Why PMs are an important investment in the current economic enviornment
derryb
Posts: 36,795 ✭✭✭✭✭
Inflation is not a prerequisite for hyperinflation. Most people see hyperinflation as not possible because they don't see inflation happening any time soon. However, an econonmy can and will go strait from deflation to hyperinflation. Here's the scary reason why:
". . . hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.
Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency. "
How hyperinflation will happen
Edited to add:
Part II just released
". . . hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.
Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency. "
How hyperinflation will happen
Edited to add:
Part II just released
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Indeed, 99% of the populous would equate hyperinflation to "inflation on steroids" and literally impossible to occur without lower to medium levels of inflation occuring first.
roadrunner
Knowledge is the enemy of fear
<< <i>Can economies go straight from hyperinflation to deflation? >>
Who knows...but according to the author "the smart money prepares for what it believes is going to happen next."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey