and because branch banks keep only about $25,000-$50,000 in cash on hand. All of which implies we will go straight to deflation without the emancipating, hyperinflationary interlude that some mortgage debtors might be hoping for.
Until now, I have been reluctant to air the simplistic argument, used by economists when they are at their most condescending, that inflation implies nothing more than an increase in the money supply. Although that’s a truism that we would not argue with, it holds little value for anyone attempting to predict how a drastic increase or decrease in the money supply might play out symptomatically. While the textbook theory of it could account for the gas-and-groceries inflation that QE1 and QE2 have produced so far, it fails to explain logically how we would go from grocery-store inflation to systemic and pervasive hyperinflation. To repeat: Hyperinflation would require the shifting of cash money into physical goods and assets. But other than mattress money and the relatively paltry sums of cash on hand at branch banks, there would be precious little cash to shift. And if the panicked money is assumed to come out of Treasurys and other paper assets, it begs the question of how much the paper assets will fetch on the day when there are no buyers other than the Federal Reserve?
Flat-Earth Optimists
My argument is simple, and I will not yield ground to any hyperinflationist who fails to explain, if the system collapses, where the money will come from to bid tangible assets skyward. Nor will I even print comments from the flat-earthers who see the financial system somehow muddling along, avoiding a collapse indefinitely. In any event, I would urge you to click here for Jim Quinn’s powerfully persuasive essay if you want to know why a financial collapse is not just likely, but inevitable.
I invite readers to attempt to rebut my argument in the Rick’s Picks forum – to tell me exactly where the cash will come from that would allow Americans to bid the price of hard assets into the ionosphere. In the meantime, I plan to run a guest commentary later this week concerning one asset class that seems likely to outperform all others. Hint: it is not bullion. And, this investment category could conceivably increase in absolute value for the same reason that the pine forests of the Southwest are dying. Under the circumstances, the asset appears to be very undervalued at the moment. It will be out of reach once the system crashes.
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"tell me exactly where the cash will come from that would allow Americans to bid the price of hard assets into the ionosphere."
Disco Rick,
Why assume the govt. goons will stop printing?
Paper/ink shortage?
The Weimar scenario could be played out with electronic money just as easily as with paper. Electronic price tags are already being used in French supermarkets that can be updated instantaneously by a computer-controlled transmitter located in the roof of the building. A bar of soap with a price tag of 80c in the morning can be changed to 3$ in the late afternoon at the stroke of a key.
http://www.haaretz.com/print-edition/business/eldat-sells-its-electronic...
(older link but there is plenty more stuff on the web)
This is no bullshit, I've bought stuff from these supermarkets (The "Casino" chain). No need for wheelbarrows of cash. You just need the appropriate powers of ten in your bank account to feed your debit/credit card. Jim Rickards has already described this scenario, which would involve 2 electronically displayed prices: one in Fiatscos and one in gold.
Exactly! Smart phones with pixel trillions! What could go wrong?
Who said "cash" was needed? We have known for well over a decade that M1 and M2 are meaningless, so why use ancient measures to predict hyperinflation?
The only thing that is needed to stoke hyperinflation (and bid the price of assets up) is the same exact thing that has been occurring in the US, EU, and Japan. The creation of debt (aka credit) out of thin air at a macro level remains the most likely cause for hyperinflation this decade.
If you need any proof of this, just look at the equity and commodity market reactions to QE1/2 and most recently the $300-400B fiat injection into Japan. Now take that and multiply by 5, 10, 20, 100, etc. and it becomes very easy to see that asset prices would be bid up in such an environment because there would be no other avenue for money to go to chase yield.
That's what it's all about at the end of the day... chasing returns. The first phase has already begun with institutional money chasing yield and running out of valid avenues outside of equities, commodities, and high yielding currencies. The next phase begins when the man on the street realizes their savings have earned nothing for years and their wealth is being stripped via inflation (even at a paltry 2% core inflation rate, savings are only returning 0.25% which is a net loss of 1.75% per year). The man on the street then chases return in the same markets that institutional money has been chasing it. There's your asset price rise into the ionosphere without any additional cash entering the market.
Cash was never the issue at hand, confidence was. There is plenty of debt-based fiat to go around and the only chance to avoid hyperinflation (or something similar) is to allow the debt deleveraging that began in 2008 to run its course over a decade.
Agreed. As I see it, if you have stocks, you sell 100 of your shares of Occidental Petroleum (or whatever) which are by then trading at 10 000 000 old USD per share due to quantitative easing, and buy gas and groceries (see electronic price tags below) with the proceeds. 1 loaf of bread = 10000 $ etc. If you have bonds you are screwed of course. Precious metals - no brainer. If you have a job, your salary will hopefully increase in nominal terms with a delay connected to how rapidly your employer can raise his prices. The credit/debit card companies will have to update their software to handle the large numbers.
"I invite readers to attempt to rebut my argument in the Rick’s Picks forum – to tell me exactly where the cash will come from"
From the tens of billions the FED creates every week, and which are then leveraged at 10x by the primary dealers, perhaps?
There is no inflation/deflation debate.
There's just a physical limit to the amount of debt that can default, and no physical limit to the money that can be printed to offset it. Period.
But I'm frankly becoming tired of this eternal debate which resurfaces every month or so, with the same arguments and the same people, so I'll leave you there.
"There's just a physical limit to the amount of debt that can default, and no physical limit to the money that can be printed to offset it. Period."
That's it in a nutshell, folks. Well said. Only thing to add is there is no limit to the political will to avoid hard choices, which leads you to...Bernake hitting the "increase" button to avoid catastrophic collapse this week in favor of next week.
In Weimar people needed money...the Gov't met the need. The more they attempted to satisfy the need for money the greater the need increased.
Nothing has really changed.
Hyperinflation is a political response to an economic catastrophe.
I am sure the present incumbent has the political will to meet this need, should it arise, in the electronic age. For this reason I truly doubt there will be insufficient digital currency, so the numbers might even be greater.
Your argument about being unable to liquidate financial assets quickly enough to fund a hyper-inflation makes no sense...the point of the whole exercise is that when money is needed...for food, say...the government rises to the challenge and creates it. Therefore, money loses all value. It dies.
Track the price of a loaf of bread from pre WWI...it would not matter how quick you were to liquidate financial assets, that loaf of bread cost 200 Billion Marks in 1923. Will that be cash or charge? There is your gap in logic. Foodstamps.
and btw, throwing around millions, billions and trillions like they are all part of the same money family...a million seconds runs between 11 and 12 days...a trillion seconds is about 32,000 years. Fuck, even rocket scientists gave up trying to count past 6 trillion miles...they called it a light-year.
Keynes said not one man in a million could recognise hyper-inflation when it happened...you are with the majority.
Other major economies of the world are already beginning to move away from their dependence on the US Dollar. Once we cross the tipping point where the globe is no longer dependent on the US Dollar as a reserve currency, the value will drop rapidly. Stuff will then get mighty expensive.
Yes, hence invest in everything that the government can not fabricate itself.
what in the heck does the pine beetle killing our evergreen trees have to do with deflation? or the matter that superior colorado, is interior colorado. view of the foothills, LOL. winterless winter?
Cut the guy some slack, he lives too close to Boulder. Fumes from all the new Birkenstocks are killing the pine trees, and an innocent little beetle gets the blame.
heh, heh, heh, heh, heh.
Another loser who fails to mention that defaltion and inflation are simply made-up economic terms.
All that matters is purchasing power. If you have it, good for you, if you don't, prepare to be a slave, as you most likely are already.
The author states "Hyperinflation occurs when people, fearing their money is about to become worthless, panic out of currency and into physical goods." Okay, so tell me, what happens when the dollar is no longer the world's reserve currency or if other trading partners (creditors) and people around the world stop taking the dollar as payment or stop using the dollar all together? The latter is ALREADY HAPPENING in many instances.
The author fails to realize that even the imaginary dollars that exist on computers around the world will become worthless overnight. Unlike Weinmar, where the money had to be physically printed, our "in silico" money can become worthless EVEN FASTER.
To the contrary, I would argue that, from the prospective of purchasing power, the dollar can become worthless even faster. Hence, we will not have the stepwise hyperinflation experienced by Weinmar, but something much, much worse.
It does not hurt to hedge accordingly either way.
@LoPhs
If all of those in silico dollars become worthless, what do you reckon happens to some one that has enough of them to retire a contractual agreement denominated in same -- such as a mortgage?
Given the current disdain for contract law I fear the answer could be interesting...
To add to your arguement, what happens when it becomes a 'no brainer' to short the dollar? What happens when everyone and his dog 'know' that the dollar is becoming a LOLlar because the printing presses have to run to cover the interest on the gov't debt?
Back into the woodwork, deflationistas. Little slips of bankster paper have very very rarely increased in value/purchasing power. That is not why the banksters created them.
The cash will come from the 401K's and other invested money jumping on commodity based assets. Look at SLV, GLD and think about all the other commodity ETF's that could suddenly explode if everyone ran to those assets with every invested dollar.
No, I think Uncle Sugar will get the 401K and IRA money first. That ripe, $10T plum is just too tempting for them to ignore much longer. If they can get their hands on even 1/3 of it, then the Ponzi can continue for another year or two.
I invite readers to attempt to rebut my argument in the Rick’s Picks forum – to tell me exactly where the cash will come from that would allow Americans to bid the price of hard assets into the ionosphere.
Offer accepted, but you've framed the problem wrong; strawman? If you frame the question wrong, you'll always get the wrong answer. Americans don't have to bid up the price of hard assets. All that is required is a loss of confidence that the U.S. government will be unable to pay the interest on its debt. USD interest rates would skyrocket, interest payments on rolled debt would skyrocket right with them, and a U.S. restructuring or outright default would ensue. The buying power of USD would collapse quickly. No printing presses required.
Now, additional arguments can be made that, in response to such a scenario, the Fed would crank up the "crediting their accounts electronically" to affect a bailout. This is the scenario they are trying to forestall by...crediting their accounts electronically. Under these circumstances, once this monetization became blatant and obviously never-ending, the buying power of USD would also collapse. To holders of USD, this will "look like" hyperinflation. The Weimar scenario, liek the Japan scenario, is a red herring.
There is another possibility: foreign holders of USD and USD-denominated assets rush out of them and try to convert them to real assets right here in the U.S., bidding up the prices of hard assets...
+1. No need to print "cash money."
I'm already moving available FRNs into physical assets.
And Rick? Your chart is deceptive. Jan-Sep-Jan-Sep? And then it morphs into weekly at the end.
Good Job, concur with your point, could not have verbalize the position as well as you did.
"Japan" will be instructive. The inflation is unavoidable now. The technical term is "data."
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While the textbook theory of it could account for the gas-and-groceries inflation that QE1 and QE2 have produced so far, it fails to explain logically how we would go from grocery-store inflation to systemic and pervasive hyperinflation. To repeat: Hyperinflation would require the shifting of cash money into physical goods and assets.
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I lost counting how many idiots who got it wrong w/ hyper inflation..
HYPERINFLATION IS SOCIAL PHENOMEN...
LISTEN IDIOT hyperinflation will occur when most of population will be w/out jobs, when most of population will be unable to buy simple burger for breakfeast, when most of population will have nothing to lose, so the THEY will 'lose'..
AND WHAT WILL GOVERMENT SOLUTION BE ?.. PRINT MONEY AND GIVE AWAY AS HOT PANCAKES..
why do you think hyperinfaltion ocCured in Germany..
cause it was after ww1,people were without jobs, 12 years old teens were on street selling bodies,there were revolutionS in all coutnries around.. it was time of great upheaval..
SO WHAT WAS SOLUTION OF GERMANY GOVERMENT ??? PRINT FUCKING MONEY... and give thme away .. LIKE BENNY is doing now..
right now US gov prints 0.8$ for each 1 $ inrevenues.. wait for 1:1, 2:1
then shit will hit the fan..
alx
Time of great upheaval! No simple burgers for breakfast! LOL!
I junked you for bad form, asking questions and soliciting ideas doesn't make one an idiot.
Try editing your post and cleaning it up, both for content (articulate your point) and typos.
#
, asking questions and soliciting ideas doesn't make one an idiot.
#
idiots always say that..
alx
of course! the "pancake problem" was weimar's undoing!
We don't need to see hyperinflation to ensure lives of daily misery for ourselves. Plain old inflation, like we're beginning to see plenty of, will be quite enough.
While I generally have a soft spot for everything having to do with the Front Range, Ackerman doesn't know what he's talking about. Deflationary collapse? Puhleeze...and only waiting for it since the 90's. Hope he has a nice comfy chair, and plenty of beer nuts...
Cash? Who needs cash? I keep 4 credit cards with $20,000 limits on all of them in my address book beside my computer. If and when I feel the Final Bell rings, aka., the ShitHitsTheFan, then with a couple of mouse clicks I'm on Apmex or Ebay, and VOILA!, I'm $80,000 dollars RICHER with your "Hard ASSets of gold and silver. I might add, NO CASH NEEDED, No branch bank needed, and my "ASSets skyrocket. PM's will do well whether there is inflation, deflation, or the Stagflation we are in now. That's my argrument, BTFD's by ALL MEANS...........
Good luck with that "plan" when somebody at DHS certifies an emergency and they turn off your ISP's access to the web. TPTB are ten moves ahead of you in this chess game.
I totally agree with this article. "Some inflation" can happen while economic growth trajectory (or perception thereof) is still intact. But once wheels unravel the ~$250-300 trillion of 'debt' (money/claims/etc that require a return) in OECD absolutely dwarfs what little the central banks are doing. Now - once that debt is devalued/defaulted on, THEN we might have hyperinflation as a next-to-end-game event, but not before. No way.
Rick it's really very simple. Word leaks out. The collapse is being front-run as we speak. Fed shennanigans hold up the casino in the mean time. Some people like to stay late at the table.
Rick Ackerman
Good Lord, some Deflationists are coming out of the woodwork!
Welcome to the 0.0000001% Club, we haven't many Members . . . . . yet!
In fact the word 'deflation' has been notable by its complete absence for the past decade from all media and the talking heads of the establishment and according to Rob Prechter there's only 10 deflationists out of 35,000 inflation predicting economists. But judging by the usefulness (uselessness!) of the economists profession 10/35,000 are bloody brilliant odds we're going to get deflation!
Someone commented recently the "problem" with the CPI is that it includes the deflationary price meltdown in the property sector. If the CPI hadn't included property his inflationary storyline would be even more inflationary. Yes what a 'shame' reality is included and getting in the way of the inflationists 'religion', let's not let any deflationary price pressures obstruct his inflationary view!
The big problem for the economists inflationist argument is deflating debt bubbles don't equal inflationary prices but deflationary (imploding) prices. And the biggest problem in Western society is overwhelmingly DEBT. The 2nd hole in the keel of continuing to float the inflationary boat is every patch and 'solution' dreamed up by the retards of Govt and central banking is to 'solve' a debt problem by digging a deeper debt hole in the hull. They're baking in a deflationary shit storm (drowning) like you wouldn't believe
Deflation it is then ...not 'if' but just a matter of when
Yes but the gargantuan levels of debt are denominated in dollars. If you can print gargantuan amounts of dollars (and they can), where is your debt-destruction-deflation argument then?
In a world of sound money backed by something tangible, I would be firmly in your camp, sir.
Euro VS the Dollar.
It is my understanding (and please correct me if I'm wrong) that throughout most of Europe you can walk into a bank and exchange your euro for physical gold at a floating market price. How do you think this will affect the ability of euro-hyperinflation to even get out of the starting gate?
As confidence is lost in the dollar and the contagion spreads to the euro, do you think people will rush into the stores first, driving up the prices of economic goods (CPI)? Or will they rush into the banks and buy up the gold on offer? Answer: The availability of physical gold in face-to-face cash transactions through official channels like commercial banks will arrest this contagion in its tracks.
As this proceeds, the price of gold (rather than the price of consumer goods) will skyrocket in euro, stretching the supply of gold measured in weight. In other words, you'll get less and less gold the further back you are in the line at the bank. So the bank won't run out like it does in a bank run during a fixed gold standard. The banks will simply be selling gold at the official market price which will be rising rapidly.
I would recommend that you and all who even faintly expect a new gold standard take heed of these words that are more true today than when they were written in 1977, by F.A. Hayek:
"I am afraid I am convinced that the hope of ever again placing on government this discipline is gone.
â?¦My conviction is that the hope of returning to the kind of gold standard system which has worked fairly well over a long period is absolutely vain.
â?¦it is the demand of gold for monetary purposes which determines that value of goldâ?¦
â?¦ I have said that it is an erroneous belief that the value of gold or any metallic basis determines directly the value of the money." [Source]
Most banks in larger towns in Europe either have gold and silver coins/bars in stock or can order them for you. There are also plenty of reliable dealers where you can buy physical metals either at their premises or online. In a crisis situation there may be interruptions in supply - for example a year ago when Greece threatended default and the Euro nosedived but was later rescued by Russian and Chinese buying. Silver or gold were not to be had for love or money for several weeks. The supply situation normalized itself later though.
Completely agreed on the impossibility of an (official) gold standard. No government or central bank is honest enough to run it. There will just be gold and silver in use parallel to whatever Superfiatsco SDR replaces the USD.
It is my understanding (and please correct me if I'm wrong) that throughout most of Europe you can walk into a bank and exchange your euro for physical gold at a floating market price.
You are wrong. If you are a good customer of a big bank (friend of the devil), you can buy small amounts of gold at an obscene spread. If you want a million dollars of gold you are SOL.
well "where is it coming from right now?" corn prices are surging today.(?) i understand the theory that if we give all OUR government money to banks "they'll be such assholes with it everything will be fine." shall we talk "Wall Street bonus"? but still--"prices rise across the board."(?) my favorite word created by this "it's not all bad" thing is "flation." but it's not "flation": perhaps a "mild case of hyper-inflation" will do? clearly "no one is claiming they are responsible" and "all they want to do is go home."
hahaha
Fear is the main emotional motivator in any currency collapse, just like it is in financial market meltdowns. And as we saw even just last night, the herd can stop on a dime and reverse course 180 degrees overnight, from greed to fear, based on a single news item.
The initiating spark of hyperinflation (currency collapse) is the loss of confidence in a currency. This drives the fear of loss of purchasing power which drives people to quickly exchange currency for any economic good they can get their hands on. This drives the prices of economic goods up and empties store shelves, which causes more panic and fear in a vicious feedback loop.
The printing of wheelbarrows full of cash is the government's response to price hyperinflation (currency collapse), not its cause. This uncontrollable government response happens in some cases, but not all. Let me repeat: The massive printing that first comes to mind when anyone mentions hyperinflation is not the cause, it is an effect, in the common understanding of hyperinflation which is the collapse of a currency.
Stated another way for the specific case of the US dollar; credibility inflation (financial product hyperinflation) leads to consumer price hyperinflation (collapse of confidence) which leads to monetary base hyperinflation (govt. response). This is a concept I spelled out in my three most recent hyperinflation posts:
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post.html
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post-part-2.html
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post-part-3.html
Hyperinflation, so misunderstood.
Stage (1): $ Confidence inflation. 1971 to now.
Stage (2): Confidence Loss (Instantaneous): Maybe one can say that this has happened "behind the scenes" but not "in public." Debts are being socialized, no? Stage 2 is "hyperinflation" a loss of Inflated Confidence. There are two ways to go here: a default (never done), or a massive printing (always done by political will, always messier in the end with far worse social impact, but its less pain "in the moment" so this is the way things go.)
Stage (3): Physical Cash is Required to Settle Contracts, Settlement Lags and kills commerce.
Stage (4) Confidence loss in Fiat requires recapitalization of World Fiat Currency structure, probably commodity backed.
Time of Chaos: In the Lag time when things are not functioning, chaos reigns and political changes happen (to the benefit of the "hyperinflators" aka Banksters and other wise folk).
I disagree with the authors premise that a hyperinflation can not happen today in the US. I think that a "loss of confidence inflation" will happen.
+1, and I hope this isn't a stupid comment, but... you remind me of another mechanism that might actually make any hyperinflation worse. That is, that we have so many credit cards. If people lose faith in the dollar and think it might lose value, and if they have credit cards, why won't the possession of so many credit cards actually accelerate the hyperinflation?
People will use their credit cards to buy goods and commodities now, knowing they can repay later with inflated dollars.
Why won't credit make it worse?
Credit cards can be turned off like a light switch. Read the mice print on the cardholder agreement -- the issuer can reduce available credit at any time and for any reason.
True, wouldn't they be doing it in response to an already in motion hyperinflation? Those who panic early would be able to load their cards up. Extreme interest rates at the onset would be the only way to stop that before it took hold.
The money will come from where it always comes from the issuing authorities printing press. The real question is why will it be printed in such mass quantities? Because a (hyper) deflationary scenario bankrupts those entities most in control of the printing press and is more damaging to them as it empowers the little guy to an extent. All of a sudden in your scenario, the prudent savers become the masters of there own destiny, unacceptable. You answer your own question when stating most banks carry 25 - 50 K cash. The big banks are not stuffed with FRN's, it is truly the simplest of cause & effect.
Can the author see Congress agreeing to balance the budget anytime in the next ten years?If not who will buy the treasuries issued to fund it apart from the Fed -i.e electronically printed money that will render the dollar worthless and all US treasuries issued up to that point also,how long will it be before the government is in a position where not only can it not afford to repay the capital of its borrowing,but also has to print further worthless dollars to pay the interest.In that scenario it is not difficult to see how inflation can get out of control is it? The author maybe correct in saying that there will not be hyperinflation, but it is the Bernank's plan to inflate away the debt(and everyones life savings and pensions) over many years of relatively high inflation-the old frog in a pot of cold water brought to the boil versus the frog thrown into the boiling water.
Where will the money will come from to bid tangible assets skyward? There are close to $1 trillion dollars in the coffers of American corporations. The wealthiest 1% of the American population possesses at least that much. In fact, it seems entirely possible that far fewer people could, in America today, fuel a hyperinflation than were needed in Weimar Germany. The wealthiest 1% may see it as an opportunity to profit. History doesn't repeat itself. It rhymes. Moreover, your analysis is limited to Weimar. What about all the other hyperinflations? If a hyperinflation happens, you will be left explaining how something you forgot to notice caused a hyperinflation. I would find it easier to agree with you if you discussed all the other hyperinflations.
Deflation cannot smother hyperinflation.
Deflation of asset prices can coincide perfectly with inflation of the money supply. What this would translate to in real world terms is a decrease of the amount of stuff we can buy (inflation means money is worth less) while there being an actual decrease in the supply of real goods to buy (deflation of goods means less production capital to produce things).
During the German hyperinflation asset values of many things fell to rock bottom, usually luxary items, while the values of others soared to the moon, usually on items people need.
Moreover, your chart is meaningless: the money printing begain in 1914, with the advent of WWI. It wasn't until 1919 that the treaty of versaille placed an enourmous debt and further exercabeted the money printing problem Germany was already facing.
Welcome to hell.
Peter Schiff jokes about zimbabwe but i've never heard him say we are going into hyperinflation......i think he paints a similiar picture either way gold goes up....if we collapse in deflation they still will need a new system and to pay off china. gold will have to be involved....Schiff has actually hinted at credit may be confetti......"The only thing that will be left is all the debt we owe to foreigners" Does that mean a reset where credit card debt and domestic mortgages are zero and home prices reset down? I think so. I agree home prices must come down.
Who says we're actually going to pay off our foreign debtors?
But it wasn't until France and other countries no longer accepted the Weimar dollars that hyperinflation truly set in. You can't have hyperinflation and have dollars be able to escape the US. As much as everyone wants to talk about people using a different reserve currency, it isn't going to happen. Not when the Euro has more problems, China is not transparent enough and there are not enough Canadian or New Zealand dollars to be reserve currencies.