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The trigger for a Hyperinflationary shock


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#41 Nigel Watson

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Posted 12 September 2010 - 06:22 AM

QUOTE (DrBubb @ Sep 12 2010, 12:33 AM) <{POST_SNAPBACK}>
The problem is, as I have said above, saying "velocity increases" doesn't actually explain anything. Of course it does. But what is the actual process? How does velocity increase? That is what matters. When a car goes off a bridge into the water, its speed may increase as it plunges down towards the water. But isn't it better to know how?



Easy - the pick up in velocity happens when people lose confidence in fiat. This could happen following another QE burst. People spend their money because they expect it to lose value, because they expect the CB to keep on printing. A classic case of a self-fulfilling prophecy. A sudden drop in the exchnage rate can also create the pick-up in velocity

#42 aliveandkicking

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Posted 12 September 2010 - 08:27 AM

QUOTE (Nigel Watson @ Sep 12 2010, 06:22 PM) <{POST_SNAPBACK}>
Easy - the pick up in velocity happens when people lose confidence in fiat. This could happen following another QE burst. People spend their money because they expect it to lose value, because they expect the CB to keep on printing. A classic case of a self-fulfilling prophecy. A sudden drop in the exchnage rate can also create the pick-up in velocity


Shazaam! People lose confidance with the currency and spend it as quickly as possible

Shazaam! upon witnessing the increase in velocity the authorities who have total absolute control over the non-banknote payment system of electronic money and reserve balances do absolutely nothing at all to limit velocity.

Shazaam!

Mighty powerful medicine!

QUOTE (Nigel Watson @ Sep 12 2010, 06:14 PM) <{POST_SNAPBACK}>
More like a religion. Blind faith that the future will be like the past.


Yeah right! Hyperinflations always happen to fiat! The past is guaranteed to repeat very soon!

laugh.gif


#43 grumpy-old-man

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Posted 12 September 2010 - 10:47 AM



Shazaam!! Hyperinflation. wink.gif



From:


"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." -- James Madison

"Paper money eventually returns to its intrinsic value: zero" - Voltaire

"Give me control of a nation's money and I care not who makes her laws." Mayer Amschel Rothschild

#44 grumpy-old-man

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Posted 12 September 2010 - 10:51 AM

Shazaam!! Hyperinflation. wink.gif


From:

I mean just look at that chart. ohmy.gif

I know this clip is old, but just look at that chart.

QE 2 within weeks.....

#45 aliveandkicking

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Posted 12 September 2010 - 12:02 PM

Weimar began with rising inflation long before 1923.

Reich Marks had deflated against gold Marks:

1000% in one year from aug 21 to july 22
1000% from july 22 to nov 22 and maintained that rate until july 23 when it then went
1000% per month until the end of 23

http://upload.wikime...erinflation.jpg




Instantaneous currency repudiation is a myth or simply gold bug propaganda

#46 DrBubb

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Posted 12 September 2010 - 12:43 PM

Shazzam !
Interest in the Lira-Podcast has taken off ! : Hits (989)

That's more than the podcast with Mish at a similar time.
But the Mish & Eric T. podcast has gained many hits too : Hits (1232)

I wonder what is causing this sudden pick-up in traffic ?
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#47 d2thdr

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Posted 12 September 2010 - 12:51 PM

QUOTE (DrBubb @ Sep 12 2010, 12:43 PM) <{POST_SNAPBACK}>
Shazzam !
Interest in the Lira-Podcast has taken off ! : Hits (989)

That's more than the podcast with Mish at a similar time.
But the Mish & Eric T. podcast has gained many hits too : Hits (1232)

I wonder what is causing this pick-up in traffic ?



Perhaps people have read Gonzalo Lira's articles on Zerohedge and they believe what he wrote, as compared to Mish who just theorizes without having any experience of the reality? Perhaps people are awakening to the reality?
All I do is take these funny little rectangular pieces of paper or those electronic digits that appear on my computer screen that our zombie banks and governments call money and I turn them into silver and gold. The medieval alchemists never even go close to that miracle! I am turning paper into gold, it's awesome! We should be thanking the collective boneheads who make this magic possible.

FREEGOLD
V/S SLAVEGOLD


Gold coins then bank storage then gold lending then gold certificate use then lending of certificates then certificates are declared paper money then overprinted then gold backing removed then price inflation then,,,,,, we begin again. But this time it's different the hard money crowd say. Yes, it is. Only the time has changed-- FOA

The best thing about eating gold is pooping gold. Don't eat ETF GLD paper though, it's boring and painful to poop out.


#48 romans holiday

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Posted 12 September 2010 - 12:52 PM

http://www.wolf1168......oney Dies.pdf

QUOTE
The mark's fall began gradually. In the war years, 1914-1918, its foreign exchange value halved, and by August 1919 it had halved again. In early 1920, however, although the cost of living had risen less than nine times since 1914, the mark had only one-fortieth of its overseas purchasing power left. There followed twelve months of nervous fluctuation, but then the mark sped downwards with gathering momentum, dragging social misery and political disruption in its wake. Not until 1923 did Germany's currency at last go over the cliff-edge of sanity to which it had, as it were, clung for many months with slipping finger-tips. Pursuing the money of Austria and Hungary into the abyss, it crashed there more heavily than either.
...
The inflation of 1923 was so preposterous, and its end so sudden, that the story has tended to be passed off more as a historical curiosity, which it also undoubtedly was, than as the culmination of a chain of economic, social and political circumstance of permanent significance. It matters little that the causes of the Weimar inflation are in many ways unrepeatable; that political conditions are different, or that it is almost inconceivable that financial chaos would ever again be allowed to develop so far. The question to be asked ó the danger to be recognised ó is how inflation, however caused, affects a nation: its government, its people, its officials, and its society. The more materialist that society, possibly, the more cruelly it hurts. If what happened to the defeated Central Powers in the early 19203 is anything to go by, then the process of collapse of the recognised, traditional, trusted medium of exchange, the currency by which all values are measured, by which social status is guaranteed, upon which security depends, and in which the fruits of labour are stored, unleashes such greed, violence, unhappiness, and hatred, largely bred from fear, as no society can survive uncrippled and unchanged.
....
In a lengthy interview many years afterwards with Pearl Buck, Erna von Pustau, whose father was a small Hamburg businessman who ran a fishmarket, made the same point: 'We used to say "The dollar is going up again", while in reality the dollar remained stable but our mark was falling. But, you see, we could hardly say our mark was falling since in figures it was constantly going up -and so were the prices ó and this was much more visible than the realisation that the value of our money was going down Ö It all seemed just madness, and it made the people mad.' In other words, the causes of the mark's depreciation, which certainly escaped Germany's politicians and bankers as well, had little enough to do with how the people, individually or collectively, reacted to it. Most of them clung to the mark, the currency they knew and believed in, long after the eleventh hour had come round for the umpteenth time. Most had no choice; but all were encouraged or bemused by the Reichsbank's creed of Mark gleich Mark ó paper or gold, a mark is a mark is a mark. If prices went up, people demanded not a stable purchasing power for the marks they had, but more marks to buy what they needed. More marks were printed, and more, and more. Inflation, already in its fourth year when revolution overthrew the old regime, added a new, overwhelming uncertainty to the many uncertainties that attended the birth of the Weimar Republic.
p 2/3

Weimar is an interesting case study of years of inflation morphing into hyper-inflation, but not one of "sudden currency repudiation".

James Turk admits as much and suggests attention should instead be turned to Argentina.
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.

Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].

#49 aliveandkicking

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Posted 12 September 2010 - 12:56 PM

QUOTE (d2thdr @ Sep 13 2010, 12:51 AM) <{POST_SNAPBACK}>
Perhaps people have read Gonzalo Lira's articles on Zerohedge and they believe what he wrote, as compared to Mish who just theorizes without having any experience of the reality? Perhaps people are awakening to the reality?


lira has no experience iether. He was more or less a baby.


#50 Nigel Watson

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Posted 12 September 2010 - 12:59 PM

QUOTE (romans holiday @ Sep 12 2010, 01:52 PM) <{POST_SNAPBACK}>
http://www.wolf1168......oney Dies.pdf

p 2/3

Weimar is an interesting case study of years of inflation morphing into hyper-inflation, but not one of "sudden currency repudiation".


Yeh, and Weimar inflation was NOT caused by a wage-price spiral. It was caused by CB money printing. Just like EVERY other hyperinflation that there's ever been.

Hyperinflations have never occured in any economy running a commodity currency.

It's not rocket science.

#51 DrBubb

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Posted 12 September 2010 - 01:06 PM

QUOTE (d2thdr @ Sep 12 2010, 09:51 PM) <{POST_SNAPBACK}>
Perhaps people have read Gonzalo Lira's articles on Zerohedge and they believe what he wrote, as compared to Mish who just theorizes without having any experience of the reality? Perhaps people are awakening to the reality?


You are right !
And I think this explains the interest:

http://www.zerohedge...lo-lira-octagon

The Deflation vs Hyperinflation Debate On Steroids, Or Mish vs Gonzalo Lira In The Octagon
Submitted by Tyler Durden
on 09/11/2010 18:01 -0500

A recent guest post by Gonzalo Lira on Zero Hedge, providing a theoretical framework for the arrival of hyperinflation, went viral, generating over 75k views and over 1,000 comments, further confirming that the biggest and most confounding debate in all of finance is what will the final outcome of the Fed's market manipulative actions be: deflation, inflation or, and not really comparable, hyperinflation (which is a distinctly different phenomenon from either of the above). The post infuriated some hard core deflationists who continue to refuse to acknowledge the possibility that in its attempt to inspire inflation at all costs, the Fed may just push beyond the tipping point of monetary imprudence away from mere target 2-3% inflation, and create an outright debasement of the world's reserve currency. One among these was none other than Mish himself, who a week ago recorded a podcast on Global Edge with Eric Townsend and Michael Hampton (link here), in which his conclusion was that Hyperinflation is the endgame, "so it is unlikely." Of course, the very premise of this statement argues that even in a monetary collapse the Fed will retain control over the flow of money, which of course is unlikely, and thus makes us very skeptical that such a simplistic and solipsistic argument is enough to resolve the debate. Since one of the items covered in the Mish podcast was Lira's argument, it was only fair that Gonzalo himself should be heard. Here is the Gonzalo Lira podcast defending the "Hyperinflation" case
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#52 aliveandkicking

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Posted 12 September 2010 - 01:09 PM

QUOTE (Nigel Watson @ Sep 13 2010, 12:59 AM) <{POST_SNAPBACK}>
Yeh, and Weimar inflation was NOT caused by a wage-price spiral. It was caused by CB money printing. Just like EVERY other hyperinflation that there's ever been.

Hyperinflations have never occured in any economy running a commodity currency.

It's rocket science.


Obviously there were elements of wage price spiral. The government were a significant employer whereas the non-state sector were somewhat protected because firms could simply earn sufficient to pay workers wages to maintain their profitable export industries. The private sector must have to some degree acted to drive up prices simply because they were capable of earning more money to ensure they were fed and housed to be productive to their employers.

Meanwhile the government had to at least some extent print to compete with the private sector once they started the whole shazaam of printing to pay wages.

But i can see facts are not your strength. You DO know

laugh.gif

#53 Nigel Watson

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Posted 12 September 2010 - 01:13 PM

QUOTE (aliveandkicking @ Sep 12 2010, 02:09 PM) <{POST_SNAPBACK}>
Obviously there were elements of wage price spiral. The government were a significant employer whereas the non-state sector were somewhat protected because firms could simply earn sufficient to pay workers wages to maintain their profitable export industries. The private sector must have to some degree acted to drive up prices simply because they were capable of earning more money to ensure they were fed and housed to be productive to their employers.

Meanwhile the government had to at least some extent print to compete with the private sector once they started the whole shazaam of printing to pay wages.

But i can see facts are not your strength. You DO know

laugh.gif


You've got a lot of time on your hands. Why don't you use it more productively. Try Googling hyperinflation. Then the 'quantity theory of money'

#54 aliveandkicking

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Posted 12 September 2010 - 01:29 PM

QUOTE (Nigel Watson @ Sep 13 2010, 01:13 AM) <{POST_SNAPBACK}>
You've got a lot of time on your hands. Why don't you use it more productively. Try Googling hyperinflation. Then the 'quantity theory of money'


the wages rose. Just as they rose in chile and zimbabwe.

Try denying that a bit harder. You obviously are trying pretty hard already

It is not rocket science

laugh.gif


#55 grumpy-old-man

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Posted 12 September 2010 - 02:11 PM

QUOTE (aliveandkicking @ Sep 12 2010, 02:29 PM) <{POST_SNAPBACK}>
the wages rose. Just as they rose in chile and zimbabwe.

Try denying that a bit harder. You obviously are trying pretty hard already

It is not rocket science

laugh.gif


but not enough to buy yesterdays basics....

an old article:

http://www.thefreema...south-america/#

"How would you like to live in an economy without memory, where you donít know the price of anything day to day or the value of the wage you are paid? Thatís what itís like under hyperinflation, in Argentina, supermarket prices are increased twice daily. During the two weeks we were in Brazil recently, interest rates rose 100% from 330% to 430%. Boliviaís demand for money is so great that its third largest import is currency. "


"In 1986, President Josť Sarney of Brazil, in an attempt to do something dramatic about an inflation rate that threatened to soar to 500% or more, instituted an anti-inflation program that froze prices, controlled wages, and lopped three zeroes off the Brazilian currency. The plan succeeded in temporarily curbing inflation, but higher prices were quickly replaced by other problems. Severe shortages of daily necessities such as eggs, meat, and milk developed. Black markets quickly filled the vacuum, resulting in higher prices that didnít show up in official inflation figures. "

this to me is multiplied across ALL gov stats.....unemployment, property prices, wages......it's ALL a con.Those who are basing their decision on gov stats WILL be caught out.

This is a comment by David at the bottom of that article:

"When I was in Brazil then, the rich carried US $100.00 bills in rolls that they converted to local currency when they needed some money. Since their savings account depreciated 20% every time the currency changed and dropped three zeroís, they used foreign banks in other currencies. Their yearly salary at Petrobras was doubled every year, they immediately bought whatever neccessities they could and discretionary spending was nonexistent.
In the US, only thing we got backing us up is gold and silver and real estate that doesnít have houses on it in non inflated areas,(flyover country), unless the gold backed yuan gets real popular and you can invest in it, itís looking like SPAM, lead and seed and maybe a chicken coop if it doesnít break local codes.
Check urbansurvival.com if you donít already read it."


here's a contrarian comment on gold, just to be fair wink.gif :

"Really, who typically buys a suit for $1250.00? Gold may go up from here but if you donít sell at or before the peak, you will be a bubble boy and a sorry one. What currency will you take for the sale of your gold? A revalued (devalued)dollar or Amero? The answer is it will be electronic only, except for the black market which will always exist in some areas. Gold at that point will likely be illegal, as it once was in this country. Then you have to sell and they name the price-how about $35 per ounce?"


so ask yourself why Rothchilds have just bought into Bullionvault after exiting the gold market in 2004 ?

http://cryptogon.com/?p=16121

#56 aliveandkicking

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Posted 12 September 2010 - 02:24 PM

QUOTE (grumpy-old-man @ Sep 13 2010, 02:11 AM) <{POST_SNAPBACK}>
but not enough to buy yesterdays basics....

an old article:

http://www.thefreema...south-america/#

"How would you like to live in an economy without memory, where you donít know the price of anything day to day or the value of the wage you are paid? Thatís what itís like under hyperinflation, in Argentina, supermarket prices are increased twice daily. During the two weeks we were in Brazil recently, interest rates rose 100% from 330% to 430%. Boliviaís demand for money is so great that its third largest import is currency. "


"In 1986, President Josť Sarney of Brazil, in an attempt to do something dramatic about an inflation rate that threatened to soar to 500% or more, instituted an anti-inflation program that froze prices, controlled wages, and lopped three zeroes off the Brazilian currency. The plan succeeded in temporarily curbing inflation, but higher prices were quickly replaced by other problems. Severe shortages of daily necessities such as eggs, meat, and milk developed. Black markets quickly filled the vacuum, resulting in higher prices that didnít show up in official inflation figures. "

this to me is multiplied across ALL gov stats.....unemployment, property prices, wages......it's ALL a con.Those who are basing their decision on gov stats WILL be caught out.

This is a comment by David at the bottom of that article:

"When I was in Brazil then, the rich carried US $100.00 bills in rolls that they converted to local currency when they needed some money. Since their savings account depreciated 20% every time the currency changed and dropped three zeroís, they used foreign banks in other currencies. Their yearly salary at Petrobras was doubled every year, they immediately bought whatever neccessities they could and discretionary spending was nonexistent.
In the US, only thing we got backing us up is gold and silver and real estate that doesnít have houses on it in non inflated areas,(flyover country), unless the gold backed yuan gets real popular and you can invest in it, itís looking like SPAM, lead and seed and maybe a chicken coop if it doesnít break local codes.
Check urbansurvival.com if you donít already read it."


here's a contrarian comment on gold, just to be fair wink.gif :

"Really, who typically buys a suit for $1250.00? Gold may go up from here but if you donít sell at or before the peak, you will be a bubble boy and a sorry one. What currency will you take for the sale of your gold? A revalued (devalued)dollar or Amero? The answer is it will be electronic only, except for the black market which will always exist in some areas. Gold at that point will likely be illegal, as it once was in this country. Then you have to sell and they name the price-how about $35 per ounce?"


so ask yourself why Rothchilds have just bought into Bullionvault after exiting the gold market in 2004 ?

http://cryptogon.com/?p=16121


It is just all more words.

The fact is:

1. people did not wake up and discard their currency overnight or even over years.

2. Fritz in weimar who was sweeping the roads was being paid about a trillion plus by the end of 1923. Kevin In Zimbawe was getting 30 trillion a month.

3. People with debt and jobs in Weimar had their debt quickly devalued

soooooo.....

if the problem today is too much debt by households and firms, a wee bit of inflation less than hyperinflation is going to see them right and there is no need to destroy the world as we know it to satisfy the gold bugs

No matter how much you keep coming at me!

biggrin.gif

You guys are just clinging to some kind of dream. And good luck to you!

#57 Nigel Watson

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Posted 12 September 2010 - 02:29 PM

QUOTE (grumpy-old-man @ Sep 12 2010, 11:47 AM) <{POST_SNAPBACK}>
Shazaam!! Hyperinflation. wink.gif



From:


"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." -- James Madison

"Paper money eventually returns to its intrinsic value: zero" - Voltaire

"Give me control of a nation's money and I care not who makes her laws." Mayer Amschel Rothschild


Has AAK watched this? He needs to.

#58 Nigel Watson

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Posted 12 September 2010 - 02:37 PM

QUOTE (grumpy-old-man @ Sep 12 2010, 11:51 AM) <{POST_SNAPBACK}>
Shazaam!! Hyperinflation. wink.gif


From:

I mean just look at that chart. ohmy.gif

I know this clip is old, but just look at that chart.

QE 2 within weeks.....



In the long-term he's right. However, in the short-run expanding the money supply, with (close to) zero velocity, will not create inflation.

However, eventually, history shows that the population evenyually twigs what's going on. Loss of confidence in fiat creates the acceleration in velocity required to create the inflation. Then a positive feedback loop between inflation and velocity occurs: acclerating inflation creates accelerating velocity, which creates a further pick up in inflation, rinse, lather, repeat.

Hyperinflation is caused by CBs, not by trade unions that create wage-price spirals!

#59 grumpy-old-man

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Posted 12 September 2010 - 02:43 PM

QUOTE (Nigel Watson @ Sep 12 2010, 03:37 PM) <{POST_SNAPBACK}>
Hyperinflation is caused by CBs, not by trade unions that create wage-price spirals!



Agreed. smile.gif

#60 deeper

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Posted 12 September 2010 - 03:17 PM

http://theautomatice...interviews.html

Nicole Foss is the voice of reason.

aliveandkicking, you will enjoy this interview wink.gif




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