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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jack of All Trades who wrote (67950)	8/10/2006 1:18:14 PM
From: Mike Johnston	Read Replies (3) \| Respond to of 110194

Hoarding pulls the demand forward causing prices to increase further. Hyperinflation always starts with hoarding as people prefer to hold hoarded goods instead of depreciating currency. Whether feedback loop of hyperinflation starts or not, depends entirely on monetary policy. There is a psychological point, a point of no return where people flee the currency no matter what the central bank does. In this case either the government increases money creation creating a feedback loop or they brake, but the amount of braking necessary is multiple times greater as time goes by. Once faith in the currency is lost, it is difficult to restore. Past the point of no return it is impossible to restore as people being burned for years will no longer believe what the government says and would be afraid to hold money even with 10% real rates.