Hyperinflation

novazombie

Generali wrote: »

For those buying gold and silver at any price, hyperinflation is already here as they have lost faith in the currency. In reality for part 2 to be satisfied, inflation would have to be a few percent a month I guess.

Not really, those buying silver now are just early. They anticipate everyone else losing faith in the currency. I know the Pound, Dollar and Euro are just monopoly money that are going to be kept on printed no different than the Zimbarbwe Dollar. Its just a question of time.

Masomnia wrote: »

I find it interesting that your criteria are both related to psychology/behaviour and not based on statistics.

If you are talking about government figures for inflation then how can you base your criteria on something not true. Gold and silver tell the truth.
Silver bullion is going up 70% per year how is that for a statistic.

lvader

novazombie wrote: »

Silver bullion is going up 70% per year how is that for a statistic.

It has also lost 40% of it's value over 30 years.

IveSeenTheLight

Generali wrote: »

FWIW, my definition is that hyperinflation is when prices rise so quickly that:

- people don't want to hold cash as it's value is eroded faster than they are happy to accept
- you can see prices rising day-by-day. I know that my favorite sweets to eat of an afternoon at work are $2.19 a bag. How do I know that? That's how much they were yesterday, last week and last month. Under hyperinflation, I could be pretty certain that almost everything will rise in price on at least a weekly basis.

For those buying gold and silver at any price, hyperinflation is already here as they have lost faith in the currency. In reality for part 2 to be satisfied, inflation would have to be a few percent a month I guess.

In that basis, if HyperInflation was to occur, rather than holding cash, it would conceivably be better to hold debt

Masomnia

novazombie wrote: »

If you are talking about government figures for inflation then how can you base your criteria on something not true. Gold and silver tell the truth.
Silver bullion is going up 70% per year how is that for a statistic.

Zerohedge tell the truth, too.

Loughton_Monkey

IveSeenTheLight wrote: »

In that basis, if HyperInflation was to occur, rather than holding cash, it would conceivably be better to hold debt

True, but only if not on variable rate!!!

Hank_Rearden

Remembering my economics degree (and yes, expect "wooliness" from now on) I think hyperinflation is defined not statistically, but in terms of effect; as a rate of inflation which breaks the system. "Non-hyper" inflation is manageable - for example, It doesn't matter that wage increases look to previous inflation, because it's only a marginal change. But if prices are doubling over the month, let alone the day, then the historical reset period (maybe annually for pay, monthly for shop prices) fails. Obviously the failure of cash as a store of wealth is part of the scenario. It also makes interest rate setting pretty challenging.

Following this view, it's interesting to consider whether technology means we could accommodate higher inflation without it being hyperinflationary. The system failure of repricing is less of a problem now than it has been in the past; in theory shops can change their prices in real time. Electronic payments can stop cash being eroded. The psychology of rapid inflation wouldn't be eradicated by technology, but might well be mitigated.

Dell

lvader wrote: »

It has also lost 40% of it's value over 30 years.

Yes good point it is still way underpriced.

That 40% is not even adjusted for inflation. Silver is not even half its previous high 30 years ago and that is not adjusted for inflation. If you adjust for inflation Silver is something like 80% undervalued compared to where it is heading.

vivatifosi

Hank_Rearden wrote: »

Following this view, it's interesting to consider whether technology means we could accommodate higher inflation without it being hyperinflationary. The system failure of repricing is less of a problem now than it has been in the past; in theory shops can change their prices in real time. Electronic payments can stop cash being eroded. The psychology of rapid inflation wouldn't be eradicated by technology, but might well be mitigated.

Interesting point that. I remember reading somewhere that Brazil is a world leading nation for specialist software to deal with high inflation and that it helped out when they developed a whole virtual currency. There's a bit of info on that here:

http://magazine.magix.com/en/is-money-real-01218/
http://www.bbc.co.uk/news/business-11477974

Hank_Rearden

vivatifosi wrote: »

Interesting point that. I remember reading somewhere that Brazil is a world leading nation for specialist software to deal with high inflation and that it helped out when they developed a whole virtual currency. There's a bit of info on that here:

http://magazine.magix.com/en/is-money-real-01218/
http://www.bbc.co.uk/news/business-11477974

Thanks!
I particularly liked:

And an entire class of people who had previously drowned their sorrows in the cheapest rot-gut cane spirit were able to switch to beer instead.

I understand Facebook are about to launch a virtual currency. There's been much talk about the virtual currency inside the virtual economy of Second Life.

I suppose the thing to remember is that inflationary, even hyperinflationary, bubbles don't really matter within that bubble. To those famous collectors of tulips, it didn't matter, until they tried to switch assets out of the bubble once it burst.

Cleaver

Hank_Rearden wrote: »

I understand Facebook are about to launch a virtual currency. There's been much talk about the virtual currency inside the virtual economy of Second Life.

I've read about Second Life and as much as try to get my head around it I just can't.

My understanding is that you exchange real money for virtual money and then you can do things like buy a car, house, new haircut, clothes etc. all for your virtual avatar. Is this correct?

If I played the game (and I never had) I'd just wander around naked and sleep on the pavement to save money. And this would be okay because...

IT ISN'T REAL!!!

Or am I missing something?