Hyperinflation
- Thread starter Bestmiler
- Start date
Show me where default equals increasing valuation. Default = value goes to 0.
Lets think who owns the most of that debt, Oh yes the Russians and the Chinese and the Oil producing nations.
Next day rest of the world declares war on the USA and you are forced to pay-off your debts at the end of gun. The same will happen if they try to monetize the debt.
No inflation just deflation and the dropping of the US in the global economic scale a bit like Britain after the first and second world wars.
Not the end of the world, The US will become number 2 or 3.
If the US suffers hyperinflation the government will need to throw the country into depression to arrest it, and yes it may even require another currency. I'm expecting deflation though.
More inflation will just create greater imbalances and will only serve to bring on a much deeper recession if not guarantee a great depression later. The problems we now face were caused by excessive credit expansion and cannot be corrected by more of the same. If we continue down this road the dollar will be toast, which is the worst possible scenario. There are no alternatives. Mises put it this way:
"An increase in the quantity of money or fiduciary media is an indispensable condition of the emergence of a boom. The recurrence of boom periods, followed by periods of depression, is the unavoidable outcome of repeated attempts to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. The breakdown appears as soon as the banks become frightened by the accelerated pace of the boom and begin to abstain from further credit expansion. The change in the banks' conduct does not create the crisis. It merely makes visible the havoc spread by the faults which business has committed in the boom period. The dearth of credit which marks the crisis is caused not by contraction but by the abstention from further credit expansion. It hurts all enterprises not only those which are doomed at any rate, but no less those whose business is sound and could flourish if appropriate credit were available. As the outstanding debts are not paid back, the banks lack the means to grant credits even to the most solid firms. The crisis becomes general and forces all branches of business and all firms to restrict their activities. But there is no means of avoiding these consequences of the preceding boom. Prices of the factors of production both material and human have reached an excessive height in the boom period. They must come down before business can become profitable again. The recovery and return to "normalcy" can only begin when prices and wage rates are so low that a sufficient number of people assume that they will not drop still more."
Ludwig von Mises
Quote from nazzdack:
The US will experience hyperinflation because the "government" will initiate that in response to a deflationary spiral.
Unfortunately, you do not take into consideration the fact that the FED and Treasury will "sterilize" all of the injections that they have been making.
As a result, this will not result in what you claim.
What is this magical process of "sterilize" and how does it work? Cand they make a How it's made show on this sterilize process?
Not even close.
The latest figures show that 75% of the national debt is owned by domestic entities with the Fed itself on the hook for 52%.
Only 25% is foreign owned and that breaks down as; Japan 21%, China 19%, UK 11%, OPEC nations 6%.
Russia checks in at less than 3%.
http://en.wikipedia.org/wiki/United_States_public_debt#Estimated_ownership