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Is hyperinflation possible?

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  • #76
    Re: Is hyperinflation possible?

    Originally posted by FRED View Post
    EJ proposes no magical turnaround in exports, but rather blood, sweat, and tears. You must be thinking of the current administration, with its bogus assertions that a weak dollar is "good for the economy." The iTulip position has consistently been that a depreciating dollar (bonar) is net negative for the US, even for exporters long term. Early in a currency depreciation the policy appears to be net positive, when demand from importing trade partners rises but before the weak currency feeds back into the balance sheets of exporters as higher input costs. That nirvana lasts only a year or so. It is clearly over for a broad range of industries.
    I guess what I fail to get is how can the US compete in an environment where even Japan is outsourcing engineering work to malaysia, india etc because engineering salaries have no purchasing power... (see this wknd's wsj)

    There's often a claim that kids are lazy etc, and many are, but there's never a shortage of med school applications... guess it's harder to import deflation when your life is on the line

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    • #77
      Re: Is hyperinflation possible?

      Phirang,

      There's an easy way: its called a trade war.

      I haven't beaten this drum much recently, but what has been happening with the 'developing' nations is their governments subsidizing industry and penalizing imports, while simultaneously the high tax/cost structures in the US are left as is.

      Europe compensates via significant import taxes, but the 'free trade' US (or more importantly, the 'free trade' rentier beneficiaries) leaves its citizens without any governmental protections - unless you are a farmer or Boeing.

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      • #78
        Re: Is hyperinflation possible?

        No. It is not possible.

        Hyperinflation is a page from the old book. In the new book we will have price controls all over the place with all the related consequences (rationing, long lines etc.).

        People, that count on PMs to preserve some value, will be disappointed, because any transaction in anything of value (gold, land, commodities) will be taxed at a draconian rate.

        Obvious consequences of the higher tax rates and massive regulation :
        1. Vastly increased black market in any valuable goods and services.
        2. Widespread corruption in all the levels of society (now we mainly have it in political and corporate spheres ).
        медведь

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        • #79
          Re: Is hyperinflation possible?

          Originally posted by c1ue View Post
          Phirang,

          There's an easy way: its called a trade war.

          I haven't beaten this drum much recently, but what has been happening with the 'developing' nations is their governments subsidizing industry and penalizing imports, while simultaneously the high tax/cost structures in the US are left as is.

          Europe compensates via significant import taxes, but the 'free trade' US (or more importantly, the 'free trade' rentier beneficiaries) leaves its citizens without any governmental protections - unless you are a farmer or Boeing.

          The first thing the US should do is to levy 30% tax on all oil products. Most developed countries except the US has already done that.

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          • #80
            Re: Is hyperinflation possible?

            The prudential reserve Euro-dollar market compounds the problem with the current account deficit (the volume of FX reserves & the subsequent creation of new money & credit). Some degree of hyper-inflation is inevitable. Foreigners at some point will simply be sated with dollars. It's just a race as to whether the Federal Deficit is repudiated first or the exchange value of the dollar falls out of bed (or maybe both).

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            • #81
              Re: Is hyperinflation possible?



              Here is David Einhorn on Bloomberg TV a few weeks back, talking about stocks, the Fed, Bernanke and Yellen.

              At the 21:30 mark: he thinks there could be hyperinflation if another recession or event causes the FOMC to use a policy tool. The risk is that in choosing to do either nothing or something "exceedingly aggressive" (because interest rates are still very low and the balance sheet bloated), they will chose the latter and that it may be a catalyst.

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