U.S. Inflation to Approach Zimbabwe Level, Faber Says

Mvic · May 31, 2009

Exaggerating may get you headlines and TV time but it doesn't do much for your credibility.

Scataphagos · May 31, 2009

Quote from agtrader777:

I may be crazy, but at some point, Paul Volcker's lessons form the early 1980s will have to be recalled and repeated. I hope not. It wasn't a lot of fun, but it worked.

It's either THAT or we're wiped out in an inflation and currency destroying INFERNO!

scriabinop23 · May 31, 2009

Quote from Cutten:

Hmm this is a good point, but bear in mind that bond yields going to 1.5% and real estate falling for 13 consecutive years is not exactly good for savers either. Also, pursuing an inflationary policy could cause a dollar crisis and get out of control like in the 70s (or worse). Hyperinflation in nominal terms is extremely deflationary for the price of local assets in real terms.

The Fed does have a mandate to ensure price stability and I just don't think they will deliberately inflate to a signficant degree beyond avoiding deflation. The questions are i) can they avoid deflation and ii) can they then avoid inflation if they went to extremes to avoid deflation, and iii) will they be willing to do both of these things? IMO the answers to 1 and 2 are yes, and the answer to 3 is debatable. Both QE and monetary tightening later on a la Volcker will alienate significant politically important constituencies.

Reference of Japan finally inspired me to do this. I gave it its own thread, but felt it might deserve a paste here (how's that for shameless self promotion) [Well was that really shameless? If I had no shame, I would not have disclaimed my shamelessness].

bond_trad3r · May 31, 2009

Where are you getting your data points for 'us monetary base'?

endsongs · May 31, 2009

Curves like the one you posted , Scria, worry me. Other curves will need to also respond sharply to that impulse of money. Which curves and how we will probably see by the end of the year.

Daal · May 31, 2009

Quote from Cutten:

So you are claiming US CFC laws have extra-territorial jurisdiction over foreign corporations? Not being a US citizen I haven't paid a tax attorney to clarify that, but I'd be surprised if you are correct.

I am. The US doesnt have any control over the foreign entity but they have over the US citizen who is controling/investing in the corporation. Passive income and income derived from capital gains are subject to US income tax without allowing for deferring taxes
http://en.wikipedia.org/wiki/Passive_foreign_investment_company

scriabinop23 · May 31, 2009

Quote from bond_trad3r:

Where are you getting your data points for 'us monetary base'?

http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt

monetary base not seasonally adjusted.

toc · May 31, 2009

HAHAHAHAHAHAHAHAHAHAHAHA!

A guy with the wisdom and experience of Faber should not be making such statements. While US can be under threat of inflation even HIGH INFLATION but it can never never never reach the levels of Zimbabwe, or Argentina or Brazil and other nations that have been famous for economic slumps time and again.

WHY???????????????

because US runs the world economy

because US is not under any kinds of sanctions and economic blockade

because US has enough economic tools, measures and pull/push in the world economy to trigger stablizing measures

because US can walk away from all its debt and no one can do anything about it

because US can starting charging nations like Japan, S. Korea, Western Europe 100s of Billions for protecting them from the Commiees, Fascists and other Pyshopathic 'fast and slow' killers of the human race.

hope that makes the matters a little clear.

Furthermore, if US can find ways to save and redirect $500B a year to debt servicing and paying off, then in 15 years US financial sheets will be in black again. $500B savings will be tough but are very very possible and US people are very capable of such expedition and coming out victorious.

Cheers and God Bless All!

scriabinop23 · May 31, 2009

Quote from toc:

HAHAHAHAHAHAHAHAHAHAHAHA!

Furthermore, if US can find ways to save and redirect $500B a year to debt servicing and paying off, then in 15 years US financial sheets will be in black again. $500B savings will be tough but are very very possible and US people are very capable of such expedition and coming out victorious.

Cheers and God Bless All!

Actually agreed. US has too much productive capacity, military power, etc. to turn into anything close to zimbabwe. But 100% inflation over a few year period is not out of the cards... That is just a price adjustment to compensate for changes in outstanding money supply (when velocity picks up).

Debaser82 · May 31, 2009

Quote from scriabinop23:

Actually agreed. US has too much productive capacity, military power, etc. to turn into anything close to zimbabwe. But 100% inflation over a few year period is not out of the cards... That is just a price adjustment to compensate for changes in outstanding money supply (when velocity picks up).

The $ dropped 100% against the euro last decade.

400% against gold.

1000% against oil?

Perhaps we should decide on the definition of high inflation first before we can discuss if it is in the cards or not.