US Inflation and What To Do About It Message Board

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Strategies & Market Trends : US Inflation and What To Do About It

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To: John Vosilla who wrote (78)	5/12/2010 12:39:03 PM
From: rr_burns	Read Replies (1) of 1504

odd question. My instinct is that not all of what you list are concurrent with hyper inflation, so much as consequences of it. Your list: 1 - high unemployment 2 - high inflation 3 - zero or -ve real GDP 4 - high interest rates 1) (unemployment) is not a precursor to high (hyper) inflation. But as runaway inflation takes a grip it likely leads to it as the mind set of the employable becomes "why work, they pay me with something next week that is less useful tomorrow than today". When things get really bad, it is important to determine "Is 'barter' unemployment?" 2) is the premise in a hyper inflationary scenario. 3) The GDP doesn't have to go to zero or -ve; but what one measures it with is likely unreliable.There is that barter measurement question again. 4) high interest rates are historically a cure likely after a conversion at the mint into a "new paper currency" or a string of international devaluations. So to answer your question do we have to have these in a hyper inflationary depression? I think the answer is no, but they probably all inevitably show up. Part of the problem is that the measures to say 'aha, a depression does or doesn't exist' tend to have narrow technical meanings that are very dependent on the markers in the game ( the currency that is inflating is the primary marker and is unreliable). Personally I am still divided on what is really ahead, hyper inflation, inflation, or deflation. There has been created a lot of money that is either sitting on US Bank books, or being absorbed internationally as cycles of fear drive the move into it as a 'safe" haven (in which case it is sitting on foreign bank ledgers). This gets us into which definition of "money" applies... One thing is certain, when the banks don't want that currency any more they will be sure it circulates into the average Joe's hands so that it is his problem. (an interest rate drop?)

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