Classic Hyperinflation Could Not Occur in America

[Leisesturm]

Originally Posted by RCCCB

Cute, but there has been a near 10% increase in the cost of food in recent months that has either come to us in smaller sizes sold for the old amount or same sizes with price increases.

18% in the last 12 months actually. That's where I was going next...

H

[thrillobyte]

Because your job will have to pay you $100 an hour and that $100 an hour would have the same purchasing power as $20 an hour in 2/23/2011 1:20 PM EST dollars

you would get daily raises from your job, mandated by the government. The minimum wage would increase automatically on a weekly basis. Money would have to be stamped as it would be perishable just days after issue. Everyone would feel wealthier until they went to purchase something with this money. It gets out of control very quickly. The only way out is strict price controls at the barrel of a gun (literally). Then productive people begin fleeing the country. Then a wall gets built...

Then credit lines would increase to 2,000,000 and you'd have to bring a wallet full of credit cards to buy groceries. Same diff. It would be more convenient than wheelbarrows, though. It would still make people's head spin on how much a loaf of bread is worth on a particular hour of a particular day. Vendors will simply do backroom deals for a stable currency, like a pre-1963 quarter would be the only acceptable money to buy bread (easily validated silver).

This kind of scenario just will not happen in the USA---cannot happen. It's absolutely impossible for all the mechanics of true hyperinflation to kick in. Most likely in such a threat the Fed will do what Volcker did in 1981---raise rates to 20%. That stopped inflation dead in its tracks and things went back to normal in 3-4 years. But they were painful years.