Hyperinflation article. Good read

I like some things in the magazine, but there is a serious Chicken Little complex in it at times.

When the US used the Gold Standard, there were some major swings in our nation's economy. During the time leading up to and including the Great Depression the US had a 100% gold standard for its money. Gold does not have a stable value, it goes up and down like any other commodity (and the dollar for that matter). In fact, I would be leary of it becoming a bubble at this point because so many people are jumping on it. It could be prime for a bubble if it continues. Maybe not, but it seems that when there is a bandwagon effect there is almost always a drop following, when people move their money elsewhere.

I'm not saying that everything that the Fed does (or has done) is great, but holding up pre-1913 as some kind of ideal economy is historically inaccurate.

And no, I don't think we are even close to coming into a hyperinflation point. In fact, cost of living is down at this point. It doesn't help the millions out of work (if there's no money, there's no money), but that's where it's at.
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I feel we are headed toward hyperinflation. Maybe not tomorrow or next year or maybe not in my life time, but its on the horizon. Here are some quotes from the article explaining why.

"Do you think it could happen here?" I said thinking back to the comment I thought I'd heard him make as I was coming into the building—that we may be headed for hyperinflation.

He thought about my question. Then, he said, "In the past, common causes of hyperinflation have been war, when governments couldn't raise money fast enough through taxes or the sale of bonds to pay to keep its war machine running. But, that's changed. As you can infer from the examples I gave, nowadays, whenever governments have accumulated extreme debts that they are unable or unwilling to raise the money to pay off, either with the sale of bonds or the raising of taxes, they often resort to simply printing more money by running the presses, whether it's the paper presses or the virtual electronic presses of the computer age that create electronic credits.

"But let's get back to whether hyperinflation could happen here. Consider our unfunded debts. These include the costs of Social Security, Medicare, national healthcare if it passes, the trade deficit, and the bailouts—for which trillions were manufactured out of thin air in a way a Zimbabwean strongman could only dream. We owe trillions in loans to foreign governments, most notably China. The responsibility for paying all of this off is being thrown on the backs of the young and those yet unborn.

"There's no way we can keep this up. In fact, when the younger generations of voters come of age and they realize what we and the other older generations of voters have voted ourselves, and that we've saddled them with the onerous task of trying to pay off these unpayable debts, they may just welcome hyperinflation and screw us the way we've been screwing them, for example, by making our savings and Social Security payments worthless.

"But not only do we have all this debt, a lot of our currency is overseas. Foreigners have been willing to hold American dollars for decades because it's been universally recognized and it's been considered stable. But, if all those dollars were to come back here and were spent in a short time, it too might lead to hyperinflation."

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