In case anyone is curious what it looks like when a country keeps printing worthless paper and hyper inflation sets in: http://www.gadling.com/2008/01/22/zimbabwe-releases-10-million-bill/
hyperinflation
- Thread starter Brandonf
- Start date
Maybe..here is my favorite quote in the article though: Despite the dismal economic situation, the central bank's much-maligned governor, Gideon Gono, offers this risible bit of encouragement: "As monetary authorities, we once again assure the nation that we are in full control of the currency situation."
We will either have hyperinflation or deflation. I don't see any middle ground. Right now I am leaning toward deflation.
I strongly agree......
Excellent Commentary
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One way of looking at this aspect is to simply examine the changes in bond values of a 10 year bond which moves from
7% to 8% versus a bond that moves from 2% to 4%...
The difference in valuation is massive and would be quite disruptive. One case in point is Japan. How do rates move to normalcy after being at 2% for a long period of time....normalcy being average individual wealth generating adequate returns for an average retiree.....
Deflation definitely has to occur first if massive amounts of credit are no longer allowed in creating prices...
The situation become very precarious ....
...........................................................................
One way of looking at this aspect is to simply examine the changes in bond values of a 10 year bond which moves from
7% to 8% versus a bond that moves from 2% to 4%...
The difference in valuation is massive and would be quite disruptive. One case in point is Japan. How do rates move to normalcy after being at 2% for a long period of time....normalcy being average individual wealth generating adequate returns for an average retiree.....
Deflation definitely has to occur first if massive amounts of credit are no longer allowed in creating prices...
The situation become very precarious ....
I see it the other way around. The Gummint/Fed will use everything at their disposal to try to prevent any kind of deflation. That probably means hyperinflation soon/now... followed by economic implosion (deflation).
I prefer and hope for the deflation first, but I don't think it will happen that way.... I do hope I'm wrong.
OK, how can the Fed hyperinflate if no one is taking out loans? (For that matter how did the Germans hyperinflate in the 20's? How did people get all those wheelbarrows filled with bundles of cash?)
With our fractional reserve system, money is debt. If new debt cannot be created and old debt is being destroyed via foreclosures and the like, it would seem deflation is the future.
I supposed some of the major banks and brokerages could look way in the back of their vaults and find a few $trillion (and a note signed "Good luck and don't spend it all in one place, Uncle Ben").
With our fractional reserve system, money is debt. If new debt cannot be created and old debt is being destroyed via foreclosures and the like, it would seem deflation is the future.
I supposed some of the major banks and brokerages could look way in the back of their vaults and find a few $trillion (and a note signed "Good luck and don't spend it all in one place, Uncle Ben").