Hyperinflation is that transition period when a paper money is clearly failing as a store of value but has not yet died as a medium of exchange. This blog is to look at this and any other interesting economic issues. Vincent Cate
The article's author recommends gold, and one of the commenters said, "That is why a low rate mortgage is a tremendous hedge against hyper-inflation."
Here was my response, FWIW:
If I were the gubmint, I'd protect my rich banker buddies by passing a post-hyperinflation law saying that all debts to "accredited financial institutions" must be paid back in the New Dollar (created after the dollar crash). This would prevent mortgage holders from paying back the banks in worthless dollars.
Also, since gold owners are a small minority, I would pass a 90% windfall profits tax on gold sales(this is predicted by Jim Rickards). It would be politically popular with the suffering masses to "punish" the evil gold speculators and take away their ill-gotten gains.
Unfortunately, I don't see any secure investments anywhere, except perhaps a small farm in the countryside with some livestock and crops. And even that is risky as the starving masses will be jumping the fences to steal your chickens . . . .
People are paying for all of this spending with the last valuable export left, the dollar. And it's getting less valuable and more over priced each day.
In your Paper vs. Gold Money article, and elsewhere, you refer to Peter Bernholz's work on hyperinflation.
Readers of you blog might be interested to know that Bernholz's 200+pages book "Monetary Regimes and Inflation" is available in its entirety as a PDF book at: http://www.goldonomic.com/Monetary_regimes_and_inflation.pdf
I do not like to read long works on the computer, preferring instead to read them while lounging on the couch. I found a free program, MobiPocket Creator, that allows me to convert PDF and Word DOC files to PRC files that can be read on my kindle. I not only use the kindle to read downloaded books, but also long articles on the web, which I cut and paste to a Word DOC, then move to the kindle.
He says, "Today the US government can borrow at ultra low rates - tomorrow, creditors may withdraw and interest rates may skyrocket. If that were to happen the government could choose to print ..." Isn't that already happening right now - with the Fed buying some 65% of the US Treasurys?
Great article! Thanks.
ReplyDeleteThe article's author recommends gold, and one of the commenters said, "That is why a low rate mortgage is a tremendous hedge against hyper-inflation."
Here was my response, FWIW:
If I were the gubmint, I'd protect my rich banker buddies by passing a post-hyperinflation law saying that all debts to "accredited financial institutions" must be paid back in the New Dollar (created after the dollar crash). This would prevent mortgage holders from paying back the banks in worthless dollars.
Also, since gold owners are a small minority, I would pass a 90% windfall profits tax on gold sales(this is predicted by Jim Rickards). It would be politically popular with the suffering masses to "punish" the evil gold speculators and take away their ill-gotten gains.
Unfortunately, I don't see any secure investments anywhere, except perhaps a small farm in the countryside with some livestock and crops. And even that is risky as the starving masses will be jumping the fences to steal your chickens . . . .
People are paying for all of this spending with the last valuable export left, the dollar. And it's getting less valuable and more over priced each day.
ReplyDeleteVince,
ReplyDeleteIn your Paper vs. Gold Money article, and elsewhere, you refer to Peter Bernholz's work on hyperinflation.
Readers of you blog might be interested to know that Bernholz's 200+pages book "Monetary Regimes and Inflation" is available in its entirety as a PDF book at: http://www.goldonomic.com/Monetary_regimes_and_inflation.pdf
I do not like to read long works on the computer, preferring instead to read them while lounging on the couch. I found a free program, MobiPocket Creator, that allows me to convert PDF and Word DOC files to PRC files that can be read on my kindle. I not only use the kindle to read downloaded books, but also long articles on the web, which I cut and paste to a Word DOC, then move to the kindle.
Thanks! I have added that to my hyperinflation section on the right.
DeleteHe says, "Today the US government can borrow at ultra low rates - tomorrow, creditors may withdraw and interest rates may skyrocket. If that were to happen the government could choose to print ..." Isn't that already happening right now - with the Fed buying some 65% of the US Treasurys?
ReplyDeleteYes, we seem to be well down the path toward hyperinflation.
Delete