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Four Reasons Hyperinflation Hasn’t Hit the US… Yet
Keith Fitz-Gerald
Minyanville.com
Thursday, Nov 5th, 2009
Everything we know about classic economic theory suggests the US economy should be experiencing Zimbabwe-like hyperinflation right now, thanks to the nearly $2.2 trillion the US Federal Reserve has pumped into the system.
But we’re not… yet.
Classic economic theory says that money supply can be used to stimulate the economy and our central bankers seem to agree. That’s why they’ve pumped more than $1 trillion dollars into the economy, engineered countless bailout bonanzas for zombie institutions, put Detroit on life support, and delivered a bunch of financial Band-Aids to the trauma ward — all in a desperate bid to make Americans feel better about the global financial crisis.
To their way of thinking, the trillions of dollars have been a success. That’s why any meeting of the Group of Eight nations looks more like a mutual affection society with central bankers eager to claim credit and backslap each other in congratulations for having avoided the “Great Depression II.”
But by taking the Federal balance sheet to more than $2 trillion from $928 billion 2008, they’ve created a situation that should have resulted in an epic inflationary spike to accompany the 137% increase in liabilities.
Yet that hasn’t quite happened.
Core inflation — which denotes consumer prices without food and energy costs — has actually decreased from 2.5% in 2008 to 1.5% presently. And that has many investors who have heard the siren call of the doom, gloom, and boom crowd wondering if they’re worried about nothing.
So what gives?
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25 Responses to “Four Reasons Hyperinflation Hasn’t Hit the US… Yet”
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November 5th, 2009 at 5:54 am
A very informative article that is well worth reading.
Patriotgal Reply:
November 5th, 2009 at 8:06 am
VERY well written, and thought-out. THIS is a problem that has me especially concerned, because I have studied history enough to know what to expect, “when the government starts printing money with NOTHING to back it up”. The only aspect of this that I really understood is, that the banks, that were given the money to lend it out, are keeping it. I had not considered the other aspects of the situation. We are so F!-ed.
I only hope, when, finally the SHTF, those in congress who did this, will bw held accountable, with their lives. Since they will have ruined millions of other lives.
Sic Semper Tyrannis!!!!
November 5th, 2009 at 6:21 am
My analogy would be a fighter that’s beat tp a pulp. He comes to the corner and they inject him with steroids and stimulants. When these ware off chances are he will drop dead. That about sum’s up our position.
Prosecute the creeps doing this to us. End the Fed. Dealing with reality will be better than to keep injecting drugs into a dead patient.
November 5th, 2009 at 6:25 am
Hyperinflation will never happen in the USA. You will see World War III first before that happens.
Patriotgal Reply:
November 5th, 2009 at 8:08 am
Why not BOTH?? A GREAT way to divert the blame, and let the guilty continue robbing. I’m sure that congress’ masters will consider your thought!
My Proofreader Died Of Swine Flu Reply:
November 5th, 2009 at 9:21 am
We may see World War III shortly after. Hyperinflation was the main cause for the rise of the Nazis and the Nazis of course started World War II.
You say Hyperinflation will never happen in the USA, why?
Kermit Reply:
November 5th, 2009 at 12:58 pm
Just wondering – if the dollar looses its total value overnight – and I mean completely – would that still be called hyperinflation?…
My Proofreader Died Of Swine Flu Reply:
November 5th, 2009 at 3:30 pm
If the loss in value comes from a expansion of the money supply, Yes.
In general hyperinflation is the finale stage in the life of a fiat currency. The circumstances that causes hyperinflation often begin before before a nation even goes to a fiat system. Nations choose fiat systems to cover up poor governance, so they can spend money they do not have. Promising future generations will pay for today’s execces insted of living within their means. Basically it lets them spend money like there’s no tomorrow at least until tomorrow comes.
A side from the government’s staggering 100 trillion dollar plus debt there is a 1.5 Quadrillion dollar derivatives bubble waiting to burst when they do burst government will do everything it can to print enough money to paper over the disaster. This action is the hyperinflation some say can’t happen.
To them I offer this fact in the thousands of years fiat currencies have been tried no fiat currency has ever lasted longer than a human life span.
ATHANOR Reply:
November 5th, 2009 at 9:47 pm
Yep…more than likely!
November 5th, 2009 at 6:40 am
End The Fed! – Sooner rather than later!. These crooks are just laughing as they think that they cannot be stopped and can actually pull off whatever they are trying to do!! I think that the signs here in the UK are showing that when the stimulus stops the whole economy is going to grind to arapid halt! I can see now why there is a big push to create a swine flu pandemic so as to distract when it all goes wrong and people become absolutely furious after all the lies the banker controlled Brownie, Darling and the other cronnies get found out proper!! The political class are traitors to the British people!
November 5th, 2009 at 8:13 am
The NEW American Century, New Pearl Harbor Crowd have devised a system where The US
Treasury had become the property of the TOP 1%. This will be done by funnelling Trillions to the top 1% and all others will be kept at a very low rate. This has basically be going on for quite awhile. Without the refinancing of homes and lots of credit cards there really has not been much movent among mean wages.
November 5th, 2009 at 8:42 am
THIS IS EASY: NOBODY IS BUYING OR SPENDING ANY MONEY & THE BANKS ARE NOT GIVING ANY CREDIT!!!!!!!!!!!!……………………….
November 5th, 2009 at 9:46 am
In a closed system, printing more money in relation to productive output (i.e. gold in previous centuries, GDP in current economies) causes inflation. But since much of our money (i.e. debt, in the form of bonds, treasury bills, etc) is held by foreigners, especially for the purpose of oil purchases, the extra dollars are not recycled into the economy. The article also states that banks are hoarding cash…another reason that money is not recycling back into the economy into the hands of consumers, who typically as an aggregate income amount are about 60% of the GDP. If banks were to hold onto the money that they have hoarded until the next big thing comes along, and if the dollar were to remain the choice of currency in which to conduct oil purchases, we would skate along with not much inflation until some crafty American business comes up with the next “big thing”. Unfortunately, it looks like moves are being made to oil purchase standards, and nothing is on the horizon in terms of new marketable technology ideas, since most technology developments are geared towards military or police usage.
November 5th, 2009 at 10:04 am
There will be no velocity associated with the money infusion. Banks keep it on the balace sheets to maintain investment grade portfolios, then the Fed will buy it back and destroy it.
No hyper inflation for us, but DAMN!!!! Gold looking GOOD!!!
Silver is looking better,
Rhodium is best play.
Good Luck and May Your Dow Never Jones!
November 5th, 2009 at 10:10 am
THE STRICT INTERPRETATION OF HYPERINFLATION IS WHEN PRICES RISE ABOVE 50 PERCENT PER YEAR…ACCORDING TO THE BIS ( BANK OF INTERNATIONAL SETTLEMENTS) THE AMOUNT OF DERIVATIVE CONTRACTS ARE AT $ 600 TRILLION ( LAST UPDATED: DECEMBER 2008)..A NEW FIGURE WAS SUPPOSED TO BE REPORTED IN JUNE, OF THIS YEAR, NEVER HAPPENED..THE FIGURE IS PROBABLY AT 1.2 QUADRILLION AS WE SPEAK..IF THIS DOES NOT CAUSE HYPERINFLATION, THAN THE GOVERNMENT IS KEEPING 2 DIFFERENT LEDGERS..ONE FOR PUBLIC CONSUMPTION AND THE OTHER, THAT HAS THE ACTUAL FIGURE..THERE IS ALSO $ 105 TRILLION IN UNFUNDED LIABILITIES..ANOTHER ‘SECRETIVE” STAT HAS THE FEDERAL RESERVE DOUBLING THE MONEY SUPPLY EVERY 120 DAYS.. THIS SYSTEM IS FINISHED..
November 5th, 2009 at 11:09 am
THE MAIN PROBLEM WITH THIS ARTICLE IS HE’S NOT ACTUALLY ADDRESSING THE PROBLEM. HE SIMPLY GLOSSES OVER IT LIKE A NWO PUPPET AND WANTS TO CHANGE EVERYTHING BUT THE ACTUAL UNDERLYING ISSUE WHICH HE SUMS UP NICELY HERE:
“Now, before I get a bunch of hate mail about this, let me just say I want to “Buy American” too. I’m all for supporting our native industry and our own domestic job markets. But in today’s world, “made anywhere” is really hard to do and even harder to support.
The interconnected nature of businesses and global manufacturing chains, not to mention the payment system, makes that nearly impossible. Granted, perhaps that’s part of the problem, but that’s a subject for another time”
November 5th, 2009 at 12:23 pm
For more information on this and all sorts of other New World Order topics, please visit http://www.truth-it.net and help educate so many of our uninformed, fellow Americans by commenting on the blogs there as well.
November 5th, 2009 at 12:40 pm
Do not click on the “full story” link. Your computer will go bonkers. I had to restart mine here at work.
ATHANOR Reply:
November 5th, 2009 at 9:51 pm
Mine didn’t!
November 5th, 2009 at 3:49 pm
we do have deflation.. the prices are the same but the packages are getting smaller
November 5th, 2009 at 5:18 pm
Everything we know about the economy indicates hyperinflation? No. Too much debt (over 52 trillion of public & private US debt and rising at 2.4 trillion a year) means too much to service the debt. In fact its costing more to service the debt than you get in benefit from it (debt = loans = money to drive the economy). So you get a negative effect from new debt now. So much so recently that it contributed -2.3% to the GDP. This may bounce back temporarily, but it will continue to spiral into DE-flation unless debt is forgiven or bled off. To put it simply, you can’t sustain an economy when you borrow more than you make.
November 5th, 2009 at 9:53 pm
It won’t be much longer until the end of all.
When the money goes haywire, KABOOM!
no more world……..
November 6th, 2009 at 1:29 am
A look at The Weimar Republic would indicate the contrary. Weimar printed mountains of paper money to satisfy debts owed to other countries. When we print money, it becomes debt and interest owed to outside entities – There is no GDP to support it. This becomes a vicious cycle of borrowing and printing more money just to service the debt. The system eventually collapses, the dollar becomes worthless, and it still ends in hyperinflation. Weimar had both inflation and deflation at the same time. Things like real estate dropped to almost zero value, but prices for essential consumer goods like food went through the roof. End the end, nearly all of the average Weimar citizen’s income was spent on food. The U.S. is also currently experiencing both inflation and deflation at the same time. If you can’t see that, you’re not the person in the household that does the grocery shopping.
November 6th, 2009 at 1:37 am
Solyient green..coming to the grocer’s shelves..near you..
November 6th, 2009 at 4:11 am
Damn.. I dont suppose I could pay for my internet with moose meat???