Hyperinflation

abaxas

Generali wrote: »

AFAIK, there is no economic definition of 'hyperinflation' unlike say 'recession'* or 'unemployed'** so what would be your definition of hyperinflation and, preferably, why?

I'll let you know mine in a bit. Firstly I'd be interested in others' thoughts first and secondly I'm off to bed in a sec.

*2 consecutive quarters of negative GDP growth
**Not working but wanting to and actively looking for employment

The terms for recession and unemployed are not definitions but have meaning based of partial agreement.

Ie most agree a recession is 2 consecutive quarters of negative GDP but it isn't defined as such.

The whole vocabulary of economics makes football punditry appear accurate and scientific.

Degenerate

ash28 wrote: »

The printing presses must be running flat out for that to happen,

And this is the thing that the prophets of doom (and gold bugs) don't understand. For real hyperinflation to happen requires a total abandonment of any pretence of fiscal control on the part of Government. It can't happen spontaneously because something has to be feeding the explosion in money supply. If all the UKs retailers tried to double their prices tommorow, they wouldn't get very far because people would not have the money to buy their stuff. Credit expansion alone is not enough to achieve this, the long period of near-zero base rates has proved that point. The only thing that can achieve it is the decision to perpetually monetise unlimited amounts of debt. This is why I agree with this:

Although hyperinflation is caused mainly by excessive deficit spending (financed by printing more money) by a government, some economists believe that social breakdown leads to hyperinflation (not vice versa), and that its roots lie in political rather than economic causes.

The trillion Zimbabwean dollar note didn't spontaneously come into existence, someone had to make a decision to print a note with a face value larger than the previous decade's average GDP. On the face of it this is an insane decison. The sort of decision made by people in fear of losing control. We're a long way from that.

The_White_Horse

i would love hyperinflation to apply to my house and my salary only.

SilverStandard

Generali wrote: »

AFAIK, there is no economic definition of 'hyperinflation' unlike say 'recession'* or 'unemployed'** so what would be your definition of hyperinflation and, preferably, why?

I'll let you know mine in a bit. Firstly I'd be interested in others' thoughts first and secondly I'm off to bed in a sec.







*2 consecutive quarters of negative GDP growth
**Not working but wanting to and actively looking for employment

I would say its when the public wakes up to the truth about paper money and everyone wants to get out of paper ASAP.

Forget what the inflation figures are supposed to be. Not many believe them these days anyway. Gold and silver tell the truth. I am not saying inflation is 70% the same as silver is going up every year. But they give a good indication the way real inflation is heading.

So when the public at large realise that their paper currency is buying them less every day, they want to get rid of their paper en mass. This has happened many times throughout history and when it starts there is nothing anyone can do to stop it because prices for things like gold and silver go ballistic.

I am not sure but I do not think the Pound sterling will be the first to see this kind of currency crisis. I think the Euro or USD is nearer than we are.

But all currencies around the world are heading that way and seem to be racing each other to the bottom.

So when one of the major currencies has a crisis like this it will affect the gold and silver price which will mean lack of faith in ALL currencies around the world except for the only 2 currencies that cant be printed out of this air - Gold and Silver.

Asheron

Asheron

vivatifosi

SilverStandard wrote: »

So when the public at large realise that their paper currency is buying them less every day, they want to get rid of their paper en mass. This has happened many times throughout history and when it starts there is nothing anyone can do to stop it because prices for things like gold and silver go ballistic.

So when I go to Smiths to buy a newspaper, are they going to accept a shaving from my bar of silver? No. Will my credit card ever bill me in silver or gold grams? No. Seriously, if things ever get that bad that silver and gold are the only currency; I'd be wanting a gun, a big supply of ammunition, a huge stockpile of food and big locks on my doors and windows first.

diable

As long as wages keep up we should be ok.

SilverStandard

vivatifosi wrote: »

So when I go to Smiths to buy a newspaper, are they going to accept a shaving from my bar of silver? No. Will my credit card ever bill me in silver or gold grams? No. Seriously, if things ever get that bad that silver and gold are the only currency; I'd be wanting a gun, a big supply of ammunition, a huge stockpile of food and big locks on my doors and windows first.

You do not understand. Things do not have to get that bad, there have been many currency crisis even in recent history. It doesn not mean things go mad max.

It is looking very likely we are heading for a currency crisis somewhere in the major currencies in the not too distant future.

diable wrote: »

As long as wages keep up we should be ok.

Ha as long as you can find a wheelbarrow big enough:)

vivatifosi

SilverStandard wrote: »

You do not understand. Things do not have to get that bad, there have been many currency crisis even in recent history. It doesn not mean things go mad max.

I do understand, we will just have to agree to disagree. I would just rather stockpile something that will help me get through a crisis (eg dried food, wood for heating). Remember, I'll be the one with the gun;).

ETA: while there have been cases of hyperinflation, to my knowledge they have never included the whole global system. Therefore you will be using a globally priced commodity to hedge against a local problem. I'd rather stick to my stockpiles. Plus my faith that no matter how f*cked our banking system is, we'll never be as bad as Zimbabwe.