Are we headed for hyperinflation?

Discussion in 'Politics, Religion, Social Issues' started by dukebound85, Nov 12, 2008.

  1. dukebound85 macrumors P6

    dukebound85

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    #1
  2. gotzero macrumors 68040

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    We are headed for either higher inflation (not good) or deflation (really bad).

    The US is nowhere near a hyper-inflationary situation. There are a lot more things that have to go really wrong before that happens. The US is not expanding the money supply enough, we are just attempting to take out more foreign debt...
     
  3. jplan2008 macrumors regular

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    No, I don't really buy it. I think the arguments that we are or were headed for deflation (pretty bad, too, and this was related to the Great Depression) made more sense. We had pretty modest inflation even when oil/gasoline prices went through the roof. It seems like ironically they may have helped prevent deflation.

    Deflation is more worrisome because the Fed would reduce interest rates to deal with it, but it's already at 1%. There's not much room there. Read up on Japan's problems in the '90's and deflation, and compare to our situation. Increasing interest rates curbs inflation -- lots of room.

    With a global recession underway/in sight, the US dollar is still quite favored, another reason hyperinflation doesn't seem that likely. Ironically, the dollar has improved with this global crisis because of that.
     
  4. lord patton macrumors 65816

    lord patton

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    Far more likely, IMO, that we'll see deflation in the short-term. China, having rapidly constructed manufacturing capacity over the past decade, is going to be sitting on a mountain of inventory very soon. But don't take my word for it, listen to Dr. Doom:

    link

    of course, soon the gigantic hoax that is the Social Security Trust Fund will become apparent and the Treasury will have to print money like there is no tomorrow. Then we'll get the inflation.
     
  5. 3rdpath macrumors 68000

    3rdpath

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    glad to see someone else quoting dr doom..roubini's my hero!
     
  6. pseudobrit macrumors 68040

    pseudobrit

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    99% of radio "personalities" have very little going on for them beyond functional brain stems. The static to noise ratio within the financial journalism sector is pretty dire, and it gets extremely worse outside that niche.

    I wouldn't listen to one squeak they made. Even if they're simply reading news items, the possibility of them framing it in proper perspective and doing quality analysis is nil.

    To address the question, the answer is no. We cannot get to hyperinflation from here. Cash is being hoarded or used to stanch incredible losses as insolvent corporations attempt to maintain a pulse in hopes that they'll survive long enough to see a market where it's possible to raise or borrow the capital they need to operate properly.

    Central banks worldwide are pouring money into the economy to keep the credit markets from shutting down entirely. The U.S. has been out front on these moves (maybe too fast as the risk of liquidity trap is now very real, but at least the Fed is not resorting to 150bp moves) and the dollar will remain strong against foreign currencies until ECB and BoE bottom out.
     

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