Hyper-inflation Coming?

[ritehook]

It could be, and may well be worse than the 15% or so a year we saw in the last years of Jimmy Carter's admin.

I and others saw the first signs of the price jumps about 3 years ago, when the lying govt was telling us all that inflation was around 2%.

Now, it's clear for all to see, and it's not just because of the recent oil price run-ups. Globalization, the ethanol scam, and above all the disaster in Iraq (now maybe America's longest war) seem to be the engines driving this.

The bailout of foolish people who signed up to ARMs that they could not afford will also have the govt printing more money and futher debasing the currency.

Gold and other precious metals have long been considered an inflation hedge. As I know there are folks who frequent this board who know a lot more than i do about basic investment strategies, what should a prudent person do to protect themselves if we have an inflationary blowoff?

[Dark Horse]

I agree that a perfect storm is gathering at the horizon. Pitch black clouds. We're only feeling the first little breezes, and probably won't know what hit us. I'm shorting the Dow after Christmas. Am hearing $5 gasoline at the pump. We could be in survival mode this time next year.

What if the dollar is worth nada? Silver could be a good way to pay for stuff. Gold would be for after the storm; unless you want to pay for errands in Krugerrands. Have a supply of food and water, a knife, and an AK-47 or two. People still gambled during the great depression, so...

I hope we'll sail through the storm without serious damage. Lot of creative people working on it. If we do it will probably be on the strength of the global economy. Global investing would be safer than here in the US. By December we in the US can buy shares of Alibaba.com, the Chinese 'google' in terms of stock potential. I like India as well.

[tacomax]

Am hearing $5 gasoline at the pump. We could be in survival mode this time next year.

$5 a gallon? You should thank your lucky stars that you don't live in England (or most European countries).

[Dark Horse]

We don't have a public transportation system to speak of. And we drive a LOT longer distances than Europeans.

Most of that European gas money is taxes (welfare system). Here, prices for food and consumer goods have a lower gas price build in. You don't want to start messing with those dominos, because if we go down, so will you.

[tacomax]

Most of that European gas money is taxes (welfare system).

That's bullshit. The taxes which come from the "gas tax" don't go to welfare. It goes to subsidising other areas (which may include welfare (and also the upkeep of the road system) but mostly includes general government incompetence). Much like the taxes in the UK on cigarettes more than pay for the cost of treating any diseases from smoking-related actions - where does the rest go? You've guessed it - general government incompetence.

[Dark Horse]

I didn't necessarily mean that gas taxes go to welfare, but was referring more to the difference between the US and Europe. There can be no question that in Europe more taxes go towards social services. Gas is part of that higher taxes picture. The trade off is that the government looks after you in times of crisis. By comparison, Americans are on their own.

More homeless people in the US and more self-made millionaires (or is it time to up that to a billion?). No safety net, less red tape. That's pretty much what 'land of the free' comes down to. If I understand correctly, Europe has, or used to have, a small volunteer army of unemployed, who signed up for life. They'd be sleeping in parks in the US.

In addition, Americans prefer to pour their tax dollars directly into the pockets of industrialists, through such patriotic endeavors as war. In return we get cheap gas. Or at least, we were supposed to.

[louis]

Rising oil will cause prices to rise - no doubt, but the inflation of the 70's was different - it was caused by printing money to pay for government programs. In the 80's and 90's we came up with a new way to pay for deficits, borrow the money from mainly foreigners. Inflation is a monetary phenonema, printing money at a faster rate than the economy is growing, the motive is because it benefits debt holders, mainly the government. I don't think the Federal Reserve will go back to that; The government can't easily hide the price of goods. Governments do in fact cause inflation, they create and grow big expensive programs and then pay for them in effect by printing off newly minted currency. Of course it doesn't work that directly, but that is what in effect happens. The inflation in the 70's ended when the Federal Reserve tightened the money supply and has pretty much not let it grow faster than the general economy for the last 20 years. if the money markets were expecting inflation, the long term interets rates would already be high; the people who make a market in these securities are the best inflation predictors around, and so far they don't seem to be expecting anything other than a one time rise in prices.

[BigBollocks]

I don't want to get too far into it, but it's going to get ugly stateside. REAL ugly. The writing has been on the wall for years, and is going to blindside quite a few idiots in the near future. I hedged out a bunch of my USD into Euros in the Euro markets years ago, and even when the stocks lose money I break about even with the ever-collapsing dollar. We ain't seen nothing yet boys, trust me...

[Dark Horse]

Louis, I believe the Fed is printing money all the time. That is how the Plunge Protection Team has been able to keep the market artificially high for years. And now we are paying the price for that. The glossy veneer is coming off. Underneath it? A big hollow space.

[BrentCrude]

Here is my take on why we are in uncharted dangerous waters with the dollar and econo

I live in an area made up of 80% democrat voting union member socialists.Foreign companies are coming here to mine the natural resources because of the low dollar.The state still gives them tons of corporate welfare as incentives to come here.The union people have no concept of economics and think they are now in a boom economy.Bush has played a great part in being a puppet for the new world order banking system that has put the dollar in free fall.The union industrial people here have Bush to thank for their jobs being in existence all be it that these employees ''workers as they like to be called''are now being paid in near valueless dollars.Do you think they would ever vote for a republican ?Hell no,they vote for socialist womb to the tomb Hillary types.

Bush has become a big spending nation builder type and that's something he said in his first campaign that he wouldn't do.It's gotten where both the democrats and republicans are in the same socialist new world order party that believe in big government.

A couple weeks ago the government was putting out the employment report and how many jobs were created where we have a booming economy.All the growth is in direct government jobs or indirect government jobs like the medical industry.Same goes for the housing boom we had this past decade where allot of people worked in construction building houses for people getting in over their heads with big mortgages where the interest rate was low and the government was doling out allot of FHA loans and such.In medicine we have created an entitlement program that has turned everyone into hypochondriacs so there are millions of people hired to take care of them.

We really don't have a private sector free enterprise market driven economy.It's print lots of money,have allot of people make good salaries working at makework government jobs,shrink the dollar so we have foreign companies looting our natural resources while getting corporate welfare.

The fed says we can print lots of money and lower interest rates because we have a great GDP.The trouble is,the GDP is made up of the bogus makework keynesian economy I mentioned above where no one produces anything in the private sector.

I know allot of blue collar construction workers and whenever I ask them what jobs they are working on it's always government realted white elephant public works projects like aquariums,subsidised corporate welfare arenas and stadiums,socialist euro style lite rail where only street people on welfare use the train.etc.

We have had this false economy mentality ever since FDR came into power and it just took this long for the economy to implode.Bush is almost an FDR clone where he wants made up wars so he can expand the military budget to artificially stimulate the economy.The industrial military complex is another area of the economy I neglected to mention above where it's just makework Keynesian economics to put people to work in some capacity for the government.

Look in your big city newspaper engagement section and when the people getting married list their occupations it's always phoney bologna,plastic banana useless government related makework.Diversity councilors at college,early childhood development studies,womens study professor,minority student affairs representative,community race relations civil rights program councilor..I could go on and on with 1000's of this BS high falluting government job title crap where people all work but I'm running out of time and really rambled here just rough drafting my thoughts on why our economy is cooked.We have a pyramid scheme economy and the last schmucks getting in on the bottom of the pyramid scheme are the losers.God forbid that we place any of the blame for all this smoke and mirrors economics on our parents,granparents and great grandparents who set us younger generation up for a fall.Don't you get disgusted with seniors lecturing you on how hard they had it growing up!!!!!These are the entitlement people who contributed diddly squat to social-ist security and medicare and passed big spending legislation and are now draining the system and still whining about how bad they have it.It's the younger people that are indentured servant wage slaves that live in hell conditions with an uncertain future that have it rougher than these grey panther a-holes.

They should call people people working in the private sector who aren't inheriting big bucks from entitlement abusing relatives from 18 to 50 the greatest generation for all the heartache and termoil they are weighted down with by a bankrupt government and economy..

[ShamsWoof10]

Well first off we are close to hyper-inflation now... We have about 14% inflation NOW!!!! I don't look at or listen to the stupid figures (bones thrown to the public) the media puts out... Inflation is SIMPLY how much money is being printed... PERIOD!!!!! Higher prices are a result of that NOT THE CAUSE... damn! That being said M3 is about 14% and although M3 figures were classified (April 1st 2006 and I wonder why..?) you can still get a good estimate of what M3 is through M1 and M2...

Hyper-inflation from what I understand is about 20% and we will get there for sure in my opinion... FIve years ago when I used to mention things to people like $100 oil, $5 gas, rising prices in metals, the housing crash the people I was speaking too labled it as "doom&gloom".. This tells you how we simply repeat and don't really think... I simply gave predictions on certain markets I never said anything about "doom&gloom".. THE PEOPLE I SPOKE TO labeled it that... Well now we have these things happening and it's not "dooom&glooom" as the sun still rises and NFL is still being played...

Basically I don't think you'll need an AK-47 DH...

BCrude..another SOLID post!!! Excellent points on the types of jobs being created and the jobs being listed by couples.. This is all be design...

Why is it they always talk about how many jobs have been created and never talk about how many have disappeared..? That's like a gambler only telling you the plays he won and leaving out the ones he lost...

[tacomax]

Hyper-inflation from what I understand is about 20% and we will get there for sure in my opinion...

Yes, 20% is a low estimation of hyperinflation.

20% a month, that is.

[ShamsWoof10]

I thought it was 20% a year...

[ritehook]

Precious metals, then, is the only way to go? The hard stuff, mining stocks, or futures?

What about distressed housing, the fools selling off because they really couldn't afford to pay the mortgage in the first place. Will all the people in the US, and the population growing (tho mostly via high birthrate Third Worlders) isn't property in desirable areas a good investement, if one can get it cheap or even at foreclosure?

[ShamsWoof10]

Metals are a LOCK short term but long term... I think all commod's (metals & energies) go to ZERO!!!

NANO........TECH!!!!!

[ritehook]

I may have exagerrated with the word "hyperinflation."

That would likely be more than 20% a year - this would be severe inflation, but hyperinflation is more like what existed in Germany in the early 1920s, and gave rise to you know who.

Then, people demanded to be paid at lunchtime, to shop on their lunch hour. Because they knew prices would jump by the afternoon quitting time. And people were supposedly pushing wheelbarrows of money around for minor purchases.

The German middle class, much of it, was wiped out.

We're nowhere near that yet, but prices are snowballing uphill right now. At a discount grocery store I have for years paid
.49 for a small can of evaporated milk. 45 days ago it went to .59, and yesterday it was .69. I think that's around a 40% price jump in less than 2 months.

Sure, that's milk, which has been rising for a few years, but it's so across the board.

Many other producers are shrinking the product, if not the container. What may have been 16 oz two months or a year ago is now 12 or 13 oz. A big price jump.

If very hard times come to America I doubt we'll see the relative stoicism of the Great Depression generation. The population has shifted, the cultural norms are upside down, we face endless wars regardless of which group is in power, and the fate of the Roman Empire draws in the American Eagle . . .

[greg66]

No doubt its coming. Its going to get bad, much worse than anything most of us have experienced before.

[tacomax]

Metals are a LOCK short term but long term... I think all commod's (metals & energies) go to ZERO!!!

Didn't you say that oil not going over $95 this year was a lock as well?

[ShamsWoof10]

Yeah and I was wrong...

I think Nano will and can NOW do things like molecular manufactoring... This is more advanced then just moving molecules around but by being able to rearrange them you can turn one element into another...

[Dark Horse]

Look in your big city newspaper engagement section and when the people getting married list their occupations it's always phoney bologna,plastic banana useless government related makework.

quote of the week.

[tacomax]

We're nowhere near that yet, but prices are snowballing uphill right now. At a discount grocery store I have for years paid .49 for a small can of evaporated milk. 45 days ago it went to .59, and yesterday it was .69. I think that's around a 40% price jump in less than 2 months.

Sure, that's milk, which has been rising for a few years, but it's so across the board.

Come on now, you can't take the example of a single product at a single store and extrapolate that into being like hyperinflation during 1920's Germany.

Many other producers are shrinking the product, if not the container. What may have been 16 oz two months or a year ago is now 12 or 13 oz. A big price jump.

Companies have been doing that for years. In all countries. The oldest trick in the book. Keep the price stable but reduce the packaged quantity.

[regularguy]

Meanwhile, Pakistan is falling into chaos. Pakistan has nukes. Our government is stuck up to its ass in the sand in Iraq, spending $200 million a day stuck. And the American populace is wringing its hands about a popularity contest that is a year off.

It's painful to watch.

[louis]

Darkhorse, I honestly don't follow the money supply figures any more. I do believe in the monetary theory of inflation, which says that increasing the money supply too rapidly in order to pay for things and benefit debt holders, causes inflation. Some refer to this as printing too much money. Of course they print money all the time, but in some countries they finance government spending with newly printed notes which results in hyperinflation, and I don't see it happening here in the United States. The experts in predicting inflation are those that trade long term bonds, as they have to include an inflation premium into their interest rate, and they do not seem to be predicting hyperinflation soon. There are two types of inflation, a one time price increase, and price increases that happen month after month as the dollar loses value vs. what it can buy. The oil prices may cause a one time price increase; but the type of inflation evidenced by rising prices month after month, I do not believe is caused by oil prices at all. That was a big lie in the 70's during the Carter Era. Back then the Federal Reserve was not managed well and the money supply was allowed to grow at high levels in order to avoid recessions at all costs. Finally the rate of inflation was so high something had to be done, which was a tightening of the money supply, a resultant deep recession, and the money supply has been growing at about the correct rate since then. We still have some inflation, and there will be temporary price increases if oil prices rise, but I don't see any hyperinflation coming.