I thought Ron Paul was predicting hyperinflation...could someone explain please?

[TheOraclePaul]

Anybody else care to explain how creating credit will lead to hyperinflation? Given the fact that if banks don't lend and people don't borrow, that all that credit creation will be meaningless? (aka the only real route to hyperinflation would be physical printing of money)

 

[GunnyFreedom]

I've always though it was to be from the influx of foreign dollar holdings after the collapse and the big international fire-sale sell-off of the dollar.

 

[walt]

One of the reasons we're probably going to have hyperinflation is because when the US dollar loses its reserve status and trillions in US reserves held overseas start to get sold off, the value of the dollar is going to fantastically plummet.

As much as I agree with this in theory, has it truly ever happened to a major countries currency?

 

[GunnyFreedom]

As much as I agree with this in theory, has it truly ever happened to a major countries currency?

Has any other currency ever been this big of a world reserve currency; and has it ever been subject to the possibility of such an international selloff?

 

[Paul.Bearer.of.Injustice]

Depression cash was backed by gold, so that's not an accurate parallel to today.
There was also a good deal of savings and the dollar was still a decent currency.
I highly doubt a fiat currency whose strength is easily manipulated will be seen as "king" in the 21st century. There are just too many liabilities attached to the USD, and there are better currency alternatives in the global market like gold/silver and the Yuan and Denar.

 

[Montpelerin]

bluemarkets made a good point:

Austrians tend to think of inflation as "inflating the money supply" but that's not really the definition of inflation. Inflation is inflation of prices. Austrians attribute the *cause* of inflation to be an increase in the supply of money. There is essentially no difference in the short term between an increase in the supply of money and an increase in the amount of available credit: prices will go up either way to match the ease and availability of funds.

This is incorrect.

"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output." - Milton Friedman (a Monetarist)

Inflation is NOT necessarily the inflation, or increase, in prices.

'Inflation' is only 'Inflation' when the price increases are a result of an increased money supply.

An mere increase in prices is referred to as an rise in the price level.

ex. The increased price in airline tickets, caused by increased fuel costs, caused by increased demand is merely a rise in the Price Level.


Hope this helps