Welcome To Hyperinflation Hell: Following Currency Devaluation, Belarus Economy Implodes, Sets Blueprint For Developed World Future

Tyler Durden's picture

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mynhair's picture

Sweet.  Coming soon to a terminal near you.

Jeff Lebowski's picture

“The whole world tells them, guys, you have economic problems, you should do something, and all they did was live off getting more and more loans.”

Coming soon is right....

TruthInSunshine's picture

We're going to have a deflationary collapse, before there's any possibility of hyperinflation.

I have been too reserved on this subject in my demeanor. I like Gonzalo Lira, but he's effing insane with respect to his hyperinflation bullshit.

All the hyperinflationists fail to give much, let alone quality, analysis to debt destruction, which is the same as money/fiat destruction, when presenting their cases and models for inflation.

We know the that excess reserves, which is really what Ben 'Bananas & Bubbles' Bernank has created (aside from a really shitty Federal Reserve Balance Sheet, steeped deep in toxic MBS and soon to be worth far less treasuries), do not equate to a inflationary input, and can and will be drained (however painfully and slowly, ultimately).

We know there are vast sums that still have yet to be delevered or otherwise dealt with, in the form of rotten assets, laying in sky hgh piles, all over the balance sheets of banks and financials, which have been literally marked to fantasy for going on 3 years now, that very well may present yet another global systemic threat to capital markets, even making that which occurred in 2008 look mild by comparison (reference Eurozone now, and the U.S. and China in the coming years).

ZIRP is the reason for the surge in commodities and other speculative asset classes as of late, more than any other causal force put into motion by the Fed.

Presenting a case for hyperinflation in the 'developed world' beginning with events in Belarus is painful to read.

This is Fight Club. F*ck this hyperinflation bullshit claim that's been made.

Hyperinflationists can join Harold Camping now, and adjust their time tables, again.

We have stagflation and we're going to suffer it for some time. But it's ultimately going to transition into deflation again.

Those of you claiming the Fed and other Central Banks "won't allow deflation" don't comprehend that the route to stopping it at this point would be the more hazardous one, at this point.

The Fed's only tool is ZIRP at this point, and ZIRP is doing nothing but creating speculative bubbles.

QE is dead with a Do Not Resuscitate advanced directive. QE failed. Everyone knows it.

QE will be viewed with derision and scorn even among the most steadfast Keynesians in years to come (that attitude has already begun taking shape amongst their ranks - Krugman does not view QE as even roughly equivalent to stimulus measures similar to those enacted with the goal of [however inefficient and costly] job creation).

akak's picture

TiS, I have often agreed with you before, but I cannot agree with you here.

The simple, undeniable fact is that there is nothing --- NOTHING --- in all the sordid, thousands of years of monetary history to support the absurd thesis of deflation under a fiat currency regime.  But, there are literally HUNDREDS of examples of the opposite --- currency debasement and collapse --- happening under those same fiat currency regimes, particularly, and ALWAYS, when the governments exercising the monetary monopoly under those regimes went into chronic overspending and unsustainable debt, as all Western nations are doing today.

So tell us again, why is this time different?

PS: Bankruptcy NEVER leads to one's credit rating rising, or one's IOUs becoming more valuable than they were before.

DK Delta's picture

What are you talking about? Look at Japan. It's currency is backed by more debt, and it has been deflating for the past 25 years.

EscapeKey's picture

The savers of Japan have bought nearly all issued debt, whereas the American issues were financed through the printing press. Big difference.

Besides, the Japanese game is nearly up.

nope-1004's picture

Have to agree with akak.  Sorry TIS.

Deflation is for sure here, but the banksters won't let it materialize.  Benocide is doing everything he can to stave off deflation.  The big boyz, who lent out trillions in toxic shit, would crumble overnight if deflation took hold.  Won't happen.  Inflation is the bankstas grip on the masses, and it is policy #1.

Deflation means people walk away from their financial obligations, as price deterioration makes the asset worth less and selling it completely unmarketable.  If people walk, banks take the biggest hit, as they are the lenders on all that shit. 

Your points are clear and make sense, only if you assume TPTB are going to act rational.  They won't.  They're into confiscation and hyperinflationary write offs.  They're all acquiring PM's in anticipation of this event.  Deflation would bring power back to the people, and they won't let that happen.

 

grekko's picture

This time infaltion is coming at us a different way.  All gov't stats are total lies...CPI, unemployment, etc.  During the 70's, paychecks went up as inflation went up (not by the same % though, so we lost, but not as bad).  Today, we are losers, big time.  I've been trying to buy as much silver and gold (prohibitively expensive on my paycheck), but the family needs to eat as well, so it's only a pittance here and there that I can accumulate.  As far as I can see, within the next couple of years, the shooting is gonna start.  I'm not violent by any means, like this body was built for comfort, but I feel the mood of the country this recession/depressiion.  I'm going to tend the garden and keep my head low.  Anyone got a better idea to add to my list?

TruthInSunshine's picture

Hyperinflation is literally prices on basic goods doubling or tripling in a matter of months or even days.

If anyone believes that the U.S. Government can survive, or that the global economy can survive (the United States is still the largest single consuming sovereign in the world by a wide margin - we consume nearly as much as the entire Eurozone nations do, collectively, and many of those nations are net exporters), while hyperinflation takes root in the U.S., they're high on crack.

The only way hyperinflation can possibly occur in the U.S. is if the global economy suffers a deflationary collapse first, and the political and military order of nations is revamped in such a dramatic manner, that up is down and down is up.

For those thinking this is really possible, or likely, having a year's worth of provisions is going to be the least of your concerns if you're estimations bear fruit.

What we're going to see, most likely, is a reversion to the mean of the slow drip of mean clustered inflation, but with the nasty changeup of wages not at least keeping up with the slow drip; in other words, a slow devaluation of living standards, in an effort to keep the frogs from jumping out of the pot because the water feels too uncomfortably hot (let alone the frogs rising up with firearms and torches).

However, do not discount that the universe and world are complex environments, and there is much that is not able to be even remotely contemplated at present.

Austerity measures - given enough time and political recalibrations (again, over a long enough time frame) - may indeed be in store for the U.S., and budget recalibration of a positive kind may be in the offing, especially if external events in other parts of the world create an opening.

Things are fluid, dynamic, and highly unpredictable.

disabledvet's picture

first off "when i think of frogs i think of sex."  All seriousness aside however--a special set of circumstances must occur in order for a hyper-inflation to take hold.  we're missing the most important component:  "we must repay our debt but can't print our way out of it." i think a better example in what we are going through is what France went through during Napoleon.  There are so many interested parties in our "Guns and Roses" economy..."it's hard to know who to shoot first."  Healthcare?  The Post Office?  Either way "the hundred years war continues"--and we all know how that ended.  "But it took a hundred years"--so we shouldn't forget that, either.

Ahmeexnal's picture

Prices on many daily items may have already doubled without the sheeple actually noticing it.

Can you say smaller food rations at somewhat higher prices?

nmewn's picture

This is absolutely true.

All you have to do is look at the size of your roll of paper towels in the kitchen, shampoo bottle in your bathroom etc...its been going on for a year or more.

You are paying the same or more for less product...oh for the days of a 5lb. bag of sugar ;-)

Calmyourself's picture

I also quietly agree with much you have said in the past but you seem to be framing your argument against hyperinflation as a monetary regime and phenomenon. Sooner or later (probably later) the propaganda machine will break down and a true hyperinflation will begin somewhere in the world, Belarus perhaps.. This will be like wildfire and if not spun properly and quickly by the corporate media it will endanger all fiat.

It is a cliff and once one lemming goes over it others will understand very quickly their money is paper but goods are physical and sellers will feel their power and then hold on.. This is an idea, a psychological happening and predicting its start is very difficult it may never happen but history argues against our avoidance of our fate.

tarsubil's picture

I like your last comment. Can anyone predict hyperinflation, stagflation, or deflation with confidence when the system is so fragile and prone to a disaster or the arbitrary whims of the elites? How the fuck do you hedge for all three possibilities?

pavman's picture

Yes.  Look at it like this...let QEx run its course while all the businesses go cash positive big time.  Then pull QEx and none of the drivers of the 'economy' need to borrow money ...what happens?  Cash becomes king and pricks like me go on field trips for bargain basement assets.  Everything crashes, but guess what.... you got cash, you're g2g!  So who gets hurt?  The big guys? Nah.  Mom and pop?  Only if they don't have savings.  But heck, even then if they have a job all of a sudden everything gets cheaper!

That's the reality.  When you have the guys with big guns holding huge wads of cash, they're gonna want to buy bargains.  That's not gonna happen very much if [hyper]inflation sets in.  Of course, some are hedging in China and shifting currencies, but the big money players are swimming in cash now.

So... if you want solid growth pull the plug on QEx, let the dollar deflate and watch the multi-nationals go out on an international shopping spree!

A Nanny Moose's picture

Agree. 2008 was my lesson in TPTB's approach to deflation. Right off that v-bottom.

 

Edit: To add. It seems we are seeing deflation right now, in the bubble assests...Real Estate. Stocks soon.

tiger7905's picture

Great Rob McEwen interview. His perspectives on Europe and bailouts, real estate as well as gold and silver of course.

http://goldandsilverlinings.com/?p=1071

Ricky Bobby's picture

+1

Nope- your arguments make sense to me.

akak's picture

No, you are buying into the perverted vocabulary of the Keynesians if you believe that.

Japan has NOT been experiencing deflation of any sort, and that is utter bullshit to even suggest!  The collapse of an asset bubble (or several asset bubbles, as the case may be) is NOT synonymous with "deflation"!  Has their money supply fallen in the last 20+ years?  Has the cost of living for the average Japanese citizen fallen during the same period?  Does the yen have a higher purchasing power, domestically or internationally, than it had in 1989?  No, no and no.

DK Delta's picture

Keynesians look at consumer prices, not monetary aggregates so how am I buying into Keynesian bullshit?

 

How do you define money supply??? If you are looking at base money then sure, the BOJ is pissing cash, but if you look at broader monetary aggregates that take into account credit, then you see a DEFLATION. 

If you borrowed money to buy silver on margin and then were forced to sell that silver because of margin calls, is that not a deflationary event? Are you under the impression that the largest driver of prices in an economy is money? No, its credit. 

You have to look at all the prices in an economy, not just the price of a consumer goods. If you look at things in this manner then you will see that japan has been deflating for two decades.

Spalding_Smailes's picture

Yup ... And always a thirst for that dirty little dollar ...

 


Reliance Industries Ltd. (RIL)India’s largest company by market value, is in talks with banks to arrange as much as $1.5 billion in dollar-denominated loans, according to two people familiar with the matter.

Reliance, controlled by billionaire Mukesh Ambani, plans to borrow $1.1 billion in five-year loans to replace debt maturing in about two years that has higher interest costs, the people said, not wishing to be identified because the terms aren’t set. The company may obtain another $400 million of new loans, the people said.

Robot Traders Mom's picture

Why wouldn't they want a dollar-denominated loan? That $1.5b will be a lot easier for them to pay off as the dollar is devalued...#trolling

Texas Gunslinger's picture

Akak is the dumbest window licker on the short bus.

Any attempts to teach him about deflation is a bit like having a knife fight with a hemophiliac. 

 

akak's picture

Go away, RedNeck Repugnifuck --- nobody called you, or wants you here.

Absinthe Minded's picture

With you Akak, this scum slinger is getting tiresome. Here is an idea. Why don't you go some place else and piss off. This blog is full of too many well intentioned people giving voice to their inner most thoughts, worries and theories. You must be lonely for you to have to troll here.

DoChenRollingBearing's picture

akak, Absinthe, (Hulk, dumpster, Mr Lennon, Turd, Instant K, JW in FL, Colonel_Cooper, etc., all who have been kind to the lowly Bearing). Email me (gmail) if you would like a link to my new little blog. Above at gmail. Pls try to prove who you say you are (I write my real name, so..., I do not want my name trashed all over the 'Net) Some 20 ZH-ers have joined up. I keep this kind of secretive ONLY at ZH. Everyone on my personal and email list and Facebook account is aware of my little blog. My last article is on GOLD! I am HAPPY with my responces minus a couple of ZH bullies, see CogDis's EXCELLENT article above at the top at 12.24 AM ET.

jdrose1985's picture

I remember the time Bruce Krastig schooled you on the Yen.

You must have forgot...I didn't.

akak's picture

Jdrose, are you replying to me?

If so, I have no clue to what you might be referring.

disabledvet's picture

i don't know.  "window licker on the short bus" is a new one.  was he referencing anything in particular when he said it?  perhaps we need a button for "flag as original insult" in addition to the "i hate you button."

parangwarrior's picture

man dont leave.. i like your style, licker on the short bus, wow

are you a cowboy? ehhmm

we could hangout together ya know..

i have a big ranch wit lotsa horses and dogs and pussie cats..

you like popcorns, how bout movies.. wanna watch brokeback mountain..

i like cowboy hats and jeans.. u? ;)

 

Fiat2Zero's picture

Tex tex tex...you are such a sad little fuck.

The fact is that Akak has some very cogent and well presented counterpoints (complete with facts I might add) to the specious bogeyman of DEFLATION.

This is the tell, you lousy, sad sack of replicant shit. You paid shill.

To go full metal on someone who is absolutely destroying the deflation argument with some very simple "but hey, the emporer has no clothes" observations, is to show that your perverse Rothschild masters have singled him out as a threat. Also it's really bad form old sport.

I liked you better as RoboTrader - at least you were fun to make sport of. The whole sock puppet brigade complex is collapsing under it's own weight.

You'd better retaliate to this post because I think your PayPal debit is not going to come this period. The Rothschild Masters will be furious by your sad, sad fuck up.

Tell daddy warbucks Rothschild that we have his number, and we're coming to skull fuck him.

Fiat2Zero's picture

Sorry, after that missive CD wrote today about being nice to other people, I need to rephrase:

PLEASE tell daddy warbucks Rothschild that we are coming to skull fuck him.

There, that felt much better.

akak's picture

You are more of a gentleman here today than I, F2Z.  Thank you for your moral support.

However, Tex is nothing more to me here than a momentarily irritating mosquito buzzing in my ear, and just as easily shoo'ed away --- or swatted.

asymptote's picture

I've been a lurker for a long time(2008, and reading multiple times every day for the past year). So hello all.

I am curious about your comment about reducing credit. I'm with you that credit drives prices for just about everything. However, I'm not sure that I agree that refraining from using credit naturally leads to deflation that disproves HI. I personally believe that the argument between deflation and hyperinflation is orthogonal.  HI is rejection in the belief that the currency is a store of wealth, and increasingly as a medium of exchange as it progresses. Obtaining credit is an admission on the part of the person obtaining it, that they believe they can not only return the principal, but also the interest. So credit use (to me) denotes 'betters times are ahead', as you need more cash in the future to repay today's debt.

Choosing not to take credit, (again to me) is a distrust in future conditions, i.e capacity to repay the debt. This sounds like the kind of mindset that currency rejection comes from.

As I understand Hyperinflation, the increasing prices come from owners of real assets rejecting the 'worthless currency' until they have enough buffer in the accepted price for them to spend it without losing value, which is where the 'big numbers' come from. So to me the psychology of not trusting the future of the currency is key. 

I found this article enlightening to help separate me from the correlation between inflation and hyperinflation:

 

http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

 

 

 

 

WonderDawg's picture

Dude, you confuse the fiatness of the money system with the fractional reserveness of the monetary system. It's the fractional reserve lending that "creates" money, and is responsible for the crisis we are experiencing now, and will ultimately lead to deflation, because money (credit, debt, whatever) is being destroyed and will continue to be destroyed as more debt is defaulted.

Now that we have that cleared up, can you think of any periods of deflation under a fractional reserve banking system? Does the Great Depression ring a bell? There are many other examples of deflation under fractional reserve systems, do some research and education yourself.

You know just enough to be dangerous.

DK Delta's picture

"You know just enough to be dangerous."

LOL

Eternal Student's picture

Ditto and +1 to WonderDawg.

Bay of Pigs's picture

And what about the legion of deflationists who have had it completely wrong on gold and silver for over a decade now?

Pardon me if I have any of you confused with some other sad sack deflationist like Prechter.

DK Delta's picture

I started buying gold a long time ago, but bought hand over fist in the fall of 2008 and then again around 1000. Haven't bought since, because I was expecting a correction. I'm still expecting a further correction from here but have been burned waiting the past couple of years. 

A lot of people gain a lot of valuable stuff from Prechter, but his position on gold makes no sense and it is the single reason why i reject his theory

Bay of Pigs's picture

Thanks for the reply DK.

I read the deflationist arguments all the time (mostly from Mish and Rick Ackerman who both like gold). It keeps me thinking and questioning my own set of beliefs. 

It truly is a sad state of affairs these days no matter how you view this broken financial system.

WonderDawg's picture

DK, I think the Socionomic theory is enlightening. It explains a lot of historical cycles. There is some pretty compelling evidence to support the theory. What I have some disagreement with is the EWI real-time interpretation of the waves. Prechter has been right a lot, and wrong a lot. I still think the Wave Principle has a lot of value, but not for day-trading purposes.

But as far as explaining social trends and other social phenomena, it makes for an interesting study.

DK Delta's picture

yes, it does have value, but as far as I can see it does not have value as a means of acuratly predicting market movements. It has value as a philosophical and thoughtful exercise. Its one thing to talk about the high correlation between social mood and the height of a mini skirt and quite another to say that, in order for ABC to happen, gold must drop below 650, or whatever the level is that Prechter has been saying. 

 

but that's just me

Spirit Of Truth's picture

The Apocalypse Wave may be next:

http://thespiritoftruth.blogspot.com/2011/05/major-planetary-alignment-t...

At that point the merit of Prechter's arguments will be abundantly clear.

What you all fail to realize is that "money" is CREDIT and credit is the evaluation of economic relations based upon TRUST.  Deflation is the collapse of this evaluation since the relationships were fundamentally unsound.  In other words, we are dealing with issues of MASS PSYCHOLOGY. TPTB seeking to manipulate mass psychology and pump up evaluation of credit based upon lies (UNTRUSTWORTHINESS) are literally out of their minds because creative intelligence is uncontrollable BY DEFINITION.  Those seeking to control thought will receive their just desserts for violating man's trust with God.

Eternal Student's picture

I really couldn't answer your question about those deflationists, as I don't generally pay attention to them. And please, please don't get me started about Prechter.

As I've mentioned, I'm in the Debt Deflationist camp. Gold and Silver will go down in price when there's the mother of all margin calls. But it's not happening now, and I'm invested in PMs. Even profitable, even after the engineered bloodbath in Silver earlier this month. But I will get out of both of them as we near the end of the great Ponzi. And I'll be back into them heavily afterwards.

nope-1004's picture

So.. US dollars were worth more in the '30's than in the 20's?

 

DK Delta's picture

Ostensibly yes. Is this a rhetorical question?

akak's picture

No, they were ONLY worth more than at any time in the 1920s during the period prior to Roosevelt taking the USA off the gold standard in 1933 --- after that, rising prices were the norm for the remainder of the 1930s.

DK Delta's picture

Ok. Let's say you are right. Can you provide for me a list of prices for the following items in 1929 and then again in 1939:

Residential RE in NY

A basic suit

A Ford Automobile

A loaf of bread

akak's picture

No, but I will wait for you to provide that information.