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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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oops
"Who can make straight that is crooked?"
The Orthodontist.
What?
Yeah. Pretty much lost me at:
"like when coal went on rail through a Country"
must be some good stuff he's drinking though...
I got this far, but my ears started to bleed so I had to stop:
ha! thanks for that, Rocky. The captcha on here really needs a new test. Between this guy, downwiththebanks, and Sun Tzu's retarded mumblings, I'm having to skip past more and more comments to find anything that doesn't make my own ears bleed.
translation poetry comes to ZH
I want to know what IPADS will cost? Eat IPADS Bitchezzzzzz and ask William Fucking Dudley.
Sinking one ship is one thing. Sinking an entire fleet is something else.
You cannot compare past hyperinflations to our situation today. It takes a much more comprehensive plan and coordinated effort to pull off a worldwide hyperinflation.
Hehe...I am a little more optimistic....3.33%.
Ok, so lets say there is a probability of approx 66.66% that the US and Western world does experience 100% inflation.
What could prevent it from occurring? What is the 33.33% side of the equation?
A widespread return of sanity, honesty and responsibility to government --- an outcome whose probability I would put closer to 0.003333%.
If the US were to balance the budget, it would cost at least 5 million jobs. Federal employees would be cut, but most of all, government contractors would be cut. Northern Virginia and Maryland would be devastated.
You say all that like it's a bad thing! :>D
Wealth in the USA has increasingly been ditributed to a very narrow range at the top. This indicates to me that a very small number of people have maintained fitness and productivity and that there is a vast amount of non-productive "stock" that should be reduced. I re-read some Ayn Rand last night and I'm pretty sure I'm right.
To be honest, most or all of the above countries were total economic basket cases leading up to their hyperinflations.
What would be much more interesting, and much more relevant I think, would be to see the vastly longer list of all those nations which experienced currency collapses or high inflations of "only" 100% to 1000% annually --- which I suspect is a much more likely scenario for the USA going forward. Such levels would still lead to the near-total loss of savings, and impoverishment, of most Americans.
The problem with high inflation is that it feeds on itself as people try to get rid of the fiat currency as soon as they receive it, knowing that it lose half of its buying power in a year. That leads to hyperinflation as people stampede for the exits.
Ive never understood where that idea comes from. People repeat it but it doesnt make sense unless your in a hyper-inflation. It seems more reasonable that during high inflation,people hoard cash ,ie stop spending on non essentials. Thats what you see today, "inflation" is rising and people are holding on to cash to spend on essentials.
The inflation now is very tame. The smart people are buying PMs.
But that's the curse of being the "dumb money." There is no incentive to save during an inflation. And say what you will, but this is inflation because the M1, M2, M3, and BASE are all up. As our buddy Friedman reminded us, "Inflation is always and everywhere a monetary phenomenon." Now the rising prices just confirm this fact. And if rice is $20 a bag this month and $30 a bag next month with you making the same amount of fiat each month, then BTFD. It's just that the dip is right now! Or you just missed it. Spend as quickly as possible so that you aren't robbed by the printing press (or credit extension vehicle, as the case may be).
Bingo! This is why Japan and their never ending printing ways has not caused the Yen to sky dive into a black hole.
Speculators.. evil traitors that dare to arbitrate the printed promises of the political and banking class against other stores of value like stronger currencies or metal.
True patriots keep faith with bankers and politicians.
This was all caused by the unions that, by trying to raise the middle class standard of living, caused the massive transfer of wealth from the top down and pushed all those millionaires into poverty!
Damn those unions!!
Also, the government ruined everything by standing in the way of free capitalism, taking over private enterprises, and bankrupting the pillars of our economic system!
Oh, wait ... I'm told I got things wrong ...... what?? ...
There was no top-down transfer of wealth ...
and the government actually saved the bankrupted 'pillars' of our economic system ...
everything funded courtesy of our middle class
WTF!?!
What is this socialism in reverse? .... Is there a name for it?
..........
Anyway, as I was saying ... bad unions! bad, bad, unions!!!
a fascist government with stated [sometimes] socialist objectives. lots of wealth transfer all around but do not agree with this middle class victim narrative. this ignores too much nuance. union straw man is garbage of course -- more symptom than problem.
ambiguity of government vs corporate {roles, actors, objectives} is interesting/developing.
a safe bet is that people will act in self interest across every social class. so we need clear rules and social contract. false dichotomies like republican vs democrat, capital vs labor, fascism vs socialism, class, etc distract from the core problems.
Bailing out failed businesses? It's called socialism. You see, socialism is the government transferring wealth from those who earned it to those who did not earn it but "need" it. The banks and GM did not earn the money, but they needed it to stay solvent for the time being. The government took money from current and future taxpayers and transferred it to the banks and GM. It's called socialism.
Funny some people's definition of the word earn isn't it? I for example think I "earned" a lot more than I have been paid over the years while my employers (not all just most of them) did little to earn anything at all, and everything in the USA is FROM the USA, I do not want communism to be our form of economics but I think that bitch Ayn Rand can suck it, all civilizations that have ever existed were forms to a degree of socialism. It is a huge embarrassment to me that I live in a nation of such wealth and yet such squalor and poverty, and the worst part is the outright lie, the myth that one can get rich here just by their ethics, integrity, hard work, but the truth is that you also need to inherit and a lot of just plain luck, or you could get ahead by being a sycophant to the crony capitalists that rule us.
America generates a GDP of about $100,000 per working person, about 145 million of them, yet average wages are closer to 30k per annum with a median of about 42k. It is fair that those who risk capital be compensated for their risks, but fair would be maybe 10% of GDP at most, not 60%.
You wonder why there are so many people soaking up benefits rather than productively working for what they need? Try paying a living wage and see how many would rather work for it. Conversely, take away the hope of doing better than their parents did and watch how many will refuse to work, in a democracy like ours you can only stretch the Gini coefficient so far before it breaks, and it has never in our history been so far stretched as it is now.
fascism actually
Hybrid of fascism AND socialism actually
Junk my ass!
It's not socialism at all! It is a perverse form of capitalism. In the end no private company was nationalized, and, once more, there was more transfer of wealth to the top ... all done in the name of our special brand of corrupt capitalism...
The same brand of capitalism that allows rampant speculation to the detriment of the Nation and the vast majority of its people ...
socialism ... fascism ... what the f#ck are you guys talking about?!?!
You obviously have no idea what real capitalism is if you think any of the things that have happened are caused by capitalism.
Actually ... I'm enjoying this Capitalism of ours very much ...a.k.a economic fascism of the Oligarchy
maybe you should look up the definition of facism by the facism maestro himself, called Mussolini
I have enjoyed reading this give and take.. per wiki..
"What constitutes a definition of fascism and fascist governments is a highly disputed subject that has proved complicated and contentious. Historians, political scientists, and other scholars have engaged in long and furious debates concerning the exact nature of fascism and its core tenets."
I think this is the best description of Fascism:
"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power." FDR
Welcome to Emerald City, where everything is green.
Ha ha ha, ho ho ho and a couple of tra la la's...
pay with silver and buy with gold. now figure where the catch is...
If we buy with gold, don't we pay with gold? The catch is in mindless illogical posts....or is the meaning in plain English part of the clever insanity?
cant you/they use that paper to atleast pay off the mortgage and own your housefree and clear ?.....(serious question)
Part of the real problem for the political arse holes is that pay is not keeping up with rising prices, this is not demand pull or wage push inflation of yesteryear, it is of, by, and for the profits of the wealthy speculators. Real household income is falling dramatically on top of the losses in household wealth (for the lower 80%) due to mostly lost home equity and near zero bond interest.
Sunday Times Rich List 2011: Fortunes of super-rich soar The richest people in Britain have seen their fortunes soar by a fifth in the past year even as much of the UK is struggling to recover from the recession.http://www.telegraph.co.uk/finance/personalfinance/8498759/Sunday-Times-Rich-List-2011-Fortunes-of-super-rich-soar.html
I think long before we see billion dollar eggs we will see either revaluation of the currency or an outright switch to a new currency. You can rest assured that there will be loopholes in the revaluation. Savers and responsible citizens will see their savings wiped out. Debts owed to the banks will be revalued in a manner much more favorable to the bankster class. Look to Argentina to see how this works.
Mish is pointing to this week's commodity dip as proof of the impending deflation. Wish he were right. Deflation is a much better outcome for the saver and a financial death sentence for the banks and government -- which is why it is so unlikely to happen.
Deflation is a much better outcome for the saver and a financial death sentence for the banks and government -- which is why it is so unlikely to happen.
Thats gonna be my new slogan to fish-slap deflationists with.
Except that the monthly rent to the property tax man will skyrocket to keep the government and government unions solvent while you are going broke at breakneck speed. You may see monthly reassessments. You might want to have an abandonment plan if you cannot keep up with the taxes.
I think the problem is that wages are too slow to keep up with price of food and other essentials so you have no spare 'money' to do that
Went shopping today and found a lot of food prices have gone up around 30% in the last few weeks :(
Is this a problem or an opportunity?
We're (the U.S.) commonly criticized for overconsumption.
Prices go up 30%. Why not consume 30% less?
Problem solved (actually two problems solved).
agree on opportunity but dependent on voluntary effort. hope that eventually enough people grow tired of constant effort to preserve/increase wealth and instead 'consume' their own lives. smart people who trade correctly are in a position to help significantly - will be interesting to watch... probably another animal farm.
Criticised by Limousine (or AF-1) liberals who expect the rest of us to do without for the betterment of all.
not(consume+grow) = die. QED
Or so I've been told.
About two months ago I bought some laundry detergent and at the time it cost about $16 a countainer. Yesterday I went to Costco and it cost $20 a container.
me too and thats after seeing the packing shrink a few months ago
so far they seem to be keeping a lid on things, at least here in the USA.