«
»

Hyperinflation, here we come…

… if Peter Schiff of Euro Pacific Capital is right. “There is no way the dollar can possibly survive what’s coming. It just has to go. That is the next crisis…” I sure hope he’s wrong!

Also via Blowhards.

This entry was posted on Tuesday, November 11th, 2008 at 12:28 am and is filed under the economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

6 Responses to “Hyperinflation, here we come…”

  1. Elihu Says:
    November 11th, 2008 at 10:54 am

    I think in the short-term (1-2 years) Schiff is wrong about hyperinflation. Prices of everything are falling and decline has kicked in. Euro Pacific Capital has lost a lot of money for its investors over the past year by not adequately preparing for global decline.

    Long-term, however, he is surely right. The government has a printing press and it will always inflate. Always.

  2. Karl Says:
    November 14th, 2008 at 3:46 pm

    Maybe I’m missing something. But, if the coming depression is global in its reach, wouldn’t all currencies be affected. The only question, it seems, is whether one will be hit harder relative to another. Won’t every other government react similarly to the United States and crank up their printing presses? It seems the United State and Europe are two peas in the same pod. I don’t see why their reaction will be any different from ours.

  3. syzygus Says:
    November 15th, 2008 at 4:35 pm

    Karl, governments like China with large manufacturing base and thus non-debt-driven consumerism will not need to inflate (or at least not nearly as much). As you’ve heard me say before, there’re over a billion of them. And they’re creating the Greater Asian Co-prosperity sphere that Japan started before WWII.

  4. Elihu Says:
    November 16th, 2008 at 4:55 pm

    Anybody with a printing press is going to use it.

    China inflates the yuan to keep the exports going out. It is also making Keynesian moves:

    http://online.wsj.com/article/SB122623724868611327.html

  5. syzygus Says:
    November 17th, 2008 at 7:44 pm

    Do you know what the inflation rates were among all of the major economic players during the Great Depression? I ask out of ignorance, and I wouldn’t know where to look.

  6. Elihu Says:
    November 17th, 2008 at 8:52 pm

    I’ll have to look that one up.

    The key difference between then and now is the ability to issue currency. It is completely digital. The Fed just creates money in a computer and buys, say, Treasury bonds or credit card debt (in the last two months it has monetized lots of stuff it didn’t used to). That money goes into bank accounts, which can multiply up to ten times the issued amount. Unlike the ’30s there are no paper transactions, no need to make the paper notes, no need for people to go the bank and deposit the notes. Just a few computer transactions and keystrokes. And no gold standard to hold an inflated money supply in check. It is that much easier.

Leave a Reply