Kris,
Can you tell me why do you insist that hyperinflation in the US will be driven by wage growth and the Fed somehow reliquifying all households ?
In healthy economies, ones with a sound currency and balanced sustainable growth, productivity driven wage growth can fuel certain amount of price inflation in certain sectors, but overall it doesn't. Rising incomes in such economies are driven by real growth and rising productivity.
In sick, unbalanced, unstable and unsound economies, like the US today, high inflation is not initially driven by wage growth. Wage growth stemming from social discontent, higher government spending, increasing inflationary psychology and labor unrest can be a result of inflation. And such wage growth can then perpetuate inflation.
In the US, hyperinflation will not be driven by wage growth, but by panicky people getting rid of money they already have, while there are not enough goods being produced domestically to satisfy that kind of demand and prices of foreign-made goods will soar sharply.
There are trillions of dollars sitting in money funds, savings and bank deposits. There are additional trillions sitting in bonds and foreign public and government reserves.
Will everybody just stare when this wealth evaporates or will some people take action to protect themselves ?
Where was wage growth during hyperinflation in Bolivia, when the middle class there lost 90% of their purchasing power in 3 months ?
Where was wage growth in Argentina, when worker's purchasing power dropped by 40% overnight ? |
