User Tag List

First 123

Results 21 to 28 of 28

Thread: Hyperinflation

  1. #21
    Senior Member reason's Avatar
    Join Date
    Apr 2007
    MBTI
    ESFJ
    Posts
    1,211

    Default

    Quote Originally Posted by Lateralus View Post
    Getting rid of fractional reserve banking would help.
    In a decentralised banking system, fractional reserve banking would not be a problem. It would be like an investment company that holds some funds in reserve for depositors to withdraw. A halfway house between a 100% reserve bank and an investment company. It is the Fed's control of the reserve ratio and money supply that is the problem.
    A criticism that can be brought against everything ought not to be brought against anything.

  2. #22
    Senior Member ptgatsby's Avatar
    Join Date
    Apr 2007
    MBTI
    ISTP
    Posts
    4,474

    Default

    Quote Originally Posted by reason View Post
    I made a mistake. All these mortgage defaults are not creating deflation, they're creating inflation!
    It's inflationary when you add the money to the system (ie: as you say, when it is spent into the economy). When one side of the accounting gets destroyed, the money cannot be recirculated and is inherently removed/destroyed from the cycle. That makes the default deflationary.

  3. #23
    Senior Member matmos's Avatar
    Join Date
    Mar 2008
    MBTI
    NICE
    Posts
    1,721

    Default

    Things are moving along quickly. Time to get into gold?

    Merrill [Lynch] expects global inflation to hover near zero, with rates of minus 1pc in the industrial economies. This means that yields on AAA sovereign bonds now at 3pc will offer a real return of 4pc a year, which is stellar in this grim climate.
    Merrill Lynch says rich turning to gold bars for safety - Telegraph

  4. #24
    Permabanned
    Join Date
    Mar 2008
    MBTI
    ISTP
    Enneagram
    9w8
    Posts
    3,187

    Default

    Quote Originally Posted by bananatrombones View Post
    Things are moving along quickly. Time to get into gold?


    Merrill Lynch says rich turning to gold bars for safety - Telegraph
    People will start buying up Gold to hedge against inflation when the really swelling starts. Gold has been low so far due to the deflationary factors and the massive sell off by large organizations that need the money to pay off their debts and such.

  5. #25
    Senior Member reason's Avatar
    Join Date
    Apr 2007
    MBTI
    ESFJ
    Posts
    1,211

    Default

    Quote Originally Posted by ptgatsby View Post
    It's inflationary when you add the money to the system (ie: as you say, when it is spent into the economy). When one side of the accounting gets destroyed, the money cannot be recirculated and is inherently removed/destroyed from the cycle. That makes the default deflationary.
    Malinvestments are inflationary.

    A debtor creates inflation when he borrows and deflation when he pays off or defaults on his loan. In both cases any initial inflation appears to be offset with deflation later.

    If measured from the inflationary peak, the default is deflationary. If measured from before the initial inflation, the default seems to be neutral. But it is not. Investing foregoes production and consumption in the present for more in the future. A malinvestment not only fails to increase future production and consumption, but often decreases it (investment must at least keep pace with depreciation of capital assets to maintain productive output).

    The deflation caused by a default brings the money supply back to its position before the inflation, but in the meantime goods and services have been wasted and future production decreased. The relative increase of money to goods and services created by a malinvestment creates a net inflation over time.

    The only way to create real inflation (i.e. inflation once debts have been paid off) by manipulating the credit supply is to destroy the productive capacity of a nation. This is exactly what the U.S. Government is doing, and thereby impoverishing the future.
    A criticism that can be brought against everything ought not to be brought against anything.

  6. #26
    Senior Member reason's Avatar
    Join Date
    Apr 2007
    MBTI
    ESFJ
    Posts
    1,211

    Default

    Quote Originally Posted by ptgatsby View Post
    No, it wouldn't. It would simply destroy capital now and reduce the incentive to invest in the future. Savings require a withdrawal of money from the economy for future investing. If not invested, reduces spending -> production -> wages -> spending. Deflation works against capital investment, as there is less incentive to earn a return (fixed return given, in a true risk-free sense).
    Not so. The deflationary aftermath of an inflationary boom is the solution to years of malinvestment and overconsumption. As interest rates increase so does the incentive to save (that is, more is supplied at a higher price).

    Every dollar of debt is a claim on future production. Central banks overextend credit by expanding the money supply and keeping interest rates too low. An economy is then set upon an unsustainable growth path, which is undone when people begin paying back or defaulting on their loans. Deflation and recession are the hallmarks of the correction, not the problem. As demand plummets and prices fall, malinvestments are purged from the economy and resources reallocated. Interest rates rise along with the incentive to save again, and labour is shifted away from services and towards industry (unemployment rises suddenly as this correction begins).

    Prices are like messengers, and sometimes they bring bad news. The U.S. Government is trying to currupt the message by way of inflation. But it cannot change the underlying reality, all it can do is make prices send false messages.
    A criticism that can be brought against everything ought not to be brought against anything.

  7. #27
    Senior Member matmos's Avatar
    Join Date
    Mar 2008
    MBTI
    NICE
    Posts
    1,721

    Default

    Quote Originally Posted by Risen View Post
    People will start buying up Gold to hedge against inflation when the really swelling starts. Gold has been low so far due to the deflationary factors and the massive sell off by large organizations that need the money to pay off their debts and such.
    I go along with most of that, Risen. The point I was making is that gold prices are a canary in a coalmine. The projected rise indicates the main fear is deflation.

    I don't see any fear of hyperinflation at all. Look at global interest rates - hardly indicative of demand outstripping supply. Quite the opposite.

    The car market in the US is a good example. When supply outstrips demand you can see what happens.

    Talk of fractal reserve banking in this thread is fallacious and reductive as it misses the wood for the trees.

    All the best.

  8. #28
    ♪♫♪♫♪♫ luminous beam's Avatar
    Join Date
    Feb 2008
    MBTI
    INFP
    Enneagram
    2w3 sx/so
    Socionics
    INFj None
    Posts
    779

    Default

    I can't wait to see what happens lol Whatever it is will be inevitable and out of our hands. If we elect a Hitler after hyperinflation takes place...I'm heading out 3wc style.


Similar Threads

  1. Could hyperinflation happen in the US?
    By Robopop in forum Politics, History, and Current Events
    Replies: 14
    Last Post: 08-22-2010, 04:05 PM
  2. Hyperinflation
    By Lateralus in forum Politics, History, and Current Events
    Replies: 29
    Last Post: 11-12-2008, 09:11 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Single Sign On provided by vBSSO