[BigTex]

$this->bbcode_second_pass_quote('Iaato', '')$this->bbcode_second_pass_quote('BigTex', 'I')t's important to remember that hyperinflation is mostly a psychological phenomenon that employers have to buy into as well.

[threadbear]

$this->bbcode_second_pass_quote('Duende', 't')hreadbear wrote:
$this->bbcode_second_pass_quote('', 'I')t hasn't happened yet. This is a future forecast. Think of it as the pendulum swinging very far in the other direction.

[CrudeAwakening]

$this->bbcode_second_pass_quote('threadbear', 'A') contraction in money supply, on Main street, will not translate into price decreases in the price of day to day living. What will become cheaper is houses, cars, boats, etc...

[Pretorian]

$this->bbcode_second_pass_quote('BigTex', 'I') think we have several stages of demand destruction, though, since so many of us live like kings compared to most of history.

First, demand destruction for new clothes.

Then, eating out.

Then, any form of entertainment.

Then, non-essential travel.

Then, flavored drinks.

Then, alcohol, tobacco and other vices.

[Falconoffury]

Remember that hyperinflation is man-made. A situation like 1923 Germany or present day Zimbabwe could happen in the USA soon. If life gets bad enough, people will be yelling for the government to do something about it. That something could be a massive program of socialized jobs and money creation, in the face of stagnant real goods. In effect, people could be making high wages in numeric terms, but the cost of goods would have to go up. Governments and central banks are still a wild card. It could go many different ways.

[threadbear]

$this->bbcode_second_pass_quote('Falconoffury', 'R')emember that hyperinflation is man-made. A situation like 1923 Germany or present day Zimbabwe could happen in the USA soon. If life gets bad enough, people will be yelling for the government to do something about it. That something could be a massive program of socialized jobs and money creation, in the face of stagnant real goods. In effect, people could be making high wages in numeric terms, but the cost of goods would have to go up. Governments and central banks are still a wild card. It could go many different ways.

[ki11ercane]

$this->bbcode_second_pass_quote('BigTex', 'T')he U.S. will borrow the money for any bailout plan, just like it has borrowed the money for every other misguided government action of the last 60 years.

This plan is not inflationary. Inflation requires rising wages. Without rising wages, inflation simply creates demand destruction, which stifles economic activity, which leads to deflation, not inflation.

In a credit crisis, inflation is never going to be the problem.

Japan has been trying to create inflation for 15 years. Every time they inject money, the banks sit on it. Inflation requires that money be available in the form of credit, which is the whole problem right now--credit is drying up, which is very deflationary.

It's like a game of musical chairs, except there are 300,000,000 people and only a few chairs. The chairs will go to the people who do not depend on credit to function or survive.

[Falconoffury]

If the government does create a massive system of socialized jobs, I would go so far as to call it communism. A communist country is no different. The government creates the jobs, assigns them to the citizenry, and assigns the wages. The free market has nothing to do with the entire process. Do we forget history so easily?