Investor · Camden , NJ · Member since 2010 · 77 posts · 7 votes
Do you believe in hyperinflation??Seems like every where i turn I'm hearing this word ... It's a very scary word  sounds like a horror movie . Guess the government  are the ones with the mask ,.. Lol :)Â
My question is do u believe in hyperinflation  .. If you do how are you preparing for it ???
Me myself I do believe the gap between the rich and poor is increasing everyday . !!!!Â
Exactly, James. Lots of people like to throw the word around. Keep the fear alive!!
But it is very rare indeed. It isn't something that just arises out of high debt or rising money supply. There are several factors that must converge at the same moment in time and they must converge on the right country at the right time.
It is not enough to find 1 or 2 similarities between the US now and other countries which experienced hyperinflation. You have to go much deeper than that.
Unfortunately most people don't go deeper. They read a misleading headline and jump to wild conclusions.
In the current real world, you should fear the effects of stagnation or deflation much more than hyperinflation. It is economically impossible for an economy to be teetering on the edge between deflation and hyperinflation. But if you listen to the kooks mostly on a certain cable "news" channel, that is apparently where we are.
It is ridiculous.
Is it reasonable to prepare for some inflation? Sure. But talk of hyperinflation is simply that...hyperbole.
I bet dollars to doughnuts we won't see any responses to the questions posed above. It is all entertaining though!
Of course we won't...
If you read the posts above, they contain both obvious misinformation (such as the claim that the U.S. has experienced hyperinflation on two occasions in the past) and large cut-and-paste of text from basic econ articles.
To get answers to the questions that have been posed would require people to have at least a moderate understanding of macroeconomics, and it's clear that those making the claims don't have that level of understanding.
Unfortunately, too many people read a Wikipedia article and think they understand a subject that others have spent years studying...
Of course, that's not as bad as those who don't even bother to read the Wikipedia article... :roll:
Well by preparation I meant: food, water, and ammo.
My financial status will mean very little if a desperate man with bad intentions enters my home.
You're a smart man. The US has created then hyperinflated fiat currency both during the Revolutionary War and the Civil War. It never hyperinflated the gold standard and had to change it back into a fiat to spend on the Vietnam War, contributing to the double digit inflation in the 1970s. If a person can look at this track record and look at the US domestic and foreign policy spending combined of the last 10 years and not see what's coming, I don't care what degree they have, they are fooling themselves.
Do I think times  will get bad yes .. Do I think our currency will be wipe out and the dollar will die no .. I can't see it possible the middle class  will become poor and the poor  will get crushed to the point that parts of the  world will look like a bomb hit .. I can't  see it getting to that level .. I do believe times will get to the point where money will lose some of it's value but not all ..Â
Tom thats good to hear that its been done before without anarchy. But dont you think the central banksters would make it extremely hard to get back to the gold standard?
When Ron Paul even tried to pass legislation that would allow a congressional audit of the Fed, there was massive drops in stock prices (fat finger day). Meanwhile most people probably think the Fed is actually Federal and have no clue of where our money comes from.
It seems to me they have us by the short hairs, and most "officials" would consider the pain of removing the Fed as political suicide. Play along to get along, ya know?
@Lisandro...the "poor" will actually BENEFIT largely from hyperinflation IF it ever did happen. Everyone's debt would erode almost over night if the contracts are written as fixed rates OR there is some statutory cap on the rates that is much less than the inflation rate.
Yup...and a modest inflation rate is good for the economy. Almost every economist agrees on this, but I am sure it is another sinister plot by the CFR people to stealth tax us to death...right Tom?
I wonder where we would be now had we still been on the gold standard when the technology/information/computer/Internet revolution hit? Would we have sold California to Japan and Florida to Saudi Arabia for a few bricks of shiny yellow metal?
I wonder where we would be now had we still been on the gold standard when the technology/information/computer/Internet revolution hit?
We would be right where we are at now with .com companies that were profitable and the worthless .com pipe dreams on the scrap heap. There is one difference though. There'd be a lot less temporarily overpaid programmers griping about how they were making 6 figures back in the day when their companies got a 7th round of V.C. funding and weren't making a dime of profit.
This is why the fiat mentality holds on. Too many are convinced that because they reaped 4 years of high paid fiat rewards of fiat salaries and fiat stock options based on extension of fiat loans to businesses that didn't turn a profit, we should continue this....just a bit longer. They only need another commodity to create a derivative out of and they're sure this one will work this time. The same model that drove the .com bubble drove the real estate bubble. It wasn't profit - it was "created funding". We're talking about a problem that extended across 3 Presidencies of both parties and multiple leaderships of Congress....and we elected this philosophy to power for at least 15 years now.
Tim.
P.S. Watch them devalue the gold derivative they created - ETFs - and try to point to that as a folly of going to the gold standard.
I'm pretty sure my history teacher at St. Mary's High School in Wayne MI, Sister Mary Catherine, would scoff at your feeble analysis. And you'd get a ruler on the hand to boot!
TC
Probably true since St. Peter was clearly not an adherent of the Austrian School of economic theory - "Silver and gold have I none."
Absolutely it is possible, but it is highly improbable as we have safeguards (Fed) to open the flood gates. Could I hire a contractor on a cost plus job and end up 10, 15 or 25% over budget over a three or four month building process? Sure, it has and probably will happen again. Will you go to the store and a guy with a price gun will be standing there before you get in the check out line? I doubt it.
Things howebver can happen at a micro level that will effect prices into a hyper inflationary level. If you have ever gone through a really bad ice strom and tried to go out and buy a generator, you have an idea how prices jump and continue to jump to a point where people don't know what to sell them for now thinking they will get more tomorrow.
It's most likely the micro level you need to prepare for, not a national level of hyperinfaltion.
The title of this thread is perfect! You have to have faith and believe in hyperinflation because when someone asks for facts or some sort of rational explanation for there being HYPERinflation in the future you get nothing. When you ask why the people who fear it and are convinced it will happen aren't preparing for it you get nothing.
Another week...another empty conversation trying to convince people that the people in the magical picture box they watch don't know what they are talking about. They certainly know how to sell ad space though!
Another week...another empty conversation trying to convince people that the people in the magical picture box they watch don't know what they are talking about. They certainly know how to sell ad space though!
You know the investors who come here thinking Profit = Rent - PITI and are so convinced that real estate investing is really that simple?
It seems to me that those in this thread who are convinced hyperinflation is coming (without any concrete evidence) are the Economics equivalent of those Profit = Rent - PITI folks...they read a Wikipedia article or two and think that the field of Economics boils down to a few simplistic binary scenarios...
And just like with the Profit = Rent - PITI folks, we can do our best to try to point out that things are more complicated, but in the end, it's up to them whether they want to really dig in and learn or whether they're happy to delude themselves and fail.
In the end, if they really want to believe Profit = Rent - PITI, I'm afraid we must let them...
Jason, I disagree with you, slightly on one point. I think most who are really concerned about hyperinflation don't get so much information from Wikileaks as they do FOX News! lol
We would be right where we are at now with .com companies that were profitable and the worthless .com pipe dreams on the scrap heap. There is one difference though. There'd be a lot less temporarily overpaid programmers griping about how they were making 6 figures back in the day...
If you're saying the end result would have been similar WITHOUT the roller-coaster ride, I'll give you that. But would our economy still be as large today had we remained on the gold standard?
During the 80's, the US was leading the world in computers, software, and integrated circuits (microchips), but South Africa was pulling out over half of the world's gold from their soil. Who exactly was creating more wealth at the time?
If you're saying the end result would have been similar WITHOUT the roller-coaster ride, I'll give you that. But would our economy still be as large today had we remained on the gold standard?
During the 80's, the US was leading the world in computers, software, and integrated circuits (microchips), but South Africa was pulling out over half of the world's gold from their soil. Who exactly was creating more wealth at the time?
Mitch,
First of all, thank you for an intelligent response.
First, to the question of whether or not the economy would still be as large today. Imho, first of all we have to look at if: 1. What defines a "big" economy? I'm not sure I understand what you mean by a big economy. Big does not always mean working or sustainable. 2. Does the US have a history of growth on the gold standard? I submit that we do. We didn't go to gold standard until Nixon. There's people on this forum who were alive on the gold standard. 3. What drove the conversion from gold standard to fiat? It wasn't the economy. It was the government's need for money to support it's spending.
As to your question on South Africa - weren't they under apartheid during the 1980s? That's not really an apples to apples comparison with the US. Is there an example of a democratic republic with a representative currency you can think of?
So why are you lending your money at "hard" rates then Tom? When the hyperinflation hits it will be WORTHLESS almost over night. Riddle me that Batman.
I submit that you and I both know all of this rhetoric is politically driven and you don't fear hyperinflation. Either you think it will happen and you prepare for it OR you don't think it will happen and you stick to your guns to maintain a consistent political dogma.
I think hyper inflation is all relative. Compared to other countries it is significant, but in a country I don't believe in it because there will always be the very rich, a shrinking middle, and the people who don't have anything. No matter how much money is actually printed, the proportions don't change unless naturally.
I think hyper inflation is all relative. Compared to other countries it is significant, but in a country I don't believe in it because there will always be the very rich, a shrinking middle, and the people who don't have anything. No matter how much money is actually printed, the proportions don't change unless naturally.
You may be correct that the proportions don't change (I haven't researched that) but that's not what should be concerning you here. What you should be thinking about is which group you will fall into within these proportions. That's where knowing the history of fiat and hyperinflation pays off, because it makes you ready to take advantage of it. Btw, welcome to Bigger Pockets Jason.
All net debtors benefit from inflation in real terms because their debt is worth less if it is fixed and not indexed.
Hyperinflation is a different animal altogether and the term gets tossed around mainly by people that watch political commentators instead of studying books.
So it not actually all poor people just those who are poor because they " credit " but wouldn't it turn around and hurt then when prices of everyday products like food , toilet paper and even milk go up at crazy pace .. Again I'm not saying it going to happen I just want some knowledge on the topic ...
It really depends on how marketable the "poor people's" skills are as to how it will work. If their skills are quite marketable their wages would keep pace with inflation and the price would likely be set daily during periods of hyperinflation. Nobody would want to hold the money because it would be worthless and any contracts written in dollar-denominated terms without at least one-way indexing would evaporate in value very quickly.
Here is a good primer on the subject from someone that actually knows what they are talking about:
This is actually a very complicated topic and there are members of our board that criticize posts when they literally have no idea what they are talking about. I am happy to point you to books on the subject if you really want to educate yourself instead of listening to people that have no idea what they are talking about.
BTW...I am not claiming to be an expert on this subject, but I certainly know when someone posts things that are patently untrue...which has happened several times in this thread.
I prefer to take my advice from experts on subjects instead of people that get stirred up by TV personalities. At the end of the day everyone has to decide who they choose to believe.
Here is a good list of books to educate yourself with:
1. How To Protect Your Life Savings From Hyperinflation and Depression by John T. Reed
2. The Dollar Meltdown by Chales Goyette
3. A Monetary History of the United States by Milton Freidman and Anna Jacobson Schwartz
4. The Great Inflation and Its Aftermath by Robert J. Samuelson
5. The Hyperinflation Survival Guide: Strategies for American Businesses by Gerald Swanson
6. Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider
7. This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart
There are plenty more titles as well, including The Creature from Jeykll Island by G. Edward Griffin and End The Fed by Ron Paul. The listings above are a better start though IMO.
Hope this helps...A great site to visit is Shadowstats too:
Not many people benefit in a hyperinflation. Except those who own gold maybe.
Theoretically, those who have cash flowing leveraged commodities at fixed interest rates as a part of their portfolio will benefit as well. When it is a fixed amount of dollars paid back for the next 30 years and those dollars lose value, the value of the obligation decreases. This is assuming this person is also able to compensate with income in other areas.
BTW, Tom are you getting trolled for being a hard money lender? Is that effective real estate networking skills - trolling and attacking lenders? I must have missed that bootcamp.