Hyper-inflation and how fast it can happen in todays world (wage, dollars)

[SilverOne]

Everybody thinks you have to go through defaltion, then inflation and on to hyperinflation. In todays world with the internet it can be a matter of hours. Following two article explains how, first is how the second is the authors explaining in lay terms due to the amount of questions he got from the first. Excellent read....

Gonzalo Lira: How Hyperinflation Will Happen

Scroll down to August 23 rd article first then read the one from August 26


Hyperinflation, Part II: What It Will Look Like

Gonzalo Lira

[Swingblade]

Good article and that is one of the scenarios that could take place. But if there is a run on treasuries I would think that China and Japan would be players. The writer implies that it would be the TBTF banks with Barnake swooping in to buy them up.I just do not see them sitting on the sidelines watching their investment tank with out taking action and getting out while the getting is good. Your thoughts?

[SilverOne]

this could all happen in a matter of hours so with the time difference the TBTF banks would be running for the door before those countries even get a clue. Read his follow up on how this can and why treasuries are termite eaten.

Gonzalo Lira: A Termite-Riddled House: Treasury Bonds

[summers73]

This was an EXCELLENT article! Thanks SilverOne!

[summers73]

On another note, I like the part where one commenter talked about how he wishes he went to Chile in 1973. He knew Chile would take decades to even consider the evil scourge of socialism as a viable form of government once again, and now was a good time to buy up assets on the cheap. That gold mining investor earned a 7,000x return on investment.

It's also interesting how in the Wiki article and in other places, the language is extremely apologetic. Food prices went up during his reign. No talk as to why. LOL. They even attributed it to a fall in demand for copper, of all things.

[SilverOne]

Here's how it will happen.

We will be trading in the southerly direction generally, but reasonably peacefully. Suddenly, a handful of Russell 1000 stocks will decline due to a HFT storm of offers, attempting to arbitrage the primary venue and some other exchange such as BATS.
Within a fraction of a second these stocks will all hit the 10% lock and freeze. The index will, at this point, have dropped about 1% in a matter of seconds.
Retail traders will try to sell their positions. But on the Russell 1000 stocks they will not be able to sell - their orders will be "pending", and not go through. Paniced, they will hit the "FLAT" button on their trading consoles, driving additional stocks into the lock, while the HFT "bots" will likewise arb the locked stocks against those that are not, issuing a further flurry of SELLs.
Within a few seconds what started as a handful of stocks that had hit the limit will turn into a rout. The entire Russell 1000 will hit the limits and lock up. Panicked investors will sell everything else, including for those who have access, futures, in an attempt to hedge the unknowable - and impossible to apprise.
In less than two minutes the entirety of the US Market will hit the system-wide circuit breakers and stop trading.

Market-Ticker - MarketTicker Forums

Posted at: 2010-09-10 14:21 by Genesis
in category Market Musings

How fast the market can seize up then what .....

[newonecoming2]

Really good stuff there silverone. We are so screwed.

[newonecoming2]

We need to print money but in order to prop up consumer spending we need to give it to the consumers.

We need a good old round of price wage inflation to make the total debt in terms of % of GDP drop to something like 150% of GDP and that is the total debt. A 200 or 300% inflation of GDP.

"I have no idea what will happen after we reach the point where $100 is no longer enough to buy a cup of coffee—but I do know that, after such a hyperinflationist period, there’ll be a “new dollar” or some such, with a few zeroes knocked off the old dollar, and things will slowly get back to a new normal. I have no idea the shape of that new normal. I wouldn’t be surprised if that new normal has a quasi or de facto dictatorship, and certainly some form of wage-and-price controls—I’d say it’s likely, but for now that’s not relevant. " from the article at the top of this thread. Why not start with wage price control and push them where they need to be for the long term health of the nation?

[SilverOne]

Originally Posted by newonecoming2

We need to print money but in order to prop up consumer spending we need to give it to the consumers.

We need a good old round of price wage inflation to make the total debt in terms of % of GDP drop to something like 150% of GDP and that is the total debt. A 200 or 300% inflation of GDP.

"I have no idea what will happen after we reach the point where $100 is no longer enough to buy a cup of coffee—but I do know that, after such a hyperinflationist period, there’ll be a “new dollar” or some such, with a few zeroes knocked off the old dollar, and things will slowly get back to a new normal. I have no idea the shape of that new normal. I wouldn’t be surprised if that new normal has a quasi or de facto dictatorship, and certainly some form of wage-and-price controls—I’d say it’s likely, but for now that’s not relevant. " from the article at the top of this thread. Why not start with wage price control and push them where they need to be for the long term health of the nation?

A little difference of opionion here, until the toxic assests are cleared from the banks books nothing will work. Inflation is going to keep happening due to the quantive easing (printing money) from thin air. The banks are broke, and no amount of wage increases will do anything until the to big to fail banks are cleaned up and those that took to many risk are filtered out of the system. Once the economy is reset and a new currency is estabilished ( no paper currency has ever lasted more than 40 years- the last time for the US was 1971) then we can rebuild from the bottom up. As it is now we will just be paying interest on the money we are borrowing, it has to crash to get the trash out of the system.

[jetgraphics]

Actually, dollars have not suffered depreciation. Dollar bills, on the other hand, have no par value (worthless) and any trade value they have is astounding.
Do not keep them - trade them for real goods and services at the earliest opportunity.