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The Monetary Endgame Score To Date: Hyperinflations: 56; Hyperdeflations: 0

Tyler Durden's picture


We won't waste our readers' time with the details of all the 56 documented instances of hyperinflation in the modern, and not so modern, world. They can do so on their own by reading the attached CATO working paper by Hanke and Krus titled simply enough "World Hyperinflations." Those who do read it will discover the details of how it happened to be that in post World War 2 Hungary the equivalent daily inflation rate of 207%, the highest ever recorded, led to a price doubling every 15 hours, certainly one upping such well-known instance of CTRL-P abandon as Zimbabwe (24.7 hours) and Weimar Germany (a tortoise-like 3.70 days). This and much more. What we will point is that at no time in recorded history did a monetary regime end in "hyperdeflation." In fact there is not one hyperdeflationary episode of note. Although, we are quite certain, that virtually all of the 56 and counting hyperinflations in the world, were at one point borderline hyperdeflationary. All it took was central planner stupidity to get the table below, and a paper with the abovementioned title instead of "World Hyperdeflations." 


Full table: 


The full working paper by Steve Hanke and Nicholas Krus below (pdf

h/t @GTCost


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Sat, 09/01/2012 - 11:00 | 2754900 BaBaBouy
BaBaBouy's picture

Buy Zee GOLD ...

Ben Shalom and his Successor have no choices other than to Hit Fiat CTRL-P ...

We don't even need to go back to the "USD GOLD Standard" gimick. GOLD has its own 8000 year Money standard, and we never ever left the "GOLD Standard" ...

Hyper GOLD $50K...

Sat, 09/01/2012 - 11:10 | 2754938 Pladizow
Pladizow's picture

Martin Armstrong claims and this confirms that hyperinflation does not kill empires with reserve currencies.

Hyperinflation occurs at the fringe and empires collapse due to defalation.

On the other hand, Jim Puplava claims a deflationary collapse has never occured where there has been a fiat currency.


Sat, 09/01/2012 - 11:12 | 2754951 tmosley
tmosley's picture

Tell that to the core of German Empire (idiot).

Sat, 09/01/2012 - 11:17 | 2754960 Hype Alert
Hype Alert's picture

But this time is different!

Sat, 09/01/2012 - 11:41 | 2754989 55 men
55 men's picture

Come on guys, hyperinflation is good because, you see, when I buy that big ass screen tv for 3k and hyperinflation sets in and now it costs 30k for that same tv, don't you see, that is alot of profit.




Sat, 09/01/2012 - 11:49 | 2755000 BaBaBouy
BaBaBouy's picture

I year later that OBSOLETE "big ass screen tv for 3k" sits in some Chinese Junk Pile, waiting to be scavenged for copper and some GOLD plating.

Sat, 09/01/2012 - 13:55 | 2755194 AldousHuxley
AldousHuxley's picture

you cna find hyperdeflation if you go back far enough in history.....


Japan is an example of hyperdeflation stretched out multiple decades. US is about to follow the same.

Sat, 09/01/2012 - 14:05 | 2755203 akak
akak's picture

You are just blathering nonsense here -- there is NO such thing, either in monetary history or in the realm of possible reality, as 'hyperdeflation'.  'Ordinary' deflation alone is vanishingly rare in monetary history.

Sat, 09/01/2012 - 15:34 | 2755295 FEDbuster
FEDbuster's picture

When you have increases in currency greater than the increases (or decreases) in productive output, you have inflation.  The price of various things will still fluctuate.  Real estate may go down, while the stock market goes up.  Some commodities may go up, while others go down.  The FED has devalued the dollar by 97% since 1913, and as Marc Faber has said "the next 97% won't take as long".  No one can predict when and exactly how the collapse will take place.  It could be a quick event compresed in a couple of years, or it might be death by a thousand cuts slow and painful.  Even the infamous Zimbabwe hyper-inflation took 28 years to peak.

The current world "leadership" is in crisis management over the worldwide derivative and debt collapse.  They will continue to try and drown the problem with a steady stream of fiat.  I still think they will play the WW3 card, before they let the whole thing collapse.  Forced austerity on the 99%, thins the herd and puts people back to work killing each other. 

Sat, 09/01/2012 - 16:25 | 2755354 Pladizow
Pladizow's picture

To: Tmosely

I have three questions:

1. Am I an idiot for presenting two contrary arguments, neither of which I claim as my own?

2. Was Germany an Empire after its complete annihilation after the World War.

3. Did the "German Empire" have a global reserve currency?


Sat, 09/01/2012 - 23:25 | 2755790 Don Keot
Don Keot's picture

I am trying to imagine what I would feel like if the dollar were on par with  the Japanese Yen, where an oz of gold would be $132,604.00. Would we say we had hyperinflation?  Is that our path with the devaluation of the dollar? What we have done in the past, is just to get used to a different number.  Our first house, new in 1962, cost us $16,950 and it was three bedroom, two baths.  Now, 10 times that is not even the average price in the US.  Why is it people think the price of things go up rather than realizing the value of the dollar has gone down?

Sun, 09/02/2012 - 08:47 | 2756077 Chuck Walla
Chuck Walla's picture

The current world "leadership" is in crisis management over the worldwide derivative and debt collapse.  They will continue to try and drown the problem with a steady stream of fiat.  I still think they will play the WW3 card, before they let the whole thing collapse.  Forced austerity on the 99%, thins the herd and puts people back to work killing each other. 


I am disgusted with myself that I might have to agree completely with your thesis.



Sun, 09/02/2012 - 08:15 | 2756049 MrSteve
MrSteve's picture

Two thumbs up and nice cigar for this spot-on call. Every inflation has ended in deflation, an historic fact not to be confused with the pedantic semantic antics here in this post. Fixing stupid assertions based on meaningless terms (=hyperdeflation) here on ZH is a boring chore but letting wrong concepts go unchallenged is not what we need.

Sun, 09/02/2012 - 09:44 | 2756127 Dingleberry
Dingleberry's picture

These deflationista-fuckers will just never go way. They thought they would look cute and prescient with their deflationary bullshit calls, despite history and logic certainly demanding otherwise.

The bottom line is this: if we EVER go into a deflationary will know it. You won't need a blog to tell you.  But alas.......we have not. Thanks Uncle Ben!  

Until up bitchez. Your costs of living are rising monthly. Hope you are enjoying your "deflation".  


Sun, 09/02/2012 - 15:02 | 2756491 sessinpo
sessinpo's picture



This is just another example of a liberal not reading the thread and trying to make an argument out of context. I'll try to explain it to AldousHuxley and let others see what I mean. Liberals have a hard time grasping reality, so they make their own.

The thread was "The Monetary Endgame Score To Date: Hyperinflations: 56; Hyperdeflations: 0" 

AldousHuxley commented: "you cna find hyperdeflation if you go back far enough in history..... Japan is an example of hyperdeflation stretched out multiple decades. US is about to follow the same."


So according to AldousHuxley, the Japanese Yen ended when Japan suffered through it's decades of deflation. Afterall, we are talking Endgame.

Of course we all know Japan suffered through decades of inflation. We all know the US suffered through deflation in the 1930s. But it wasn't the endgame for that currency.


Anyway, this falls in line with my thesis that we shall see a strong dollar relative to other currencies such as the Euro as most debts worldwide are US dollar denominated. That should surpress gold (when priced in US dollars) to a moderate rise, not super rise. However, when priced in other currencies that are facing hyperinflation, which the Euro is a great candidate, the price of gold could rise very quickly and high. These are all part and symptoms of a currency war. Each party wants their economy to be strong and they want to control the flow of money and wealth within. To do so, they have to compete with other parties. This is competition. The problem lies in the corruption, the manipulation of the markets through excessive printing, monetizing debts and loaning groups that should have gone bankrupt a long time ago.

Sun, 09/02/2012 - 07:49 | 2756026 giggler123
giggler123's picture

Japan was able to deflate simply because the rest of the world was not, I don't think you can even consider duplicating Japans lost decades in the States or anywhere else while the rest of the world is in poop land.  This time its different!

Sat, 09/01/2012 - 12:16 | 2755040 Dead Canary
Dead Canary's picture

Your logic does not resemble our earth logic.

Sat, 09/01/2012 - 13:32 | 2755152 strongband
strongband's picture

"This chapter supplies what has been long overdue in the study of hyperinflation – a table that contains all 56 hyperinflation episodes"


it's funny that groundbreaking research in economics is as basic as revealing a table.

Sat, 09/01/2012 - 14:04 | 2755204 Pairadimes
Pairadimes's picture

Most of the effort being expended in contemporary academic economics is aimed at obscuring these simple realities.

Sun, 09/02/2012 - 15:11 | 2756504 sessinpo
sessinpo's picture

What is more important is that the reader have the critical thinking abilities to understand what is being shown.

The table and research does not say deflation did not occur in those same times periods and we know it did. It only is supporting that the currency itself destructed under certain circumstances. This article says nothing about whether the US or Europe or any other part of the world will face either inflation or deflation in the near future. Any post suggesting that (not your post) is someone trying to take to much from the research and is misleading themselves.

Sun, 09/02/2012 - 07:37 | 2756014 Element
Element's picture

But if we have a global hyperinflation, won't the man-in-the-moon just flood the market with cheese?

Sat, 09/01/2012 - 13:17 | 2755121 Popo
Popo's picture

The question when it comes to inflation is OIL.    

A plunging dollar IS a soaring oil price.  And therein lies the riddle of American hyperinflation.    The fact is that America CAN hyperinflate from a monetary perspective, BUT ONLY if America can secure enough energy to allow the Fed to do it.   And securing the energy requires much more war. 

America runs on oil, and a high oil price is a brutally strong counter to the Fed's inflationary capacity.   Bernanke wishes more than anything that he didn't have to worry about oil, because it's the one thing he can't do anything about.  It's the thorn in his side.   The only scenario in which he is truly free from a monetary perspective is a scenario in which the USA has unfettered access to oil supply.

So betting on a catastrophic plunge in the currency is also a bet that America will achieve vastly more control of the world's energy.  (Which could happen, of course.  But how and when?)

So before betting on hyperinflation -- one has to hear the war drums beating extremely loudly.   And granted, they're getting louder every day.   But there will be no runaway collapse in the dollar as long as the price of oil is poised to self-limit the devaluation.

Keep an eye on the military side of the equation -- because that's going to be the biggest tell...



Sat, 09/01/2012 - 14:07 | 2755208 PiratePawpaw
PiratePawpaw's picture

A high oil price IS inflationary. They arent mutually exclusive, they are the same.

Sat, 09/01/2012 - 19:05 | 2755531 Popo
Popo's picture

That is only true in the intial stages of an oil price spike.  Yes, a rising oil price may cause inflation, but it is most certainly eventually deflationary for an oil importing nation as prices continue to rise.    

From the perspective of an 'input-cost', oil may as you said cause relative price inflation in the early stages of a price rise.  But past a critical point it will *always* cause margin-compression which is inherently deflationary.

This was well illustrated between 2006-2008.  The initial effect of a rising PPB was price-inflation of food and transportation.   At the critical point of inflection however (2008) the markets collapsed as margin compression obliterated profits, deflation took over and the economy collapsed.

If the government cannot control oil prices, the end result will always be margin compression and a destruction of profits.   The result will always and forever be economic contraction.   IF the government can't control oil prices.

Which is why the military card is ultimately the entire key to understanding whether or not America will experience hyperinflation.

Sat, 09/01/2012 - 20:29 | 2755630 mt paul
mt paul's picture

high oil prices inflationary at the pumps

deflationary at other places... 

where people are not spending money

so they can aford to buy gas..

catch 22..


Sat, 09/01/2012 - 15:30 | 2755296 minus dog
minus dog's picture

"securing the energy requires much more war. "


Not if the oil is here, as much of it already is.  Well, there may be war as a result regardless, but it will be elsewhere and we don't even need to be involved.

Sat, 09/01/2012 - 20:44 | 2755646 Errol
Errol's picture

mr dog, the easy oil is long gone.  We would not be drilling above the Arctic Circle, or in 5000 feet of water, or boiling tar sand, or fooling around cracking tight shale if there was any cheaper-to-produce oil left.

As for the US fantasy of stealing oil, what is the net return on that Iraqi adventure?

The blunt fact of the matter is: the industrial world's standard of living is dependent on easy-to-produce oil.  Now that it's pretty much gone, we can expect a continuous contraction for the rest of our lives (which is inherently deflationary).  Ben and congress can slow the revealing of this reality, just as Japan has, but the process is inexorable.

Dimitry Orlov wisely recommends that we all scale back out "lifestyles" on our terms, before reality imposes it upon us on its terms.

Sun, 09/02/2012 - 02:57 | 2755922 Popo
Popo's picture

Agreed.  The easy oil is long, long gone.  And in fact all the more modern methods of extraction have associated costs that we are only beginning to account for today.  

I have to take issue with one thing you said though:

> "what is the net return on that Iraqi adventure?"

IMHO You're doing the wrong math.   Sure, the oil contracts went primarily to foreign companies (although Halliburton made out pretty well ... what a surprise).  But the real benefit to the USA was the preservation of the petrodollar standard for oil purchases.  Remember that the real casus belli was not "weapons of mass destruction", but the oil for food program which had morphed into oil for Euros.  Put quite simply:  Iran was threatening USD hegemony over the oil trade.   That alone would have collapsed global demand for dollars and caused a dollar collapse.   So the net return on the Iraqi adventure while measured in "oil" was very little.   When measured in the preservation of USD purchasing power the operation had massive net return.  Such topics are of course unpopular because they reveal the true nature of the American empire. When you see past the smokescreen of "spreading democracy", it's all about controlling the world's energy supply in order to preserve the greenback.

Note the date on this link very carefully.  The rest is history...

Sat, 09/01/2012 - 23:22 | 2755786 GraveyardSpiral
GraveyardSpiral's picture

Popo:  You make a great point but let me think aloud; So with an increasing number of countries circumnavigating the petro-dollar and dealing with China in gold or yuan, the loss of reserve currency MIGHT BE what the douche Bernanke is pursuing on behalf of TPTB.  Attainment of this goal would allow the launching of an entire squadron of helicopters from Ben's hangars and wouldn't require WW III and wouldn't directly impact the oil price as it does today, no?

Sun, 09/02/2012 - 03:03 | 2755926 Popo
Popo's picture

The history of nations threatening the petrodollar standard is as follows:

1)  Iraq.  In 2000 they began selling oil for Euros.   The following year we invaded and destroyed their capitol, hunted down and executed their leader.

2)  Libya.  Khadaffi announced the North African gold backed dinar and announced that he would sell oil in his own currency.   The following year we invaded and executed their leader (by proxy).

3)  Iran.  Iran has announced an oil bourse and has offered to sell oil in RMB, Euros and gold.   Trade restrictions have blocked Euro transactions, but USD hegemony is still threatened.  Next year we'll probably invade and execute their leadership...  (by proxy?)


Sat, 09/01/2012 - 11:30 | 2754976 FieldingMellish
FieldingMellish's picture

US reserve currency status is nearing an end. Now the currency will be able to collapse with impunity. I suspect the collapse will look more like the bottom of the table but drag on for a year or two with prices doubling every few months. Take all opnion that seeks personal gain, either through monetary means or ego stroking, with a pinch of salt.

Sat, 09/01/2012 - 12:16 | 2755039 surf0766
surf0766's picture

Prices will not double every few months. Gas currently at $3.70 or so national avrage. Everytime we approach $4.00 the economy implodes. You telling us you think they will not be complete chaos with gas approaching 5 or 6 or 7 or 8?


Nuts.  At $5.00 U.S.A stops and food shelves are empty. Reality sucks.

Sat, 09/01/2012 - 12:36 | 2755073 Quinvarius
Quinvarius's picture

I think the US consumer will easily eat gasoline costs as high as $8-$9.  They do $6 in Europe now.  They will drive a lot less and electric cars will be more popular.  But it can and will happen.

Sat, 09/01/2012 - 13:00 | 2755110 UGrev
UGrev's picture

Perhaps; and I'd say that 8-9 would be really stretching it. When this does happen, you will quickly see the price of everything else rise. When that happens, your discretionary income will be zippo. When discretionary income is zippo, people lose jobs. To compound that fact, we live in a service oriented society now. We produce stuff, but we are very top heavy on service. When there is no extra cash to pay for frivolities, those service jobs go bye bye. You will end up with MASSIVE unemployement and the gov't funds for UE will dry up faster than your snot on a hot day. 

Sat, 09/01/2012 - 13:07 | 2755117 jldpc
jldpc's picture

Very keen observation. A predominately service based economy is far more unstable than a commodity based system because the "market" will sort priorities very quickly - think water food electricity sewer - then gas.  Ask yourself, how long can you go without each of them? What are your priorities? Are you prepared?

Sat, 09/01/2012 - 15:39 | 2755303 FEDbuster
FEDbuster's picture

If someone hasn't started to "prepare" by now, they aren't going to.  Food should be at the top of everyone's list.  As much as you can afford to buy and have the room to store.

Sun, 09/02/2012 - 01:20 | 2755867 Adahy
Adahy's picture

And water. Please don't forget to store LOTS of potable water. It's easy to fill up a bunch of plastic bottles/jugs and stash em' in your basement. You'd be surprised how much you use in a day.

Sat, 09/01/2012 - 13:21 | 2755135 Popo
Popo's picture

America will tolerate high gas prices?   Nonsense.  It's been tried.  Don't forget:  The thing that brought the markets to their knees in the end was gas prices.  America is not Europe.  The distances are far, far greater.  The transportation infrastructure is much different.   Rail freight is a minor percentage compared to trucking.   Etc.

America is incredibly vulnerable to the price of oil.   It's the entire reason for America's oversized military.

Sat, 09/01/2012 - 16:01 | 2755322 boiltherich
boiltherich's picture

Popo, not to disagree with you, I just want to ADD that Europeans pay EXACTLY the same price for gasoline and diesel as Americans do, the difference between what a consumer here pays at the pump and what you pay there at the pump is simply taxes, they tolerate $8-10 bucks a gallon at the pump because they know 6 plus of that is tax they pay IN LIEU of higher VAT or income taxes.  Of course it hits the poorer residents harder than the rest but that is what consumption taxes do, they are regressive. 

Gasoline at $4 here now is expensive and every dime over about $3 has to come out of another sector of the economy, so yes it might appear that we tolerate $4 a gallon gas but then go into the mall and see how empty it is.  Incomes for 99% of us are falling, household wealth has fallen to the point that most Americans have a negative net worth, and credit for most of us either does not exist or is prohibitively expensive, ever increase in prices for necessities has to come out of expenditures for non necessities.  And it is my experience that inflation for necessities is raging, as hot or hotter than it was in the 70's.   

Sat, 09/01/2012 - 15:05 | 2755279 blueridgeviews
blueridgeviews's picture

Look at the size of Europe and the size of the US.  Two different animals.

Sat, 09/01/2012 - 15:32 | 2755299 Terp
Terp's picture

They do $6 in Europe now.



Make that more like $10 (€1.73/liter).

Sun, 09/02/2012 - 08:56 | 2756085 Chuck Walla
Chuck Walla's picture

I think the US consumer will easily eat gasoline costs as high as $8-$9.  They do $6 in Europe now.  They will drive a lot less and electric cars will be more popular.  But it can and will happen.

Indeed. people will not let their children starve without a fight. The real action will be in the great commuter cities like LA, Chicago and NYC and the like. Those will be the foretaste of things to come.



Sat, 09/01/2012 - 13:47 | 2755167 Bicycle Repairman
Bicycle Repairman's picture

The US military would have to fail for gas prices to get that high.  Even then the US will simply find hitherto 'unknown' domestic sources of energy and will introduce 'unexpected' technology to keep the current transportation system and economy humming.

If necessary the US could be completely self-sufficient.

Sat, 09/01/2012 - 18:11 | 2755499 zerozulu
zerozulu's picture

"The US military would have to fail for gas prices to get that high."

The investment made in Iraq and Libya is exectly for that purpose. DoD will get free gas.

Sat, 09/01/2012 - 21:03 | 2755661 Errol
Errol's picture

Mr Repairman, how many millions of cars and trucks are on the road presently in the US?  How long would it take to produce enough alternative vehicles to make any difference?

Of course they are trying to roll out new technologies, but the "unexpected" part is that everyones' mass-produced plugin electric cars "unexpectedly" spontaneously combust.

Running the US rubber tire transportation system on corn squeezins, or hydrogen, or unicorn farts is just technocornucopian propaganda to keep the herd tranquil.

Sun, 09/02/2012 - 08:59 | 2756090 Chuck Walla
Chuck Walla's picture

The US military would have to fail for gas prices to get that high.

Obama is working on that very point as we speak...  He is going to ensure its failure, the consequences of his hate for America will be long lasting and far reaching.



Sat, 09/01/2012 - 16:31 | 2755365 Totentänzerlied
Totentänzerlied's picture

Stations here cracked $4 last week. "Everyone knows" this is "transitory" (on a scale of weeks), one time it won't be.

At $5, national average, whoever is president won't be re-elected, retail will suffocate, discretionary travel will wind down, and the plebs will be quite irate and restless - there will be much weeping and gnashing of teeth (and anguished cries of "who could possibly have predicted this!?!?!"). But it's not the end of the world - with purchasing power where it is today. My opinion - above $6, national average, is when we start to see some real third-world shit. Of course, if a large swath of the population were to lose use of its credit cards, all bets are off.

Sat, 09/01/2012 - 17:36 | 2755458 BooMushroom
BooMushroom's picture

A lot of credit cards are maxed out. People are making a $90 payment on a $3000 card( if they have a good rate) and then charging $55 back on to it to pay for gas and groceries.

At $6/gallon, farmers will have to re-evaluate whether it would be better to downsize or hand-harvest crops. People will quit their jobs because they don't turn enough of a profit after transportation costs. But minimum wage will prevent them from getting something closer to home.

Interesting times.

Sun, 09/02/2012 - 09:05 | 2756095 Chuck Walla
Chuck Walla's picture


At $6/gallon, farmers will have to re-evaluate whether it would be better to downsize or hand-harvest crops.


There is little to no tax on farm gas.  It is illegal to fill you vehicle with it if it is not a farm use only vehicle(tractor, combine, etc). If they catch you doing that, they will make an example though it is done every now and then.  If it threatens the food supply, it will become priority one. No politician is going to risk his life and power on not doing so.



Sat, 09/01/2012 - 18:14 | 2755500 zerozulu
zerozulu's picture

"At $5, national average, whoever is president won't be re-elected"

By default TPTB need not to re-elect any president. Who ever comes to the white house will have to stick with the plan.

Sat, 09/01/2012 - 12:49 | 2755095 ATM
ATM's picture

Was just going to post something similar about the reserve currency status. One would suspect that the standing as a reserve currency dissolves as the currency is debased and it's credit quality erodes. The move to another reserve currency probably precedes the total collapse.

In the case of the US dollar I actually would disagree that it will look more like the lower end of the table. I expect it to look more like the upper half. There is plenty of gasoline already flooding the house and all th eenighbors have gas hoses leading into our house but haven't turned on the faucet yet.

At the first signs of real inflation here all those trillions of dollar denominated debt that the rest of the world holds will come flooding back in a mad rush to get anythig of value for them. Plus we have trillions of liquid fuel sitting on bank and corporate balance sheets. All we need is a spark. What that may be I don't know. All I do know is that lots of things create sparks and one of them will. Then poof.

The longer it takes for the spark to set off the explosion the bigger it will be because the Fed keeps adding gas to the basement and soon it will reach the first floor. 

Sat, 09/01/2012 - 13:01 | 2755111 UGrev
UGrev's picture

Imagine all the US dollars out there now that will not be sloshed around when more countries start dealing in their own currency or gold for transactions. What a mess. 

Sat, 09/01/2012 - 17:35 | 2755454 vato poco
vato poco's picture

*THAT* was a very interesting chart. Tylers, many  _many_ thanks for posting it. Have been trying to convice spouse for 5+ years now of the wonderfulness (and safe harbor aspects) of PM's, etc. She tended to listen to the Wall St blather guys, and was reluctant: 1) they're the pros, surely they know what's best and of course 2) like all wives secretly believe, "If my husband thinks it, it *must be* wrong!"

So I showed her this post, & especially that chart. And told her, "See that column headed 'time required for prices to double'? Another way to put that is, 'Time required for your currnecy to lose half of its value.' " Lo and behold, the scales fell from her eyes. Of course, NOW she's pestering me to "call Tulving, call ANYbody!", never mind it's a holiday weekend. Thx again.


Sat, 09/01/2012 - 20:42 | 2755643 mt paul
mt paul's picture

half the supply 

for what ever reason

double the price


8-10 $ per gal

Sat, 09/01/2012 - 11:31 | 2754980 vast-dom
vast-dom's picture

here's some sociopathic shit:


"Bullard said he’s willing to push th interest rate into negative territory to get banks to lend more."

Sat, 09/01/2012 - 11:40 | 2754987 FutureShock
FutureShock's picture

The Fed will not allow that to happen. The whole "The banks are not lending" is by design. The fed will always offer higher interest rates over what they can get from the people to keep the money out of the system. This is a tool Bernake is well aware of to control hyperinflation. Some inflation is good to cut the debt but we will not see hyper.

Sat, 09/01/2012 - 11:54 | 2755004 vast-dom
vast-dom's picture

in the end the fed will control nothing. the cyclical nature of markets and human irrationality wins every time. no amount of QE will address structural issues of unemployment no way no how. ZIRP will in the end make matters worse and the trough will be that much deeper. think of the fed as a delayed amplitude perverter that merely offsets and staggers out the inevitable only to make the waveform that it is trying to avoid that much worse!

Sat, 09/01/2012 - 13:52 | 2755184 Bicycle Repairman
Bicycle Repairman's picture

Unemployment is not a limiting factor.  They'll ramp up welfare payments e.g. SNAP.  A large number of Americans will be more than placated by this.

Sat, 09/01/2012 - 15:10 | 2755281 margaris
margaris's picture

Fed = delayed amplitude perverter...LMAO

But that sounds like an electronic circuit that was created BY DESIGN!


It must be by design, no?

Sat, 09/01/2012 - 20:30 | 2755629 vast-dom
vast-dom's picture

by design with no clear understanding of resulting performance of said design...


THE DAP (the delayed amplitude perverters) were amazing band circa 60s around the time of The Paranoids. I believe Genghis Cohen managed them both, though with very dissimilar and unpredictable results, in retrospect.

Sun, 09/02/2012 - 04:32 | 2755949 Disenchanted
Disenchanted's picture




"But that sounds like an electronic circuit that was created BY DESIGN!"


Check out the diagrams/images that accompany this: Silent Weapons For Quiet Wars

A pure (single output) industry can be represented oversimply by a circuit block as follows:

Sat, 09/01/2012 - 12:15 | 2755037 Kayman
Kayman's picture

The Fed achieved it's sole purpose.  Saving the rotting carcases of their criminal banking friends.

Velocity is heading to zero. All that money "on the sidelines" is electronic entries between the Fed and the TBTF.

It was never intended to be out in the economy. It is money at the margin to pay bonuses and save shiny banker asses.

Sat, 09/01/2012 - 12:28 | 2755060 vast-dom
vast-dom's picture

rumors are that MS is on verge of bankruptcy...

Sat, 09/01/2012 - 12:51 | 2755098 ATM
ATM's picture

That's been out there for several months.

Sat, 09/01/2012 - 13:10 | 2755123 vast-dom
vast-dom's picture

thx to fed propping it = case in point = was gonna go bust circa 2008/9

Sat, 09/01/2012 - 12:12 | 2755030 Hype Alert
Hype Alert's picture

It's not so much the lending as it is velocity of all stagnant money.  But the more they push, the more people get concerned.  In a catch-22, the more they print, the more people want to park their money in PM and the more they justify that move.

If you saved for your retirement, they're going to screw you. If you still have equity in your home, they're going to screw you. If you live prudently, they're going to screw you.

Sat, 09/01/2012 - 12:28 | 2755059 intric8
intric8's picture

Dude, u cant describe money as having velocity and being stagnant in the same sentence. Agree with your last paragraph though.

Sat, 09/01/2012 - 12:52 | 2755099 Hype Alert
Hype Alert's picture

What is the velocity of stagnant money?  Zero is a number.

There, I did it again.

Sat, 09/01/2012 - 13:06 | 2755116 Skateboarder
Skateboarder's picture

When you nullify purchasing power absolutely, people won't know what the fuck to do. I think a lot of people have been rendered too stupid to revert back to an organized bartering system.

Sat, 09/01/2012 - 13:54 | 2755192 Bicycle Repairman
Bicycle Repairman's picture

"I think a lot of people have been rendered too stupid to revert back to an organized bartering system."

The school of hard knocks will educate them.  They'll learn.

Sat, 09/01/2012 - 17:37 | 2755459 vato poco
vato poco's picture

Yep. Hunger and pain are the very best motivators, after fear and lust.

Sat, 09/01/2012 - 16:38 | 2755371 Totentänzerlied
Totentänzerlied's picture

The entitled do not barter. The entitled take, or die trying.

Sat, 09/01/2012 - 17:42 | 2755465 BooMushroom
BooMushroom's picture

In order to barter, you must have, create, or offer something of value. What are the people at the DMV going to barter with?

Sat, 09/01/2012 - 23:48 | 2755804 Don Keot
Don Keot's picture

Your "Privilage to drive"? 

Sun, 09/02/2012 - 01:35 | 2755875 Adahy
Adahy's picture

Labor for my farm of course. Former DMV workers will maintain the compost pile and the stables.

Sat, 09/01/2012 - 12:57 | 2755107 LMAOLORI
LMAOLORI's picture


Alan Blinder called for the same thing a while back.

How Bernanke Can Get Banks Lending Again


What matter's is what Ben does really not what Bullard says for example here's the other side calling for more

Williams Calls For At Least $600 Billion In Fed Purchases

Sat, 09/01/2012 - 12:12 | 2755031 Barry Mcokiner
Barry Mcokiner's picture

I have never been one to yell fire in a crowded movie. But this is getting absolutely ridiculous.  The global economy is in such a tailspin and there is nobody with a solution no less even a hint of what is developing so rapidly before everyone’s eyes, it appears just hopeless to save society. The HYPERINFLATIONISTS, presume that government will continue to just print, for they cannot see that government is turning aggressive against the people for the bondholders will not tolerate such a policy and demand austerity with higher taxes. This is a Monmouth battle that is being waged and then they fail to grasp that state and local governments cannot print money and are becoming very Draconian raising taxes and prosecuting anything they can to raise money. The federal governments are not coming to the rescue of state and local because they know they cannot. There are always counter-forces at work that must be balanced. There is a substantial difference in trend between national governments worldwide and state as well as local municipalities. This can only end in real profound collapse. This is the reason to buy gold – to survive the future. Martin Armstrong

Sat, 09/01/2012 - 12:20 | 2755045 LMAOLORI
Sat, 09/01/2012 - 12:27 | 2755048 Quinvarius
Quinvarius's picture

You list these political problems that are solved by printing money. 

 What do you expect will happen when the government is faced with a choice  between revolution and mayhem or a "happy inflation".  I put that in quotes because it will not be happy, but you will be told it is.

Besides, you are telling me that we cannot have hyperinflation AND oppressive taxes AND a revolution all at once.  The hyperinflation we are having is due to bankers supporting themselves with printing presses and crony loans.  It is not about the economy and it doesn't matter if you personally ever get any money.  It can't stop anytime soon.  I disagree that thieves will stop stealing now that theft has been codified and expedited.  They need to steal even more now that growing bank profits can be gained solely through theft.

Sat, 09/01/2012 - 14:59 | 2755269 mammoth mo
mammoth mo's picture

20 years ago I was appointed to the Board of a Credit Union along with some other people.  Our first job was to deal with the problem loans made by the previous board.  These loans were all to their friends and relatives and all lacked sufficient collateral in addition to being totally unethical.

We the new board never went after the old board and could not undo the loans.  Those that made their payments we said nothing to and those that didn't were written off like any other bad loan.  Right now, banks are lending to their friends as fast as they can.  When and if they are out of power one or two people might do 5 minutes of being charged but almost no one will do time. 

Moral people have trouble understanding immorality.  Immoral people do not.  They took the job to steal.  They keep the job to steal.  When they leave that job, they will find another one to steal in. 

Sat, 09/01/2012 - 13:31 | 2755148 Popo
Popo's picture

True that.  And if one thing has been made absolutely clear thus far:  The bond holders are the true masters.  Everyone else, no matter how rich, is a serf.

And the end will not be collapse.  It will be war.   War like we've never seen or heard of.   Biologics,  drones,  chemical nastiness.  The works.   Historically speaking  all wars are economic in nature.  This one will be no different.   But the scale and methodology will be horrific, imho...

Find a nice island, or corner of the world folks.  Cities are probably going to be no bueno.  This is going to be a shit show IMHO.






Sat, 09/01/2012 - 23:57 | 2755814 stocktivity
stocktivity's picture

Gotcha...everyone move to an island or corner of the world. That means everyone!

Sat, 09/01/2012 - 12:17 | 2755042 Quinvarius
Quinvarius's picture

I think Armstrong is on to a single factor, but there are more factors than empire.  Rome's money was never paper or electronic digits.  No matter how debased it was, it was always a solid thing.  To compare a vapormoney empire with a debased silver coin empire, and say the same factors are in play, is probably not totally accurate.  Empire and reserve status gives you an advantage and higher circulation for sure.  But it is initialized based on the quality of money that starts the system.  Even our paper debt fiat system empire was kick-started with real gold and silver money.  Once you leave quality money, you just erode your status over time.

Sat, 09/01/2012 - 13:42 | 2755165 HardAssets
HardAssets's picture

We're in new territory with a global reserve completely fiat currency - that's why some of these things have never happened before.

Sat, 09/01/2012 - 17:17 | 2755429 billsykes
billsykes's picture

Suck it roubini.

If deflation ever happened the US would be crawling with tourists.  I always had a problem with the deflation hypothesis.

Sun, 09/02/2012 - 09:10 | 2756097 fearsomepirate
fearsomepirate's picture

With the exceptions of the Ming Dynasty, the British Empire, the German Empire, the Spanish Empire, the Mongol Empire, the Ottoman Empire, and the Roman Empire, you're absolutely right, no empires have ever been brought low by inflation.

Sat, 09/01/2012 - 11:07 | 2754945 SHEEPFUKKER

Don't worry, only things people buy will hyperinflate, but the official CPI will be close to the trusty 2% target. Therefore, the U.S. will not make it on this list.  /sarc

Sat, 09/01/2012 - 11:29 | 2754973 GlomarHabu
GlomarHabu's picture



Stop, you're kill'n me  "only things people will buy will hyperinflate"  ROTFLMAO

Sat, 09/01/2012 - 12:32 | 2755066 intric8
intric8's picture

Also getting lulz from that

Sat, 09/01/2012 - 11:09 | 2754949 bonderøven-farm ass
bonderøven-farm ass's picture

In a 'hyper-inflationary' scenario is it best to time a PM's 'peak' value in the devaluing currency and cash it in when the old currency is exchanged for the new or is it best to hold until the old currency collapses and wait for the value to be determined by the money masters and their new fiat?  This may seem to be an elementary question for most of you, but it seems that if the USD does indeed collapse we'll end up with another debt note that the sheep will gratefully accept.  How to play this hand...?

Sat, 09/01/2012 - 11:17 | 2754959 jonjon831983
jonjon831983's picture

Alternative new currencies would still a confidence game and if the confidence does not hold...

Sat, 09/01/2012 - 11:58 | 2755013 Jam Akin
Jam Akin's picture

Good question.  And what will happen with debts that are denominated in the old currency?    And can fiat gone bad be replaced with another fiat readily?

Sat, 09/01/2012 - 12:29 | 2755064 TJ00
TJ00's picture

Look at all the work that had to be done in Euro area countries to change from national currencies to the Euro which took 6 years from agreement to introduction, changing from one currency to another will involve massive changes that cannot be implemented quickly, remember it's not just about printing up some different notes and minting coins, you have to change every system from bank computers to point of sale, something that is never addressed in all the "kick Greece/whoever" out of the Eurozone discussions. Currency hyperinflation in the advanced economies seems likely to be the end of that country as an advanced nation, leading to Third World status if not a Failed State.

Sat, 09/01/2012 - 15:42 | 2755306 debtor of last ...
debtor of last resort's picture

I'd say a state with 6 row highways and everyone with 3 credit cards and an iPad loan, IS a failed state. About time you fight a lion with a stick in front of your children to show who daddy REALLY is.

Sat, 09/01/2012 - 12:45 | 2755086 grid-b-gone
grid-b-gone's picture

The entire government reaction to-date has centered around saving the top six insolvent banks. I expect debts owed to banks will be adjusted to avoid any currency devaluation hit.

This is why the prudent individual has been paying down debt since the shot over the bow in 2008.

Sat, 09/01/2012 - 14:27 | 2755232 Jam Akin
Jam Akin's picture

Agree that is a good way to play.  As for me, with all of the reported boating accidents in recent years, I'm planning to take up a new hobby: salvage diving.

Sat, 09/01/2012 - 18:57 | 2755533 ZeroAvatar
ZeroAvatar's picture

There is a HUGE anchor, made of silver, at the bottom of Lake Titicaca.

Sun, 09/02/2012 - 07:33 | 2756011 supermaxedout
supermaxedout's picture

The debts will be paid back. The debtors have to take care that they buy the needed amount of US Dollars when the price is close to zero. Once it went to zero, then you cant buy US Dollars anymore (cash Dollars are limited in comparison to the debts outstanding). Then the debtor has to wait and see how the politics is handling the debts nominated in the old US Dollars.  They can come up with any solution trying not to loose the debt slaves completely.  So its important to buy US Dollars at the right moment short before its value is completely zero and the trade is halted.   Imagine no debts, no interest to pay anymore. People are free again.But of course this comes along with an economic collapse of biblical dimensions.  New starts are only then possible when the old things give way. 

So  winners are for example people having mortgages which are going to to zero in case the Dollar collapses. But this does not help them much when everything around them is going down the drain.  So nobody will be really happy once the mega event Dollar crash would materialize. Everybody would loose but of course the 90% of the population having no acces to real wealth (hard assets including gold) would be hit hardest.


Sat, 09/01/2012 - 14:57 | 2755266 debtor of last ...
debtor of last resort's picture

Think it's interesting to get rid of your morguage when an ounce of gold is worth about 150k (or something in that range). The rest i will keep for real problems like not having food or so, or when a new currency arrives. Timing is important. 


EDIT, an ounce of gold above 15k to, lets say, 150k IS the same range.

Sat, 09/01/2012 - 10:46 | 2754901 Quinvarius
Quinvarius's picture

Exactly! More than stats, there are reasons it always plays out this way.  Schiff is still right.

Sat, 09/01/2012 - 10:49 | 2754908 yogibear
yogibear's picture

"not one hyperdeflationary episode of note. Although, we are quite certain, that virtually all of the 56 and counting hyperinflations in the world,"

Bernanke, Dudley,and Yellen, with your modified Keynesian path  yours will result in the same endgame. 


Sat, 09/01/2012 - 12:41 | 2755080 akak
akak's picture

Nor has there ever been a real case of deflation under a fiat currency regime, not even one.

Japan is probably the closest to such a case, but even there the money supply, and overall prices (i.e., the cost of living) never actually fell post-1989, but has continued to rise ever since.

Politically and practically, deflation is IMPOSSIBLE under a fiat currency regime.

Sat, 09/01/2012 - 13:02 | 2755112 PiratePawpaw
PiratePawpaw's picture

What Shedlock and the deflationists seem unable or unwilling to grasp is that deflation will destroy the system and bankrupt the govt and the bankers. And THEY control the printing press (digital or otherwise).

They will not allow themselves to be destroyed (go figure) so the only possible outcomes are Hyperinflation or some perfect balance that maintains the status quo.

I'm not that confident in their ability to balance on the head of a pin.

So my expectation is a precarious attempt at balance until the first breeze blows us into Hyperinflation; either because the wind blew us that way, or because they overcompensated for a deflationary breeze.

Sun, 09/02/2012 - 21:49 | 2756916 BeerBrewer09
BeerBrewer09's picture

great post.

Sat, 09/01/2012 - 10:52 | 2754910 Troy Ounce
Troy Ounce's picture



Shedlock, Wake UP!

Sat, 09/01/2012 - 10:52 | 2754913 11th_hour
11th_hour's picture

Tick, tock, tick, tock....

Sat, 09/01/2012 - 10:54 | 2754918 Manco
Manco's picture

I'd be hungary too if prices doubled every 15 hours.

Sat, 09/01/2012 - 11:09 | 2754947 Lee
Lee's picture

You deserve to be hungary for supporting Romney or the douche in the empty chair.

Sat, 09/01/2012 - 11:43 | 2754966 BaBaBouy
BaBaBouy's picture

I Wanna Vote For "The empty chair."

Probably would Run the USA the Best in Decades...

Sat, 09/01/2012 - 11:35 | 2754985 Tinky
Tinky's picture

Neither one of you would fare well in a spelling bee.

Sun, 09/02/2012 - 04:35 | 2755950 freet0pian
freet0pian's picture

You're a little slow aren't you?

Sat, 09/01/2012 - 10:55 | 2754921 Capitalist
Capitalist's picture

3.7 days. Buba knows this figure well.

Sat, 09/01/2012 - 10:56 | 2754923 AUD
AUD's picture

We frequently found leads suggestingnew episodes, only to discover that the proper documentation of their source was lacking

Probably because the 'economists' who were supposedly collating the data, were to busy trying to avoid starving to death.

Sat, 09/01/2012 - 10:57 | 2754925 Seasmoke
Seasmoke's picture

they are scared to death of Deflation.......thus the choice,  will always be hyperinflation

the more things change, the more they stay the same

Sat, 09/01/2012 - 11:04 | 2754934 Solon the Destroyer
Solon the Destroyer's picture

The problem here is who are you calling "they"?

The politicians are scared to death of Deflation yes. But I guarantee you Central Banks and moneyed elites are far more scared of Hyperinflation.

The banks and the elite can survive a deflation. They cannot however survive a hyperinflation.

If Hyperinflation occurs, it will come from the actions of Congress.

Sat, 09/01/2012 - 11:58 | 2755014 lightning
lightning's picture

I read Mish a lot and he continues to insist hyperinflation cannot occur.  I acknowledge what you and he assert, which is that hyperinflation is a political event.  Yet, I have never understood why hyperinflation wouldn't happen in the following scenario:  Fed needs to raise interest rates due to world economic conditions.  Due to our government never dealing with the debt, the interest on the debt is 60% of GDP.  Entitlements (mostly medical) take up the rest of GDP.  This leds our government to print money to make our debt payments.  We then get hyperinflation.  Why is this not possible?

Sat, 09/01/2012 - 12:14 | 2755034's picture

Yes, coupled with the flow of dollars returning home as inflationary policy further undermines reserve status.

Sat, 09/01/2012 - 13:26 | 2755070 akak
akak's picture

I despise Mish, and Karl "Herr Forumfuhrer" Denninger, and Rick Ackerman, and every other deflationary flat-earther for the exact same reasons: their cluelessness and/or avoidance of hundreds if not thousands of years of monetary history which refutes their deflationary thesis, and more than that, their continual propping-up of the strawman argument and false dichotomy of "Hyperinflation or Deflation".  Why do they INSIST we can ONLY see one or the other?

In fact, I strongly believe that what we in the West (and quite possibly worldwide) are going to experience will NOT be hyperinflation, nor deflation (that latter of which is absurd to even suggest, being historically unknown and logically impossible under a fiat currency regime), but "merely" high inflation, such as the approximately 400% inflation experienced in roughly 6 months in Argentina during their currency crisis of 2001-2002.  So great, we will not have ALL of our savings and paper investments lost to inflation --- only maybe 75% of them.  Hooray for us!

Sat, 09/01/2012 - 13:37 | 2755159 Likstane
Likstane's picture

The only way hyperinflation can be recognized is in comparison to another money.  I think the problem is a blindness to the comparison.  Since gold is the only real money, then (hyper)inflation is/has been occuring for awhile in connection with fiat monies.  Since gold is the only real money, of course the CTRL-P option will cause (hyper)inflation.  These arguments about in/de/bi/flation are all undermined by idiots like Mish who cannot understand what is real money and what is just paper.   I agree that the inflation will only be 400%, at least until a different money standard is in force.   

Sat, 09/01/2012 - 15:20 | 2755287 Ghordius
Ghordius's picture

+1 seventy points over 10 years already halves the debt. That's two years at 35% or ten years at 7%. Rince an repeat if necessary.

Sat, 09/01/2012 - 21:02 | 2755665 centerline
centerline's picture

Rubber biscuit award goes to akak.  Most likely scenerio.  Is the common thread - hence, most likely.  CONTROL, bitches.

Sat, 09/01/2012 - 11:12 | 2754952 i-dog
i-dog's picture

69% of Americans will support anything ... after a few weeks of appropriate propaganda in the MSM.

Sat, 09/01/2012 - 13:50 | 2755180's picture

I can get behind that. At least I think I can. Can you say it again just to make sure?

Sat, 09/01/2012 - 13:54 | 2755193 akak
akak's picture

Yes we can!

Sat, 09/01/2012 - 10:58 | 2754928 Winston Churchill
Winston Churchill's picture

Long De la Rue printers,Gold,ink and wheelbarrows.

Sat, 09/01/2012 - 10:58 | 2754930 Dapper Dan
Dapper Dan's picture

Having problems with something on my screen, help anyone,

Scroll works but,

Sat, 09/01/2012 - 11:00 | 2754931 Solon the Destroyer
Solon the Destroyer's picture

This issue is poorly framed above.

Every country in the world has experienced deflationary busts. They occur far more frequently than hyperinflation because they DON'T end the monetary regime, but allow it to stumble forward after the requisite deleveraging.

Hyperinflation is the ONLY way a fiat regime can end, so that's a helluva straw man in the intro. So the score is irrelevant and misleading.

As Mish Shedlock has repeatedly demonstrated, using the exact same instances as this paper, hyperinflation is a POLITICAL event not a CTRL-P event.

Sat, 09/01/2012 - 11:05 | 2754937 Winston Churchill
Winston Churchill's picture

Everything is a polical event,including CTRL-P.

Sat, 09/01/2012 - 11:42 | 2754991 LMAOLORI
LMAOLORI's picture


Absolutely the politicians gave the Fed the power and they can take it away something many seem to leave out


Once you understand the details of modern central banking, you are able to step back and see that it truly is a way for the government to use the printing press to pay its bills. All of the complicated process of targeting interest rates through buying Treasuries simply hides this essential point — and perhaps deliberately so."


Even Bloomberg acknowledged it the other day but they also did a hit piece on Gold at the same time

Contrary to Rumor, Central Banking Is a Political Act


Santelli Exposes The Political Fed Behind The Curtain As Romney Makes Bernanke A Target

Sat, 09/01/2012 - 12:24 | 2755049 Hype Alert
Hype Alert's picture

Exactly!   The FED enables the government debt and spending way beyond the revenue.  The politicians will not cut that off until it is way too late.  They will pretend to ignore it and point the finger at the FED when it all implodes.

Somebody needs to ask Bernanke, since he's stated he can raise rates in 15 minutes, what is going to happen to the interest payments on all the debt he is buying up and the Treasury/gov't is issuing when he raises those rates? He can't raise rates. Are we past the event horizon?

Sat, 09/01/2012 - 12:49 | 2755093 LMAOLORI
LMAOLORI's picture



The Republican's actually have been asking ben there are links in that Santelli piece. The other part is the investor's they have openly said they won't wait forever and will force a rise in the interest rates.

Treasuries Doomsday Is Four Years Away For Vanguard


Vanguard Group Inc., whose $148.2 billion of Treasuries makes it the largest private owner ofU.S. debt, says the nation has until 2016 to contain its borrowings before bond investors revolt and drive up interest rates.

“In the absence of a long-term credible plan, we are somewhere around four years away on where the markets are going to say ‘enough is enough,’” said Robert Auwaerter, head of theValley Forge, Pennsylvania-based Vanguard’s fixed-income group since 2003 and who this year was inducted into the Fixed Income Analysts Society Inc.’s Hall of Fame.


Sat, 09/01/2012 - 12:59 | 2755109 Hype Alert
Hype Alert's picture

What an absolutely stupid thing for them to say!  First of all, we may implode before 2016.  Second, anybody with an ounce of intelligence knows "the nation", meaning government, will not do anything constructive until their backs are up against the wall and then they'll punt.  The fiscal cliff/supercommittee of last year is a perfect example.


This just says pull your money from Vangard!

Sat, 09/01/2012 - 13:23 | 2755141 Winston Churchill
Winston Churchill's picture

Optimistic hopium.

John Williams at shadowstats says 2014.

He hasn't got a dog in this fight, so I'll go with his forecast.

Game over 2014,or at anytime before.

Sat, 09/01/2012 - 12:14 | 2755036 Bay of Pigs
Bay of Pigs's picture

Mish? LOL.

Sat, 09/01/2012 - 16:43 | 2755380 Tyler Durden
Tyler Durden's picture

In case Mish, or anyone else, is confused, money and markets always and without fail dictate politics. Anyone who thinks the two are disconnected in any capacity, or that politics is somehow not related to CTRL-P'ing, which effectively means the will of a banker cartel, demonstrates a complete and ridiculously naive lack of comprehension of how modern society operates.

Sat, 09/01/2012 - 11:07 | 2754942 yogibear
yogibear's picture


You know the US dollar is going the way of pound-Sterling. The US can never pay all of it's debt. Once the loss in the faith of the US dollar occurs it's all over. And it's coming.

The Bretton Woods conference of 1944 established the U.S. dollar as an alternative means for the repayment of war debt. America was expanding at a greater rate than Britain and as the two countries recovered and prospered during the post-war period, price pressure continued to weigh on the pound. In 1967 Britain was obliged to devalue the pound again to a fixed level of $2.40.

Sat, 09/01/2012 - 11:31 | 2754981 Winston Churchill
Winston Churchill's picture

If you are going to compare the UK and USA for a timeline on losing

resereve currency status,you have to go back further.

Just prior to the pound going off the gold standard in 1925 the

exchange rate was $5 to 1 pound.

Your quoted exchange rate in 1967 is only technically true.

Exchanging capital was controlled and subject to a penalty (dollar premium)

which made the true rate closer to $1-50 to the pound.

Sat, 09/01/2012 - 11:14 | 2754955 jonjon831983
jonjon831983's picture

I've been wondering, in age of electronic banking/commerce, how would a hyperinflation work?


Nowadays, the majority of people will see the same prices say on an online retailer via the Internet... real time.  The fear factor could be exponential to the paper based commerce of old.


I guess the assumption is that the Internet would be up for long after people realize a hyperinflation is starting up.

Sat, 09/01/2012 - 11:15 | 2754957 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Japan's destiny is ours.  Slow, bleeding deflationary death.  Because that's what will keep the status quo in power.

Sat, 09/01/2012 - 11:30 | 2754975 LMAOLORI
LMAOLORI's picture



Either way you will pay up


Debtors' Prison Is Back


To most of us, "debtors' prison" sounds like an archaic institution, something straight out of a Dickens novel. But the idea of jailing people who can't pay what they owe is alive and well in 21st-century America.

According to a report inThe Wall Street Journal,debt collectors in Missouri, Illinois, Alabama and other states are using a legal loophole to justify jailing poor citizens who legitimately cannot pay their debts.

Here's how clever payday lenders work the system in Missouri -- where, it should be noted, jailing someone for unpaid debts is illegal under the state constitution.

First, explains St. Louis Post-Dispatch, the creditor gets a judgment in civil court that a debtor hasn't paid a sum that he owes. Then, the debtor is summoned to court for an "examination": a review of their financial assets.

If the debtor fails to show up for the examination -- as often happens in such cases -- the creditor can ask for a "body attachment" -- essentially, a warrant for the debtor's arrest. At that point, the police can haul the debtor in and jail them until there's a court hearing, or until they pay the bond. No coincidence, the bond is usually set at the amount of the original debt. 

thanks to

"Usury used to be illegal in the United States but it was "decriminalized" in 1980--the dawn of financial deregulation. A Democratic president and Congress repealed all interest-rate controls and the federal law prohibiting usury. Thirty years later, American society is permeated with usurious practices--credit cards charging 30 percent and higher, subprime mortgages and other forms of predatory lending, the notorious "payday" loans that charge desperate working people an effective interest rate of 500 percent or more. Businesses, especially smaller firms, are also prey to usury in less direct ways."

in full,1


Sat, 09/01/2012 - 12:10 | 2755029 MachoMan
MachoMan's picture

This is fucking ridiculous.  How can you characterize this scenario as a debtor's prison, when a judgment debtor refuses to acknowledge his summons?  The court has the inherent authority to haul you before it...  if you flip the bird to the court, you're going to get shit on.  The court is simply exercising the laws on the books, chiefly that judgment debtors submit, within a certain period of time after judgment, a list of their assets.  This list is then used by the judgment creditor to offset any judgment...  subject to the debtor's legal exemptions from levy.

Essentially, if you do not have this procedure, it is practically impossible to ever collect a debt unless your debtor is stupid enough to disclose the whereabouts of all his assets...  it seems like so much of the time people have problems with our legal system that they do not attempt to understand the rudimentary policy arguments that created it.

Sat, 09/01/2012 - 12:28 | 2755061 LMAOLORI
LMAOLORI's picture



I think people should pay their debts but as they say you can't get blood from a turnip and more importantly this turns police and the courts into enforcer's for private creditors and that = Fascism

Sat, 09/01/2012 - 13:46 | 2755173 donsluck
donsluck's picture

Law and contract enforcement does not equal Fascism. Fascism is the marriage between business and government and leads to the slow decay of living standards since quality and performance become less important to success then political connections.

Sat, 09/01/2012 - 14:34 | 2755244 LMAOLORI
LMAOLORI's picture



That may be your description of Fascism but it's not mine.  The loans in question are of the most predatory nature payday loans. Thus the lender knew perfectly well they were dealing with individuals who have a poor payment history or were otherwise impaired due to job loss, etc. Just as Capitalist's reap the rewards they should eat the losses especially since they knew full well they were lending to borrower's already considered a risk. How much more married could gov. and private business be then for the police and the courts to jail people at public expense on the basis of non payment for private creditors.  

Sun, 09/02/2012 - 09:27 | 2756108 MachoMan
MachoMan's picture

This would be a really, really neat concept if the debtor didn't have the option to receive an automatic stay from collection actions via FILING FOR BANKRUPTCY...

The issue of what you're describing is simply people flipping the bird to the court.  All they have to do is appear...  they get served with a summons and then refuse to show up...  I'm sorry, but the law never has given a shit about people who do this...  and never will.  If you want the protection of the court, then you need to show up.  period.

This isn't about creditors having some stranglehold on the court system...  this is about creditors being put in a position to benefit from debtors scoffing off the court's authority...  big difference.

If the person shows up and says they don't have any assets, then the creditor is done...  they don't have shit...  pack up the ball and go home.  Simple as that...  this is about people who get served with process and then do not believe they have to comply...  [note, when the john corzines of the world get served, THEY SHOW UP TO COURT...  either directly or indirectly through counsel...  either way, there is an appearance...  if they don't show up to court, then they'll lose a default judgment and be subject to the same asset disclosure as everyone else].

Sat, 09/01/2012 - 13:36 | 2755157 Ace Ventura
Ace Ventura's picture

I hear what you say, but I would be willing to bet these debt-collection actions are targeted primarily to 'the little people'. To wit, where are the court-ordered asset listings for people like John Fucking Corzine (among many similar others)?

So yes, a creditor should have some venue to collect debts, but only if such venues apply across the entire societal spectrum. Rules that have the potential of fucking up the lives of little people, but which are never enforced against the power elite.....are no rules at all. It's just naked fascist tyranny.


Sat, 09/01/2012 - 14:46 | 2755255 LMAOLORI
LMAOLORI's picture



Good points but aside from those the creditor already has venues to collect, i.e., garnishment is one; the issue then is the public money JAILS being used for private creditors as a punitive measure not for a crime as determined by the law but really for a crime as determined by private business.

Sun, 09/02/2012 - 09:40 | 2756122 MachoMan
MachoMan's picture

What the fuck are you idiots talking about...  HOW DO YOU THINK A CREDITOR GETS A GARNISHMENT?  THE DEBTOR HAS TO DISCLOSE WHERE HE IS WORKING...  then, the creditor has to get a writ of execution/garnishment from the court...  The only venues [sic] the creditor has to collect on a judgment are AFTER disclosure of the debtor's assets...

You are simply completely mistaken about the nature of why these people are being jailed...  they are essentially being jailed for contempt of court.

Sat, 09/01/2012 - 15:03 | 2755275 Hype Alert
Hype Alert's picture

Good point.  Someone that is scamming the system, like my ex, by going around buying things on credit, giving my phone number and then not paying simply needs to go to jail.  It's not prison for debtors, it's prison for criminals.  You have to stop them from scamming other people, it's not about collection of a past debt.  There is a difference.


That's weird, I actually replied to macho man's post, but it's now under yours.

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