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Anyway, hyper inflation means very high price inflation, not an increase in the money supply. A large increase in the money supply can help cause hyperinflation, but it's not the only factor. The fact is, inflation is low in the US, not high.
The market for most commodities is global, and globally, growth in income, wages, and demand has gone up quite a bit in the last ten years. Just because the US has had sub par growth doesn't mean that the Fed is some evil monster out to cause hyper inflation and screw the working man. Supply and demand are the primary drivers of prices. Look at where the growth in demand is, and you'll see why prices on many commodities are higher than they were, even at our slow growth rates in the US. Some prices are also lower. Off the top of my head, Nat gas is about 75% lower than it was a few years ago. Oil is about 40% lower than it was just two years ago.
The guy who said that the Canadian dollar has only increased in value vs the US dollar is plain wrong. The Canadian dollar has done well over the last several years because
A. They've generally had a balanced budget .
B. They have a pretty good trade balance.
C. They've had good economic growth.
It has more to do with Canada's success at those things than anything to do with the Federal Reserve.
The amount of misinformation on this thread is amazing. Thanks for adding some sanity.
Anyway, hyper inflation means very high price inflation, not an increase in the money supply. A large increase in the money supply can help cause hyperinflation, but it's not the only factor. The fact is, inflation is low in the US, not high.
The market for most commodities is global, and globally, growth in income, wages, and demand has gone up quite a bit in the last ten years. Just because the US has had sub par growth doesn't mean that the Fed is some evil monster out to cause hyper inflation and screw the working man. Supply and demand are the primary drivers of prices. Look at where the growth in demand is, and you'll see why prices on many commodities are higher than they were, even at our slow growth rates in the US. Some prices are also lower. Off the top of my head, Nat gas is about 75% lower than it was a few years ago. Oil is about 40% lower than it was just two years ago.
The guy who said that the Canadian dollar has only increased in value vs the US dollar is plain wrong. The Canadian dollar has done well over the last several years because
A. They've generally had a balanced budget .
B. They have a pretty good trade balance.
C. They've had good economic growth.
It has more to do with Canada's success at those things than anything to do with the Federal Reserve.
Ya, that is why it is called "inflating the dollar"
Hyper inflation is a certain kind of inflation that effects things that are usually sold on a world market such as commodities and oil. While regular inflation effects all prices and wages, hyper inflation usually results from a devaluation of a nation's currency by printing and putting into circulation massive amounts of currency. That currency falls in relation to the currency of other nations and thus the prices of imports go higher while the prices of items built and sold domestically- such as washing machines, cars and real estate might stay the same or even fall.
An example of this I can use is my quarterly bill that I pay to Bell ExpressVu for satellite service (my wife is from Canada). It is a bill that I have to pay in Canadian dollars. When I first paid it 9 years ago, I paid $1 US which got me $1.40 worth of Canadian service. Now it is roughly dollar for dollar and going up. But looking at the Canadian Dollar, it has not increased vs other currencies during that period which tells me that the value of the American dollar has fallen and continues to do so- which is another reason you see creeping food and gasoline prices.
Taken to an extreme, hyper inflation can cause commodity prices to sprial up as they did in 1930s Germany where people literally burned cash to stay warm. It can cause gasoline to cost $10 a gallon.
the canadian doller is near par with the US. It is good for warehouse and delivery drivers cause I buy alot more stuff online from you guys or head down to buy cheaper gas and hit the mall and end up spending a couple hundred to $700 on a day trip easy.
BTW the American doller is what all other money is compared with so if a canadian doller is worth near parity or at par then a canadian doller is worth as much as a american doller when the economy first crashed we had exchange rates where 1 canadian doller was worth 1.05 or a 1.06 US
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation…
I recently heard housing prices were at 2003 levels. Housing was overpriced in 2003 too. The market price of my house went up 40k from 2000 to 2002. Prices will continue to go down after the holidays when more foreclosures go on the market.
When government gives out "free money" and manipulates the market, the prices do the opposite of what the free market suggests. Prices go up not down. An ongoing example of this is the cost of a college education.
The cost to build went down in my area, supply and demand were in line, so there was no free market reason for the price to go up as high as it did.
Yes when the government gives out "free money," prices go up. That is called inflation. The thing is Real estate and gasoline are lower then there peak values from 2007-8. If prices are down and you believe housing prices will continue to decline how is that inflation?
Inflation is simply when there is more money created relative to the amount of goods available. Hyper inflation is when there is so much money created, the price of any tangible asset rises astronomically and you have shortages. It is also BS that real estate prices fall during hyper inflation. Maybe relative to foreign currencies and other goods, but the fact of the matter is no one is going to sell you a parcel of land that they know will double in value in a matter of weeks, especially not for an amount of currency that is liable to be worthless in a month. For example say a parcel of land is worth $100,000 at a given time and there is a hyper inflation rate that causes money to lose value at 50% a week relative to another commodity such as gold. After a week if someone sold that land for $100,000 they would only be able to buy $50,000 worth of gold in last weeks money, next week that would drop to $25,000 worth of gold from two weeks ago. Fast forward a month and that money has a gold value of $6,250 relative to what it was a month ago. On the other hand the land is pretty much the same as it was. It might have declined relative to gold, but probably not that much.
Several tangible assets are significantly down from their pre-recession peak prices. (Probably because so much bank capital was destroyed during the financial meltdown/credit crisis). This suggests there is no hyper inflation.
Last edited by Randomstudent; 12-01-2010 at 09:42 PM..
We've been hearing these scary tails about hyperinflation for years. This is the WSJ in 2009 about the invisible bond vigilantes fear about inflation just around the corner.
Of course, the reality is that there hasn't been much inflation at all. The biggest fear up until now has been deflation, not inflation, but that hasn't stopped conservatives from predicting inflation since Obama became President. The fact is that if there was any real fear of inflation, bond yields would be skyrocketing, which are really remaining near the lows in a generation.
This is today's June CPI report:
The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.2 percent in June on a seasonally adjusted basis, the U.S. Bureau
of Labor Statistics reported today. Over the last 12 months, the all
items index increased 3.6 percent before seasonal adjustment.
The problem today is high unemployment. The sensible government (Fed) is trying to combat that by encouraging expansionary policies. Deflation is the fear in these times, not hyperinflation. You don't get hyperinflation when wage rates are depressed.
We've been hearing these scary tails about hyperinflation for years. This is the WSJ in 2009 about the invisible bond vigilantes fear about inflation just around the corner.
Of course, the reality is that there hasn't been much inflation at all. The biggest fear up until now has been deflation, not inflation, but that hasn't stopped conservatives from predicting inflation since Obama became President. The fact is that if there was any real fear of inflation, bond yields would be skyrocketing, which are really remaining near the lows in a generation.
This is today's June CPI report:
The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.2 percent in June on a seasonally adjusted basis, the U.S. Bureau
of Labor Statistics reported today. Over the last 12 months, the all
items index increased 3.6 percent before seasonal adjustment.
The problem today is high unemployment. The sensible government (Fed) is trying to combat that by encouraging expansionary policies. Deflation is the fear in these times, not hyperinflation. You don't get hyperinflation when wage rates are depressed.
and what I said on 7-15-11 is still true.
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