The Hyperinflation Myth

Many people of the Austrian Monetary theory (such as Lew Rockwell, Peter Schiff and Ron Paul) have consistently predicted hyperinflation. And, yet, we have not seen a radical increase of prices. Why not?

Category:

News & Politics

Tags:

• Hyperinflation
• Economics
• Federal
• Reserve
• Lew
• Rockwell
• Peter
• Schiff
• Ron
• Paul

[maozebong100]

3 years later. Still no hyperinflation.

[straydoggio]

You're right.

[ronpfloyd]

In fact the RISK (but perhaps not likelihood) of hyperinflation is far greater today because in a real money based economy inflation and even hyperinflation are safety valves for a overly monetized economy. We have no such safety value currently, so there are no failsafes, when things fall apart, they fall apart completely. Whereas in the past we would have corrected years ago, today we have your hock stick chart, Money doesn't = gold today, it equals confidence, and that can run out too!

[ronpfloyd]

So where does the value come from?

It comes from speculation, from feelings really. There is no way to objectively value any currency. The hyper-inflation position is not that printing money will cause hyperinflation, but that monetizing debt into a currency that has no intrinsic worth, along with economic stagnation and political turmoil, MAY cause a crisis in confidence, and since currency is valued by the confidence in it, such a crisis would lead to hyperinflation.

[ronpfloyd]

I am not an economist but I think you are mis-characterizing the Hyperinflation position. Historically hyperinflation is caused by printing money because historically money stood for something real: silver or gold. Today what gives value to money? When they switched off of gold I think their remained the illusion that money=something (i.e. the gold in Ft. Knox), but today money is valued by fiat.

So where does the value come from?

[drshlotzkin]

@whoo689

Soooo... you still are a libertarian? You just explained what libertarians think about the economy...

[whoo689]

The truth is, a COMBINATION of left- and right-wing policies will make the economy run most smoothly. The idea, inherent among most members of ALL three major ideologies (left, right and libertarian), that they have ALL THE ANSWERS on economics, is flat-out nonsense. No one ideology has a monopoly on "the solutions for growth and prosperity."

[whoo689]

For example, Mankiw supports a carbon tax, which is a "no-no" in conservative circles. He identifies or is said to be a "New Keynesian", not so much as a neoclassical, much less an Austrian.

[whoo689]

All relevant polls and surveys of ECONOMISTS on all the major claims that are oftentimes made (such as, "rent control is a bad idea") show that ECONOMISTS ARE SPLIT on most economic issues, except for free trade. It seems that the vast majority of them DO support free trade, interestingly. Economists are more center-right on some economic questions and center-left on others. Even Gregory Mankiw, the conservative Romney-supporting Bush economic advisor, is kind of left-wing on SOME economics.