Hyperinflation Expert Says US Has Reached Tipping Point

[SevenEyedJeff]

Economist Peter Bernholz is an expert on the subject of national hyperinflations. He has studied all the major cases of hyperinflation since 1980. His conclusion: The tipping point occurs when a government’s deficit exceeds 40% of its expenditures.

Guess what? The U.S. will hit the 40% mark in 2009:

http://seekingalpha.com/article/166596-has-the-u-s-reached-the-hyperinflation-tipping-point

 

[ArchPaul]

I'm sure we've blown by it. It's ALWAYS "worse than expected", we just have to wait for the
tape to peal off the box before it explodes....

 

[Grgeiger]

I'm surprised it didn't happen 5 years ago if you ask me. I think a Global recession sort of delayed it. But now we are basically the only country left in recession.. Everyone else is starting to prosper again but we are the sleeping dog.

 

[denison]

^ this.

 

[sevin]

How does he define "hyperinflation"? There's a big difference between 10% a month and 100% a month.

The other thing that makes it confusing is the fact that the dollar is the reserve currency. If not for that, it would have happened already. How far does the world have to shift away from the dollar before hyperinflation (however that's defined) really takes hold?

One thing's for sure, we are living in very historic times. Some crazy shit never seen before is going to happen over the next few years. I hope we're all here to tell our grandkids about it.

 

[Zippyjuan]

The term "hyperinflation" gets missused a lot by people who do not really understand what it means. Or they use it on purpose to exaggerate to try to make a point- validly or invalidly. Wiki uses a definition of "exceeding 50% a month" http://en.wikipedia.org/wiki/Hyperinflation
Higher inflation than we are used to is not hyperinflation. 25% a year, though high, would not be considered hyperinflation unless it continued to spiral up from there. In hyperinflation not just prices shoot up but the rate of inflation continually increases as well.

 

[hugolp]

How does he define "hyperinflation"? There's a big difference between 10% a month and 100% a month.

The other thing that makes it confusing is the fact that the dollar is the reserve currency. If not for that, it would have happened already. How far does the world have to shift away from the dollar before hyperinflation (however that's defined) really takes hold?

One thing's for sure, we are living in very historic times. Some crazy shit never seen before is going to happen over the next few years. I hope we're all here to tell our grandkids about it.

Precisely. The fact that the dollar is the world reserve currency makes hiper-inflation more posible. If the world holds the dollar and accepts the devaluation without complaining or doing anything, then the USA goverment gets to print a lot because it dilutes the dollar arround the whole world, not only in the USA.

BUT, if foreigns get tired and start dropping the dollar, then the shit hits the fan a lot quicker, since all the dollar come back home and they will triple M0. Yes, x3. Can you imagine what that will do combined with what the govt. is alredy printing and what it will have to print to finance itself in that situation?

The most likely scenario is that the dollars come back home slowly, but even in that case, the USA economy is used to import a lot of shit, and since the dollar looses value and foreigns banks start to reject to hold it like they have done until now, all the dollar printed will come back directly to the USA. And the USA needs to print to sustain its economy...

And the world really seems to be going serious and for first time not only talking about dropping the dollar, but actually taking actions in that direction.