All Forum Posts by: Jad Allen

I know I am late to the conversation but here we go.

Is it possible that this country could face a period of hyperinflation and a devauling of the dollar?
The answer is yes and anyone who argues otherwise has a basic lack of understanding the current monetary policies of this country.

Is it inevitable that the country will face hyperinflation?
No. However, if current economic policies continue then it will become inevitable.

Reasons why hyper inflation is a very real possibility.
- Currently the dollar is the world's reserve currency so right now foreign countries must trade with each other in dollar amounts. (ex. When Italy buys natural gas from Russia it pays for it in dollars. Or when India sells crap to Germany, it takes payment in dollars.) This forces all foreign countries to hold a reserve amount of dollars in order to complete trades. If the faith in the dollar starts to wane then these countries will start using other means to complete trades. (just like [/url]http://www.ibtimes.com/articles/85424/20101124/china-russia-drop-dollar.htm )

If foreign countries start making trades without using the dollar then the demand for dollars drops instantly. So, while the demand for dollars drops the supply will continue to increase. When dollar supply outweighs dollar demand what happens? Inflation

When foreign countries realize that they cannot get rid of the dollars that the United States hands out for goods they stop shipping their manufactured goods to America. The lack of goods available for purchase will cause the price of the goods still in the country to go up even more. More demand, less supply will cause more inflation. It is like a snowball rolling down hill it will just continue to grow from this point.
Will the country collapse? I don’t think so, but Americans will be forced to accept a much lower living standard.
Hyperinflation is a very real threat and anyone who says otherwise is just sticking their head in the sand.