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

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
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...

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.

So WTF?

tmosley's picture

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

Hype Alert's picture

But this time is different!

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.

 

 

(sarc) 

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.

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.

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.

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.

http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

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. 

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?

 

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?

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.

 

FORWARD SOVIET!

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.

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 spiral......you will know it. You won't need a blog to tell you.  But alas.......we have not. Thanks Uncle Ben!  

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

 

sessinpo's picture

Akak,

 

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.

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!

Dead Canary's picture

Your logic does not resemble our earth logic.

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.

Pairadimes's picture

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

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.

Element's picture

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

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...

 

 

PiratePawpaw's picture

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

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.

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..

 

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.

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.

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... http://archives.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/

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?

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?)

 

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.

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.

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.

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. 

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?

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.

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.

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.

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.   

blueridgeviews's picture

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

Terp's picture

They do $6 in Europe now.

 

 

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

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.

 

FORWARD SOVIET!

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.

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.

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.

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.

 

FORWARD SOVIET!

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.

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.

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.

 

FORWARD SOVIET!

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.