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Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,766,887 times
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I will not deny that inflation may become a problem in the future. But right now our main problem is the deflationary spiral we are in which is a far worse problem. And the only way to fix deflation is by printing money to counter it. That is what the Fed is doing.
Yeah, I'm sure Zimbabwe citizens thought that when their dollar was worth more than ours.
Comparing the US to Zimbabwe is just rather silly.
Quote:
Originally Posted by adbmon
Can I get your opinion about this video?
I don't necessarily agree with everything in the video, but the US economy is unstable on a number of levels. But over the last 2 years many of these issues have started to improve. The video is mainly talking about government related issues, which are yet to be dealt with.
But all of this is deflationary....not inflationary. Inflation is no where to be found.
I will not deny that inflation may become a problem in the future. But right now our main problem is the deflationary spiral we are in which is a far worse problem. And the only way to fix deflation is by printing money to counter it. That is what the Fed is doing.
That only distorts markets. It causes assets that SHOULD be going down in price to still go down in real terms, but slow the decline/stay steady/rise marginally in nominal terms. NOTHING can be done about the fall in real cost of real estate, not even the government can help. It is as futile as stopping gravity from taking effect. Instead, the poor will suffer as food/energy prices rise.
Note: I am not an economist. I've tried to make my point as well as possible, In order to impress upon the reader the near certainty of hyperinflation, already begun, but getting exponentially worse over the next 5 years.
Why did hyperinflation come to Germany in 1921?
1)Germany was saddled with HUGE debts associated with being required to pay for the costs of World War One.
2)In order to service this debt, the Germans resorted to printing money.
3)Because of various articles of the Treaty of Versailles, Germany had almost no industry of her own anymore and had to import a large part of its basic needs.
4)In spite of their complete inability to even service their debts, Germany embarked on a series of social programs, most notably paying workers in the Ruhr Valley full wages while they were on strike.
5)As high inflation took its toll, goods and services became more and more scarce. Very few countries would export goods to Germany in exchange for the German currency and the cost of these goods exploded.
6)As the supply of goods dried up, prices skyrocketed.
Does any of this look familiar?
For comparison, here is the current US situation...
1)The US is saddled with HUGE debts associated with decades of deficit spending, and capped with nearly 2 Trillion dollars worth of additional debt incurred in order to bail out the financial industry.
2)In order to service this massive debt, the US is resorting to printing more money.
3)Because of the exporting of jobs over the previous 25 years, the US has very little indigenous industry anymore and must import most of what it consumes.
4)In spite of this dire economic situation, the US government is pushing for Universal Health Care and other social programs, that are expected to cost a minimum of 3 Trillion dollars.
5)As inflation begins to surface, prices of imported goods, namely gasoline has already risen by 370% from 2001 to 2008.
6)As the value of the dollar plummets, and is gradually replaced by some other currency, other nations will refuse dollars as payment for their goods and price inflation will skyrocket.
Scared yet?
Here is a time-line of what happened in Germany from 1918 to 1924. In bold, is an example of the price of gasoline if such inflation were to happen today.
From January 1918 to January 1919 inflation was 57%. By comparison, imagine a gallon of gasoline that costs 3 dollars today, costing 4.71 in 12 months.
From January 1919 to January 1920 inflation is running 590% per year. By comparison, imagine that same gallon of gasoline costing 32.49 dollars after 24 months.
From January 1920 to January 1921, prices largely stabilized in German and there was very little inflation. That gallon of gasoline now costs 32.55 dollars.
From January 1921 to January 1922, inflation is running 196% per year. That same gallon of gasoline costs 63.64 dollars.
From January 1922 to January 1923, inflation is running 9160% per year. That same gallon of gasoline costs 5829 dollars.
From January 1923 to December 1923, not even a full year, inflation is running 23,369,685,978% per year. That same gallon of gasoline costs 136,221,899,568,675 dollars.
The biggest difference between now and then is today the US dollar is the world currency. It is integrated in the trade of all nations. As a result it is very difficult to trade something without the use of American dollars.
But as soon as the other nations of the world come up with a new currency, one that is either partially based on gold or silver, or one that simply replaces the dollar as the world currency, the game is up.
Alternatively, they could simply replace the dollar with the euro. Already several oil producing nations are negotiating oil contracts in Euro's. As the US economy gets worse, this is only going to increase.
Every time the dollar is replaced by a new currency, those dollars that were formally used for trade will find their way back in the US, where they will contribute to inflation. The US economy is already stripped of its ability to produce anything and as a result we will have to import vast quantities of goods and in order to pay for them, we will have to pay a higher and higher price in dollars for them.
It will take longer than 5 years for the other nations of the world to “unwind” all their dollar holdings, but as they do, the dollar is going to plummet in value.
This hyperinflation will only be stopped when the US replaces the dollar with a new currency. Whether it is the Amero, or simply a return to some sort of gold standard I do not know.
I submit that the US has already passed the point of no return. There is no magic bullet that will cure all our ills.
Hold on, because this is going to be a wild bumpy ride.
Are you nuts??? We are much closer to deflation then hyperinflation.
Do you know how much and how fast the government would have to print money and increase the money supply, before we get close to hyperinflation.
Geez, if it is not one thing is something else with you guys. Seriously, this is nuts.
If you actually looked at economic data, you'd notice that the PPI has fallen Year over Year, which would put us much closer to deflation, than towards inflation. The lower cost producers are selling their products for have yet to be passed along universally to the consumer, because the CPI is still up, but eventually, that will change, and prices will probably go down.
The only way for us to experience hyperinflation is to have the government excessively increase the money supply, which is not going to happen. Now, they may increase the money supply to pay for the passage of health-care, but that is expected. However, they will not print money excessive enough, that hyperinflation creeps into the economy. For starters hyperinflation is usually possible only after a war, when resources are scarce and the government is printing excessive money to pay for their war efforts etc. I'm sure there are other reasons, but i'm too tired to think of them now.
I mean seriously man, i know you're not an economist, so if you do not have a basic understanding, what is your point of fear mongering, something you do not even understand?
Now, i'll concede to a certain extent some of what you listed is/will be a big problem at some point in time, but it isn't going to happen in the near future
1. Trade Deficit (especially with China is a problem)
2. Increases in the Money Supply (through printing of currency)
3. As the dollar falls in value (commodity prices will continue to increase)
4. USE GOLD TO HEDGE AGAINST INFLATION
5. We are more likely to experience short term deflationary pressure than long term hyper inflationary pressure
6. Our Public Deficit, is some cause to worry
7. Foreign countries as of now, use the dollar as if it is a commodity to back their own currency, so if we fail, so does China, and many other countries, so it would signal the end of the free world as we know it
8. If the dollar fails and continues to fall, we need to be more worried about our debt, because who is to say the Chinese won't go to directly buying actual commodities like Gold instead of continuing to US or money to buy more of our debt
I mean these are things that are more logical to worry about not comparing US to a worn torn Germany following WWI.
We have a 15 Trillion Dollar Economy with over 300 Million Citizens and we are on the precipice of a major boom via immigration from our Southern boarder, which will spur productivity and cause a rapid rise in GDP. Seriously, you guys are just tossing out the baby with the bath water (and no one likes that, because all you get is an injured baby and water all over the sidewalk). Anyway, make a more constructive thread about economic topics you have a deeper understand instead of fear mongering things you clearly do not understand.
BTW the video you added was much more informal although they left a lot of stuff out just to fear monger, but nonetheless pretty accurate
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