(Hyper)inflation or Deflation - which is the greater monster we face? (March 09)

Includes excerpt interview with Hugh Hendry. Here is a link to the full video....
http://www.youtube.com/watch?v=Ts2Wi8jxHTk&feature=channel_page

Is hyperinflation the inevitable outcome of central banks' obsession with throwing money at the global crisis? Or does the effect of such actions depend upon the scale of the currency in question.

Is the massive deleveraging and deflationary spiral we are now experiencing, too great to be overwhelmed in the short term, even by the billions being pumped out by the central banks? The Fed.... pushing on a string?
http://online.barrons.com/article/SB120215442443341833.html?mod=googlenews_ba...

Will the U.S. go the way of Zimbabwe?
http://inflationdata.com/inflation/Inflation_Articles/Zimbabwe_Inflation.asp

Well, if hyperinflation is an inevitable outcome of monetization and money 'printing', then why has Japan not experienced inflation since they began such policies a couple of decades ago?

Please see my video on Japan and inflation.....
http://www.youtube.com/watch?v=SrJZRBf_Y5s&feature=channel_page

Chart of Japanese stock market (extended ouch!)
http://finance.yahoo.com/q/ta?s=^N225&t=my&l=on&z=m&q=l&p=&a=&c=

...also "Where does the money go when prices collapse?"...
http://www.youtube.com/watch?v=cVaNI_gHK0I&feature=channel_page

Whatever the outcome... still buy gold (producers)?
http://finance.yahoo.com/q/ta?t=1y&s=AUY&l=on&z=l&q=l&c=k...

Category:

Education

Tags:

• hyperinflation
• inflation
• U.S.
• zimbabwe
• deflation
• commodities
• gold
• stocks
• economy
• hendry
• goldbug
• currency
• dollar

[largo2001]

The video confuses Deflation and Asset Price Deflation.

Also, governments under a fiat system can ALWAYS create inflation at will. Always.

[flaskofcoffee]

Hi largo.

Focus naturally lands on the central banks' role as 'printer'... but money supply's greatest influence is credit and leverage - that is why 'pushing on a string' is a relevant analogy.

Leverage exaggerated asset prices, and the deleveraging is killing asset prices. As the assets are based on credit, not sound money, the destruction of asset prices destroys the money supply too... making dollars more valuable IN THE SHORT TERM.

Govt can always inflate EVENTUALLY, I agree,

[largo2001]

In the case of the US, they do not even have to print... (although they do). Why?

Since they have the reserve currency value, they simply have to "convince" the foreign Central Banks to spend their dollars....

And voila: USD inflation!

[flaskofcoffee]

Hi largo - that is an excellent point.

In fact, one might say that we are seeing it already as China redirect dollars into buying commodities resulting in oil running up 40% in 3 months, for example.

[MarcusCMarcellus]

Don't forget that Japan, both prior to their recession and during the "lost generation," had massive personal savings, whereas the US has a negative savings rate. The Japanese genuinely needed to encourage spending, whereas the US could benefit from savings and a consequent contraction. By printing more in order to encourage spending, the Fed is adding fuel to the very problem it claims to be addressing. Besides, the brunt of stricter credit standards will fall on small biz, which is fatal.

[jamezbond78]

The likelyhood of hyperinflation seems very likely because of the world losing faith in the dollar and what growth? If China dumps dollar and cuts off the credit, then prices will go up. Although the fact that raising interest rates now will be painful and probably cause us to default on the debt. It almost seems like the U.S. economy is in a checkmate situation where regardless of inflation or deflation, the economy will collapse either way.

[bearcat648]

This video was accurate at the time it was made, and maybe that was its only intent. However, for the long-term, it did not even consider the dollar losing world reserve currency status. That would quickly lead to inevitable hyperinflation here.

[theeastwatch]

I disagree 100% with this video.

As for JAPAN - 1) The world economy was not in collapse while most of their QE was implemented so its very different and 2) JAPAN is NOW in trouble, their QE over much of the last decade HASN'T WORKED.

HYPERINFLATION does not work off of the same fundamentals as INFLATION.

HYPERINFLATION is a loss of faith in the currency.

(I will sub this channel)

-TEW

[ostralopithicus]

Except, the BRIC countries are moving away from the US$ as the reserve currency, which inevitably means they'll start dumping the US dollar and buying up whatever they can with them, and . . .dun da da daaa, hyperinflation.

[billp4]

I wonder if "recovery" is even in the plan.

[billp4]

@flaskofcoffee I heard the prediction house = 1oz of gold. I thought it was incredible when I heard it but now I am wondering. I suppose in places like Detroit this has already happened but I am assuming the predictor was thinking LIVABLE house.

[mkc1979]

The US dollar will not be the worlds reserve currency after the next 10 years...this is the problem. /watch?v=kFi1KlUh5PI

[mintoo2cool]

i m a total amateur so this might sound pretty silly ... what would happen if suppose the world bank or IMF or UNCTAD says that dollar is no longer the global currency? wont that result in suddenly all nations sending off their dollars they stored back to US? and wont that lead to a massive inflation(if not hyper inflation?)

[mintoo2cool]

i have a doubt ... you said that there are literally hundreds of trillions of dollars circulating around the world right? because dollar is the global reserve currency ... now what would happen suppose if UNCTAD or IMF or worldbank decides that dollar is no longer the reserve currency ... what would happen to all the hundreds of trillions of dollars that so many nations have stored up. and that are in circulation?