Monday, September 13, 2010

Counterpoint: why hyperinflation in the US is impossible

See this article: http://globaleconomicanalysis.blogspot.com/2010/09/debating-flat-earth-society-about.html

In essence, what he is saying is that hyperinflation is always a political event, not a financial event." The commonality between Zimbabwe and Weimar is they are both political events. In Zimbabwe a political event triggered capital flight, in Weimar a political event started massive printing, triggering hyperinflation."

He says that it is impossible for the Federal Reserve on its own to cause hyperinflation. Congress can cause hyperinflation through massive spending; however, they won't.

I disagree with his conclusion. I believe that at some point people will lose faith in the ability of the government to pay back the massive debt and that lack of faith and the reaction to it will cause hyperinflation.

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