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What Does Hyperinflation Look Like?
Sweeping up pengo banknotes. Hungary, 1946.
100 Billion Dollars buys eggs in Zimbabwe.
500 Billion Dinar note from Yugoslavia.
Burning marks as fuel to keep warm. Germany, 1913.
As I've previously noted, hyperinflationists are too focused on Weimar Germany:
You've heard how bad things were in the Weimar Republic, when people would rush straight to stores to buy food after receiving a pay check because their money would buy much less the next day.
But it turns out that Germany's hyperinflation in 1923 was nothing compared to that experienced by Hungary, Zimbabwe and Yugoslavia.
In a new paper published by the Cato Institute, economics professor Steve Hanke lists the all-time worst episodes of hyperinflation:
Note that Hungary's daily inflation rate was ten times greater than that in Weimar Germany, and prices doubled almost six times faster in Hungary than in the Weimar Republic.
Life in Weimar Germany was extremely difficult. But Hungary in 1946 was a lot worse.
Note: While the commonly accepted explanation for hyperinflation is government printing too much money, Ellen Brown argues that the real explanation is a concerted attack on a country's currency by foreign speculators and/or foreign governments.
Postscript: This post is not implying that I think we'll necessarily get hyperinflation. It is only trying to put historical cases of hyperinflation in context.
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Yo, Benjamin, dude...now i'm not tryin' to be funny now with y'all but we all know it's all about da benjamin's...an' ur da biggest, baddest, benny o' dem all..
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As stated above, my ears were bleeding. If you read it backwards your ass will bleed.
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Another time...another place...but like alot of things (absinthe, hash, pick your poison) it can make you blind in more ways than one ;-)
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Hyperinflation is complex, far moreso than the mechanical relationship of sovereign debt and the ongoing process of monetizing it. The US has been monetizing its debt since the end of the 19th century, btw.
Find a Dentist
The Yen, and Japan, raising cash to pay for the reconstruction of the country, is already on the path of Yen appreciation and will be assisted in their efforts by the other central banks. By acting in a co-ordinated fashion they will begin to reverse the worldwide race to the bottom.
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Be assisted in their efforts by the other central banks. By acting in a co-ordinated fashion they will begin to reverse the worldwide race to the bottom.
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compound annual inflation rate, the appropriate term to measure this year over year inflation measurement? This level of inflation will make it difficult for people to properly value the products they buy relative to the products value in silver.. A value buying guide might be a useful tool going forward.
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compound annual inflation rate, the appropriate term to measure this year over year inflation measurement? This level of inflation will make it difficult for people to properly value the products they buy relative to the products value in silver.. A value buying guide might be a useful tool going forward.
cheapest car insurance
The Yen, and Japan, raising cash to pay for the reconstruction of the country, is already on the path of Yen appreciation and will be assisted in their efforts by the other central banks. By acting in a co-ordinated fashion they will begin to reverse the worldwide race to the bottom.
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Get your little piece of history........
http://cgi.ebay.com/GERMANY-1923-3-MILLION-CURRENCY-NOTE-AU-3520A-/15059...
http://cgi.ebay.com/GERMANY-1923-20-MILLION-MARK-CURRENCY-NOTE-CUF-3517A...
Hyperinflation, perhaps; can you posit an underlying motivation?
http://deltafunctiontoronto.files.wordpress.com/2011/05/declineofthewest.gif
Consolidation (of the Western World) is operative word.
I suspect the FED is actually trying to induce high inflation, but it is a dangerous game. They should be pushing government debt maturity lengths out..... Trapping suckers in low yield/long maturity debt. If the debt maturity is too short and interest rates spike the FED loses....
Hyper could occur if they lose control, but the FED is really smart. After all they saw the housing bubble coming.... Never-mind, they just think they are smart!
Yes, we are clearly in hyper-inflation mode, which is why I am waiting another year or two to buy more real estate, or farm land. Oddly enough, when you look at the markets, so is every one else;)
Sarcasm too high for measurement (Bureau of Japanquo Doublespeak)
Take a look at the history of the purchasing power of the US dollar in the 20th century. We have been living it for a very long time.
ttp://zerohedge.blogspot.com/2009/05/annihiliation-of-dollars-purchasing.html
Not to worry, it's all transitory
Tell that to your belly in 6 months
if hyperinflation happens, it'll be when they're ready for it.
and the sheeple are probably not.
You guys are focusing on the wrong problem. It's human nature. You are focusing on the risk of the low probability, high impact problem of hyperinflation.
I'm saying it is unlikely to happen. What you should be focussing on is the higher probability, lower impact risk of 25 years of 10% inflation. Pricies doubling every 7 years... 1 2 4 8
Not if the price of silver has anything to say about it.
What you should be focussing on is the higher probability, lower impact risk of 25 years of 10% inflation. Pricies doubling every 7 years... 1 2 4 8
Yes, that's the more likely scenario.
Ad it's more likely to be 25% per year. We're seeing 25% - 30% this year.
Let's consider 25% inflation per year, closer to what we're actually seeing.
In 5 years prices are 3 times what they are today.
In 10 years prices are 9 times what they are today.
But linear isn't likely. Parabolic is more likely.
Let's say inflation is 25% this year and increases 10% per year.
In 5 years prices are 7 times today. 719%
In 10 years prices are 617 times today. 61,713%
There. That's Weimar-style hyperinflation.
But a pre-1965 quarter will STILL buy a gallon of gas.
In 15 years? 57,344,193%
That's when we'll see TRILLION-dollar FRNs. With Bernokio's picture?
Forget 15 years. The currency (and the nation) will collapse long before then.
Followup:
HEY LEO K, how are your beloved public pension funds going to fare against 25% annual inflation increasing 10% annually?
In 10 years how much is that paltry $2,000, $3,000, $4,000, hell even $10,000 per month pension check going to buy when prices are 67,000% what they are today?
THAT'S the little flaw in your rosy projections ...you fucking moron.
Is CAIR - compound annual inflation rate, the appropriate term to measure this year over year inflation measurement? This level of inflation will make it difficult for people to properly value the products they buy relative to the products value in silver.. A value buying guide might be a useful tool going forward.
How long will BB be able to offset an acceleration in the deflation of the dollar by a turning to the troubles of the Euro?
Was this last take down in commodities and the appearance and reminder of Euro troubles an effort to avert the lighting of the wick of a USD deflation acceleration thus leading to domestic hyperinflation?
BB would have had most worried about a deflation spiral of the USD with QE3 or just simple normal growing high inflation. If he was worried about HI how much more will he beat down commodities in prepartion of QE3 which will ignite them again?
If the market perceives not just a decline in the USD but a linear increase that can be observable within say a 12 month time frame they will begin to factor that in and in doing so create an accelerating decline, a negative feedback loop. I think it is a pyschological effect, so long as movement is slow enough that it cannot be observed real time then fear is kept under control. Like grass growing. Once movement can be observed in a short enough time frame the mind begins to worry and you get that phase shift - people will begin to factor in the observable movement thus making the movement faster and so on and so forth, creating acceleration.
BB will want to avoid that phase shift. Thing is once its started it is too late, you wont see it until it is too late. Like the touch paper of a firecracker that burns down and nothing happens. You think it has gone out and go stand over it - then it suddenly explodes.
Will QE3 / 4 light the paper?
If people see the US economy get to the stage where they think QE is its only option going forawrd or full on crash then confidence in the dollar will start to deteriorate no? How far are we away.
Note: While the commonly accepted explanation for hyperinflation is government printing too much money, Ellen Brown argues that the real explanation is a concerted attack on a country's currency by foreign speculators and/or foreign governments.
Bullshit.
Loss of confidence in the currency is what happens. That's not speculators. It's everyone using that currency.
And yes it's due to the government / central bank issuing way more of said currency than wealth created in said economy ...exactly what's happening here in the good ole USA.
But we have the world reserve currency, so our govt / central bank can get away with it a while longer than other nations. Way longer in fact.
But somewhere along the way the Fed FRN is going to lose that WRC status as confidence collapses ...because of so much printing ...and yes "printing" is a catch-all for actual printing plus digital currency creation plus credit expansion, plus fractional reserve lending, all of it, every way the money supply is increased beyond increase in economic wealth creation ... which you need a manufacturing base for ..which we don't have anymore.
When the Fed FRN loses WRC status, that's when we're going to see confidence collapse, everybody dumping FRNs, Treasuries, other FRN-denominated assets, etc. That's when we're going to see food and gas prices skyrocket.
And there's nothing Bernokio can say to stop it. It won't matter if QE stops. It won't matter if the Fed doesn't create one more FRN. When confidence in the currency collapses, prices skyrocket, end of story.
But Bernokio isn't going to stop printing. Ever. If he did, the federal government would collapse overnight. Stock markets would collapse overnight. That enormous QUALDRILLION dollar derivatives bubble (where those huge Wall Street bankster bonuses come from) would collapse overnight. Wall Street would collapse overnight. The ENTIRE U.S. FINANCIAL SYSTEM would collapse overnight.
No, Bernokio isn't going to stop printing. Ever.
Washington & Wall Street are all that matter now. Fuck the economy, fuck the rest of America, print like crazy to keep Washington & Wall Street going, suck ALL the wealth out of America to keep Washington & Wall Street going.
And yes he'll precipitate a total collapse of confidence in the currency.
When could it happen? Maybe when federal government debt hits 100 TRILLION? Maybe when Fed's balance sheet hits 50 TRILLION?
He knows it's going to happen. He probably knows about when it'll happen too.
And no, rates don't have to rise along the way. Bernokio can maintain ZIRP till the FRN is completely worthless.
I think you are being a bit simplistic....I don't think there is anything inherently wrong with shorts, and many companies get shorted because their fundementals, upon close examination are bad...but it is also possible someone with money muscle to short raid a company, maybe not Apple at its peak, but say, a regular old company doing a less well than its best years but still doing okay.
Markets can be cornered and manipulated far beyond what fundementals would demand, and short a company or a currency can be a self-fulfilling prophecy, self reinforcing feed back loop fed by massive leverage of coordinated insiders. PM bugs essentially claim the mirror image of this is down by govt/insiders to suppress price of PMs...if govt can do it to PMs, currency speculators can do it to a countries currency.
Hyperinflation impossible, get over it.
Maybe you should change your avatar to an ostrich
Double digit heathcare cost increases. Impossible?
College education increases, nominal?
Oil is the trigger to a major inflationary event. Inflation in any form destroys wealth, jobs, capital, margins, credit risk management, etc and etc.
Inflation has worsen from blatant fraud and corruption. Assbenny uses inflation and every other method to save his member banks.
Is it possible? $200+ a barrel oil would make it so easy and there would be no debate to challenge it. SO why don't you think we have troops in the middle east? War on terror?
Oh, that's right, to give freedom and democracy to all nations.
Maybe we should kill bin laden again and again to make everyone feel better. I'm sure the local family who's son came home this week, in a box, feel all warm and fuzzy inside.
GW stop, go back to TREASON/PAULSON no matter how many replies here.
Proper pamphleteering. well done
I disagree w. Ellen Brown who blames currency short- sellers for hyperinflation in Hungary and Zimbabwe -- along with Weimar Germany.
I can't find any references to anyone short- selling Hungarian Pengo after the end of World War Two when Hungary was under the control of Soviet forces.
Similarly with Zimbabwe, which was an international pariah due to Robert Mugabe's violence directed against his own citizens. Currency was flowing into Zimbabwe to trade on the black market (US dollars and South Aftrican rand) however, hard currency to meet overseas obligations @ the national level did not exist.
There was also little forex trade in Serbia-Montenegro currency in 1993-94. There was also nothing in the way of foreign currency reserves:
http://www.rogershermansociety.org/yugoslavia.htm
Usually there is a black market which fixes local currency in some other 'stable' currency such as the US dollar (Zimbabwe), UK pound (Weimar), US dollar (China, currently), Soviet Army money (Hungary), Deutchemark (Yugoslavia), etc.
Keep in mind that some countries such as Hungary have suffered repeated bouts of hyperinflation. In 1923 not only Germany but also Austria, Hungary and Poland.
Poland also suffered from hyperinflation in 1990 which was not caused by F/X speculation.
Flight of hard currency reserves is a characterization of hyperinflation, however Germany's capital flight took place before WWI and hyperinflation took hold almost ten years later.
Much of the capital flight in Zimbabwe was in the form of looted F/X and precious metals smuggled out of the country by government officials. I read where something similar is taking place right now in China where wealthy (corrupt) Chinese are spiriting away their dollars overseas. In Weimar, the 'smart set' traded goldmarks (not effected by inflation), pounds- sterling or French francs for houses in finest neighborhoods or for otherwise good businesses. Those who held the papiermarks were ruined, of course.
Triggering Weimar hyperinflation was the assassination of Walter Rathenau who constructed the German finance/borrowing structure at the beginning of the war and who rationalized production so that Germany could triple its industrial output in a year without an increase in labor force.
http://en.wikipedia.org/wiki/Walther_Rathenau#cite_note-8
Hyperinflation is complex, far moreso than the mechanical relationship of sovereign debt and the ongoing process of monetizing it. The US has been monetizing its debt since the end of the 19th century, btw.
Here's more on hyperinflation from Edward Harrison, here:
http://is.gd/dOXuMq
Price pressures are still anchored: While commodity prices are rising, they are rising in all currencies, not just in USD. Moreover, their rise will create demand destruction before any hyperinflation could occur. Why? Unemployment is high and capacity utilization is low, meaning there are no inflationary pressures on that front to help push inflation higher before demand destruction sets in.
so i was going along with everything until he said the above. demand destruction for precious metals is only going to happen when people are comfy holding frn's.
so here is Ellen Brown's take on Zimb as a tangential issue to here main point on QE2 compared to Zimbabwe...http://www.huffingtonpost.com/ellen-brown/another-look-at-the-zimba_b_790074.html
I belive Ellen only claimed short selling/currency speculation was an issue in Weimar Republic...in regards to Zimbabwe, I think she has agreed that was simply a coutnry inflating there way out of foreign debt, defaulting to external debts via money printing. Given Zimbabwe's debt was not internal but almost completely foreign, it was a way for them to wipe the debt out. I suspect most domestic savers moved their money and savings into other things like foreign currency or gold or other investments, so they probably survived fine, but anybody that had lent money domestically lost it, and anyone who had debts domestically in Sim dollars, had a jubilee. But Zims default via hyperinflation was way less painful than 30 years of IMF type austerity...now they apparently doing fairly decently and countrary to what they warn before a default, people are still willing to invest there.
This is what hyperinflation looked like:
Date Marks per ounce
1 Jan 1919 170
1 Jan 1920 1,340
1 Jan 1921 1,349
1 Jan 1922 3,976
1 Jan 1923 372,477
1 Sep 1923 269,439,000
2 Oct 1923 6,631,749,000
31 Oct 1923 87,000,000,000,000
No way we'll make it to 2015 without either hyperinflation (Ben stays the course) or crushing 40% rollback of entitlement and discretionary spending (which is better in the long run).
Notice that history shows hyperinflation often on the heels of overextension in military conflicts. Sound familiar....?
If the Fed feigns "planned maintenance" on the presses in July, the rise in yields will be so sharp that even when they start 'em up again things will be too chaotic to restore. I see the DXY below 65 by year's end.
They will try to keep inflation in the 10 to 20 percent level and lie to make us think it's at 3 percent.
My solution is much easier. First, cut spending back to 2000 levels adjusted for inflation for every agency. That was the last year that we have a balanced budget(albeit with accounting tricks). Tell the agency heads that the same performance level is expected of them or else they will be fired. This will force them to lay off their overpaid and incompetent employees. Everyone knows that there are tens of thousands of federal employees making over $100,000 who are lazy, incompetent, and unqualified. They are the reason that we need to hire an army of contractors at $200/hr.
Then we legalize the softer drugs like marijuana and regulate and tax the hell out of it like we do tobacco and alcohol. This will also save prison space for violent offenders.
End the wars and close the 100 military bases we have all over the world. Have the troops protect our borders. Trying to police the world while supporting hordes of third world immigrants is bankrupting us. Dismantle the monstrosity known as Homeland Security.
All capital gains over $1,000,000 is taxed at the ordinary rate for all persons and corporations. No more tax breaks for the parasitic Wall Street gangsters. They produce nothing, therefore they do not deserve tax breaks.
Raise the margin to 50% for all necessary commodities, like energy, industrial raw materials, and food for speculators. Businesses and farmers that have a legitimate reason to hedge can keep their lower margin rates.
Federal employees making 100k?!?
Try lifeguards: http://newportindy.com/2011/05/06/my-wrong-career-choice/
From the article: "One guard recently retired at age 51 to receive $108,000 a year, plus medical."
Or load up on silver and fishing tackle
by the way, have you read the Peoples budget proposed by progressive caucus in Congress...has some of same ideas you present above...also includes a transaction tax on financial transactions, another way to tamp down on massive skimming from economy by Wall Street.
The progressive caucus didn't want to cut spending at all. They wanted to increase spending and increase taxes even more. We need massive cuts. There is no way to fill the $1.7 trillion deficit with tax hikes. Repealing the bush tax cuts would only bring in $100 million per year. That leaves a $1.6 trillion deficit.
I literally cringe while reading your posts. I'm setting up a fund to bribe you not to post anything further. I thought of this the other day, when I paid a bum $2 to hang out in front of the building across the street instead of mine. Worked beautifully.
Tomorrow your bum will want $5 and there will be two instead of one. Then the next day......
Yes, yes! Because government skimming is so much better!
Do you see the problem here?
if we cut spending abck to 2000 levels, that means you have to cut defense spending in half...good luck with that...if you cut spending to 2000 levels, you have to completely cut the sweetest of all sweethear deals to Pharma, the hugely expesnive Medicare Part D...if you can get defense contractors and Pharma to all thoe cuts to happen, go for it..
I remember consequences, like when coal went on rail through a Country as there family's were freezing. The causes later were circled, maps redrawn to buffer regional realities of friction. One was left standing and gradualism overtook them to the extent that it will happen as History records in any Humbled over time given. But always we have one thing to loose now. The World has a disposition's based on what expectation? The war between the ears will be solveds by water, soil, and Innovation of attitude to scarce finite resources. I have no answer to dynamics based on expectations on hollow certitudes being unvieled that even to this day will never see the light of regard. The earth has never been ours and is to be inherited by children who see what example today that are unleashed. Who gives stones to his children and not bread? Who can make straight that is crooked? It does not matter if it is fiat or PM. The condition will remain as we know since many in those family's all over know the defintion falling short of the mark...
That was awesomely demented. Carry on...
Funny, it looks like English ....
If I play it backward, will the hidden message be revealed?
As stated above, my ears were bleeding. If you read it backwards your ass will bleed.
Beware!
You mean, my ass will bleed even more?
Haven't Bernanke, Washington and Wall Street bent me over enough already?