There has been a lot of chatter lately about how the US economy is in the tanks, the stock market will never recover, one of the biggest world superpowers is closing down for business, and the freest nation in the world will have no currency of any value. Isn’t the First Amendment great?
Sadly though this chatter is what the confused masses have to deal with. As an objective consumer, you get it from both sides. On the one hand you’ve got the folks telling you that everything will be okay, the economy is great, jobs are coming back, and do you want fries with that? At the same time you’ve got these Chicken Little’s running around beneath a falling sky which was alleged to have already fallen so many times before.
In truth there is no way to know what the future will bring. Still, I’d like to believe that this is America and we shall overcome all obstacles set in our path. We The People are a free and strong willed people who will band together to overcome any challenges we face.
But what about inflation? Inflation is the prices of goods and services rising and the relative value of currency falling. What about that? If you couldn’t buy the same things you could before; if your money were suddenly worth less, wouldn’t that be a problem? Of course it would; this is why the Central Banks keep inflation (and deflation) in check.
Still there must be times when inflation gets totally out of control right? When inflation gets out of control by rising too fast. This is called hyperinflation. You may have heard this term bandied about on any of the chat room discussion boards. Hyperinflation means exactly that; when rapid or out of control inflation gets the best of the economy. Says Investopedia “There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that any concept of inflation is meaningless.” So we’re not there yet, you can still go buy a loaf of bread for a couple of bucks.
Hyperinflation tends to occur when there is an economic depression and “a large increase in the money supply (which is) not supported by gross domestic product growth.” So if a nation isn’t making anything or producing anything but they keep printing money, then there is no underlying economy to support that currencies value. So the prices of things will rise due to the increased sellers risk premium.
Hyperinflation has occurred to nations before. Germany between January 1922 and November 1923. Socyberty.com helps us understand the German hyperinflation situation. Hyperinflation took hold in Germany following World War I. In very broad terms there was political deadlock and Germany had many reparations payments that the Allies made the Germans pay. The German economy couldn’t function, people couldn’t work, nothing was done, and Adolf Hitler was the result. In very broad terms.
Of course, call him what you will, Barack Obama is not a Nazi. He may have differing political ideologies than you but he’s not a Nazi. He was freely elected and he can be freely removed from office. So while some may hem and haw, there is nothing to do but galvanize you around a legitimate candidate and get him or her elected in Obama’s stead.
In the meanwhile, if you hear any naysayers going on about hyperinflation, it doesn’t look like We The People are there just yet. Unless you believe that we are already there. In that case, you had better hit the high road, presently.