Author Topic: Is Hyperinflation On The Horizon?  (Read 82001 times)

Offline PlatinumGuy

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Re: Is Hyperinflation On The Horizon?
« Reply #20 on: April 01, 2021, 09:49:35 AM »
Hyperinflation is generally defined at 50%+ a month. I think that almost all economists would agree that is astronomically unlikely to occur with USD.

That being said, the dollar has been effectively devalued more than 3% over the past year. The standard inflationary effect of more (unearned, if I may add, which intensifies the effect) dollars chasing less goods leading to rising prices across the spectrum has certainly been in effect.
3% price growth is excellent. Most developed economies strive for ~2%
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline ExGingi

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Re: Is Hyperinflation On The Horizon?
« Reply #21 on: April 01, 2021, 08:13:47 PM »
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline Kobe Bryant

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Re: Is Hyperinflation On The Horizon?
« Reply #22 on: April 01, 2021, 08:33:30 PM »

Offline Kobe Bryant

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Re: Is Hyperinflation On The Horizon?
« Reply #23 on: April 01, 2021, 08:34:00 PM »

Offline Lurker

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Re: Is Hyperinflation On The Horizon?
« Reply #24 on: April 01, 2021, 08:51:28 PM »
Hyperinflation is often associated with some stress to the government budget, such as wars or their aftermath, sociopolitical upheavals, a collapse in aggregate supply or one in export prices, or other crises that make it difficult for the government to collect tax revenue. A sharp decrease in real tax revenue coupled with a strong need to maintain government spending, together with an inability or unwillingness to borrow, can lead a country into hyperinflation.[3]

I think this is what it all hinges on. Everything else can work out with corrections, recessions, or periods of relatively "normal" high inflation (think 5-10%, not 50%). If the current conditions are combined with other factors, like a "sociopolitical upheaval," that could be the spark that sets it all on fire.
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Offline AsherO

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Re: Is Hyperinflation On The Horizon?
« Reply #25 on: April 01, 2021, 08:59:34 PM »
I think this is what it all hinges on. Everything else can work out with corrections, recessions, or periods of relatively "normal" high inflation (think 5-10%, not 50%). If the current conditions are combined with other factors, like a "sociopolitical upheaval," that could be the spark that sets it all on fire.

Yeah, all you need is a few more D/R swings that make Obama/Trump look normal in comparison and this country is going to h*ll in a handbasket faster than you can say boo.

Offline Lurker

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Re: Is Hyperinflation On The Horizon?
« Reply #26 on: April 01, 2021, 10:05:55 PM »
Yeah, all you need is a few more D/R swings that make Obama/Trump look normal in comparison and this country is going to h*ll in a handbasket faster than you can say boo.

Like President Kamala Harris in Jan 2022? Or AOC in the White House in 24? Yea. It's coming.
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Offline AsherO

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Re: Is Hyperinflation On The Horizon?
« Reply #27 on: April 02, 2021, 02:26:32 AM »
Like President Kamala Harris in Jan 2022? Or AOC in the White House in 24? Yea. It's coming.

AOC in 2024 sounds too soon, but yes, that would be a good example. Not sure about KH in 2022, not sure how much more damage she’d inflict in 2 terms, also depends on 2022 election outcomes.

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Re: Is Hyperinflation On The Horizon?
« Reply #28 on: April 02, 2021, 03:14:16 AM »
Japan’s deflation is because of a low birth rate and shrinking population.

Government spending causes inflation, not deflation.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline Joe4007

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Re: Is Hyperinflation On The Horizon?
« Reply #29 on: April 02, 2021, 10:36:42 AM »
To answer the thread title, it might be far on the horizon, but in the meantime the deflationary forces are just so great that no inflation is in sight.
Some might argue that inflation has been with us since QE started. It just manifested itself in asset prices where the money was directed. Now that we're directing it towards CPI/PCE, that might change.

Offline Joe4007

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Re: Is Hyperinflation On The Horizon?
« Reply #30 on: April 02, 2021, 10:39:29 AM »
Japan’s deflation is because of a low birth rate and shrinking population.

Government spending causes inflation, not deflation.
Not that I understand it thoroughly, but some believe that as long as that spending is financed by debt, it has a deflationary, or at least a disinflationary, effect (see Dr. Lacy Hunt).

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Re: Is Hyperinflation On The Horizon?
« Reply #31 on: April 02, 2021, 11:10:31 AM »
Not that I understand it thoroughly, but some believe that as long as that spending is financed by debt, it has a deflationary, or at least a disinflationary, effect (see Dr. Lacy Hunt).
Link? I did some googling and the closest I found was an assumption that spending will ultimately lead to deflationary austerity, not a claim that spending itself causes deflation.

Debt financed spending is taking dormant savings and inserting them into the economy, it is pretty universally accepted to be an inflationary action by increasing money in circulation.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline ExGingi

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Re: Is Hyperinflation On The Horizon?
« Reply #32 on: April 02, 2021, 11:13:21 AM »
Japan’s deflation is because of a low birth rate and shrinking population.

Government spending causes inflation, not deflation.

https://www.cnbc.com/2021/01/05/us-may-see-underpopulation-not-overpopulation-due-falling-birth-rate.html

Couple that with lower immigration into the US and you are facing a shrinking population. Do you want that addressed like Germany did (welcoming "Arab spring" refugees).

Government spending doesn't necessarily cause inflation.

Debt is deflationary.
I've been waiting over 5 years with bated breath for someone to say that!
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Offline PlatinumGuy

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Re: Is Hyperinflation On The Horizon?
« Reply #33 on: April 02, 2021, 11:22:25 AM »
https://www.cnbc.com/2021/01/05/us-may-see-underpopulation-not-overpopulation-due-falling-birth-rate.html

Couple that with lower immigration into the US and you are facing a shrinking population. Do you want that addressed like Germany did (welcoming "Arab spring" refugees).
So you’re arguing for more immigration?


I agree a falling birth rate created in part by increasing homosexuality is the gravest threat to the US.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline Joe4007

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Re: Is Hyperinflation On The Horizon?
« Reply #34 on: April 02, 2021, 11:27:30 AM »
Link? I did some googling and the closest I found was an assumption that spending will ultimately lead to deflationary austerity, not a claim that spending itself causes deflation.

Debt financed spending is taking dormant savings and inserting them into the economy, it is pretty universally accepted to be an inflationary action by increasing money in circulation.
https://hoisington.com/economic_overview.html

Offline ExGingi

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Re: Is Hyperinflation On The Horizon?
« Reply #35 on: April 02, 2021, 11:50:29 AM »
Debt financed spending is taking dormant savings and inserting them into the economy, it is pretty universally accepted to be an inflationary action by increasing money in circulation.

You are oversimplifying things and ignoring important factors.

Increased money supply (and there's a bug argument if that is even occurring) is countered by falling velocity of money (partially due to the need to service debt).

Debt financed spending is taking future spending and bringing it forward. As debt grows, a larger portion of money needs to go into servicing that debt, curtailing consumption. Debt servicing is a non-productive expenditure. Spending can either contribute to growth or be totally wasteful.
I've been waiting over 5 years with bated breath for someone to say that!
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Re: Is Hyperinflation On The Horizon?
« Reply #36 on: April 02, 2021, 01:31:53 PM »
What about the consequence of a lot of young people having a lot more money than ever before that wasn't earned? I have 2 family members that earned a few K just prior to the pandemic (barely out of their teens) and are now sitting on 50k+ due to unemployment and PPP (not to mention BTC and day trading). I recognize that this might be a localized example and not indicative of the country as a whole, but if it is how does this affect the economy? These kids aren't going to be spending their funds on stuff to stimulate the economy, and if the average 20 year old now has 50k when before he had 5k, doesn't that devalue us all monetarily?

Offline Kobe Bryant

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Re: Is Hyperinflation On The Horizon?
« Reply #37 on: April 02, 2021, 01:47:23 PM »
What about the consequence of a lot of young people having a lot more money than ever before that wasn't earned? I have 2 family members that earned a few K just prior to the pandemic (barely out of their teens) and are now sitting on 50k+ due to unemployment and PPP (not to mention BTC and day trading). I recognize that this might be a localized example and not indicative of the country as a whole, but if it is how does this affect the economy? These kids aren't going to be spending their funds on stuff to stimulate the economy, and if the average 20 year old now has 50k when before he had 5k, doesn't that devalue us all monetarily?
Of course it does. And it’s not an isolated incident.

Offline ExGingi

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Re: Is Hyperinflation On The Horizon?
« Reply #38 on: April 02, 2021, 02:06:33 PM »
What about the consequence of a lot of young people having a lot more money than ever before that wasn't earned? I have 2 family members that earned a few K just prior to the pandemic (barely out of their teens) and are now sitting on 50k+ due to unemployment and PPP (not to mention BTC and day trading). I recognize that this might be a localized example and not indicative of the country as a whole, but if it is how does this affect the economy? These kids aren't going to be spending their funds on stuff to stimulate the economy, and if the average 20 year old now has 50k when before he had 5k, doesn't that devalue us all monetarily?

More than monetary devaluation, I am concerned about moral devaluation. Easy money has a moral and character cost.

I actually just checked out the movie "The Ultimate Gift" to see if it's OK to let (some of) my kids watch.

Though talking about all of this without mentioning that it might be one of the סימני הגאולה would be a disservice. We are beginning to witness מעדנים מצויין כעפר (both interpretations: abundant as dust, and valued no more than dust). 
« Last Edit: April 02, 2021, 02:11:23 PM by ExGingi »
I've been waiting over 5 years with bated breath for someone to say that!
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Offline drosenberg88429

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Re: Is Hyperinflation On The Horizon?
« Reply #39 on: April 02, 2021, 02:50:34 PM »
What about the consequence of a lot of young people having a lot more money than ever before that wasn't earned? I have 2 family members that earned a few K just prior to the pandemic (barely out of their teens) and are now sitting on 50k+ due to unemployment and PPP (not to mention BTC and day trading). I recognize that this might be a localized example and not indicative of the country as a whole, but if it is how does this affect the economy? These kids aren't going to be spending their funds on stuff to stimulate the economy, and if the average 20 year old now has 50k when before he had 5k, doesn't that devalue us all monetarily?

Why won't they be spending on stuff to stimulate the economy? On the contrary, I would assume that a very large amount of the money they are gaining with no sweat, and is going to the lower income segment, which always spends a much larger percentage of its income on goods and services than the higher income segments do, will be going straight back into the economy in the form of personal consumption purchases.

I don't think this money is going to be saved or invested responsibly, nor do I think that doing so would be the intention of the stimulus bill.