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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bart13 who wrote (73459)11/1/2006 7:49:28 PM
From: UncleBigs  Read Replies (1) of 110194
 
bart, I think our comparison to Weimar Germany is interesting and I've studied it quite a bit. To me, there is a huge difference.

Weimar Germany printed currency as fast as they could. There were no developed credit markets. The currency flooded the economy and wasn't tied to debt.

Our money comes into existence through credit. Weimar Germany's money came into existence through massive printing plants running 24 hours per day literally. Some of their printing plants were so busy they only had time to overmark one side of the bill.

I don't think we can rule out hyperinflation in the US because it's as much a psychological cause as a monetary cause. $11 trillion in m3 is certainly enough fuel to cause hyperinflation if velocity goes from 1.4 to 10. Money can quickly become a hot potato if people begin to lose faith in the value and see that they are losing ground by holding onto "safe" cash and bonds.

However, we slug around 4 times gdp in debt that needs to be serviced in the form of interest and principal repayments and that's one hell of an anchor to be dragging around. Weimar Germany citizens had virtually no debt and almost all real estate was purchased for cash.
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