Friday, October 11, 2013
I believe that with some practice a set of polling questions could be developed that could provide an early warning for hyperinflation. Below are some possible questions:
1) Imagine a 90 year old friend/relative has $5,000 and the current cost for casket and funeral services is $5,000. Would you recommend that this person pay the funeral home in advance or put the money in a saving account to be used after their death?
2) Do you think it is better to hold onto your gold jewelry or to sell it now and put the cash in the bank?
3) How important to you is it to have your salary indexed for inflation?
4) Do you feel the prices on necessities are going up faster than other prices?
5) Would you advise a friend/relative to buy long term bonds in a retirement account that only permits changes once a year?
6) If you personally own any bonds do you plan to roll them over? Y/N/na
7) Do you expect interest rates to go higher?
8) Do you expect inflation rates to go higher?
9) Do you plan to buy any gold or silver coins?
10) If you had the option of having your salary specified in the local currency or a foreign currency of your choice, which would you choose?
11) Do you know of people moving their wealth out of the country?
12) Do you feel the government budget deficit is out of control?
13) If you had extra money at the end of the month do you think it is better to buy extra things you will use in the future or just save the money?
14) Do you have confidence in your countries bonds?
15) Do you have confidence in your countries currency?
16) Do you have confidence in your countries central bank?
17) Do you have confidence in your countries government?
18) Do you think the central bank needs to create more money?
19) Do you think the current level of government deficit spending is sustainable?
20) Do you think inflation will get bad enough to hurt economic growth?
21) Do you think your currency will be a safe store of value over the next decade?
22) Do you think some more inflation would reduce the government debt burden?
23) Do you think politicians have too much/little influence over the central bank?
24) Do you think it is ok if they print new money to pay off bond holders?
25) Do you think the central bank is funding the government deficit spending?
26) Does your government have too much foreign debt?
27) Does your government have to pay for too many imports?
28) Are bond prices high?
29) Do government employees get inflation raises faster than others?
30) Do you feel that the government has protecting the value of the currency as a higher priority or creating jobs as a higher priority?
31) Are you afraid prices will go up faster and faster?
32) Is the government paying out money to too many different special interests?
33) Have you seen or do you expect price controls?
34) Do rising prices cause the government to print more money?
35) Do you think the same currency will be around 50 years from now?
36) Has the central bank been buying bonds for a long time?
37) Does the government need to borrow money to pay the interest on the debt?
38) Do you think the central bank will reduce the rate it is making new money in the next year?
39) Do you think that central bank interest rates are a good deal for big time borrowers given the current inflation rate?
40) Do you keep a bigger stock of canned food than you used to?
41) Do you think it is easy or hard to get a job now?
42) Is your government stable?
43) Do you think there is a danger of an economic crash?
44) Have you noticed any new gold dealers in the last few years?
The idea is to poll a bunch of different countries that seem to be at risk for hyperinflation each month. After awhile if some do get hyperinflation, then you could look at the data and see if there were some questions that seem to be good predictors. Then you keep refining and repeating this and you get better and better at predicting hyperinflation.
This is a post that I expect to update from time to time.