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U.S. Hyperinflation Watch
Topic Started: 23 Oct 2009, 10:42 AM (324 Views)
Ryan
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Hyperinflation Watch
Free Gold Money Report
October 21, 2009 – Evidence continues to emerge that the US dollar is headed for hyperinflation. For example, consider why US stock markets are rising.

The Dow Jones Industrials, S&P 500 and other indices are not rising because the economy has started growing. That won’t happen until employment stops falling, and there are no signs that employment will turn around anytime soon. Nor are the stock markets rising because the financial crisis of the past two years has ended. Banks failures are happening almost weekly in the US, with nearly 100 failures so far this year. A large Dutch bank collapsed last weekend, indicating that there are insolvent banks outside the US as well.

It is important to note that one of the early warning signs of hyperinflation is a rising stock market. The stock market rises because too much money is being created. That condition is now being repeated in the US, as explained by the following chart (I’m not sure who the source of this chart is, so I do not identify who to credit):

Posted Image

The above chart illustrates the close correlation between the price of the S&P 500 and the Federal Reserve’s program of “quantitative easing”, which is a euphemism for creating dollars out of thin air. Note from the above chart how the stock market stopped falling in March almost to the exact day that quantitative easing began. Then follow the rise in the S&P 500 along with the quantity of US government paper purchased by the Federal Reserve.

At its last meeting of the FOMC, the Federal Reserve indicated that its quantitative easing program would continue to March 31, 2010. The substance would change slightly because after October 31 it will be buying agency paper rather than Treasuries. But that change doesn’t matter. The Fed is still creating money out of thin air, and it can be argued that this new program is even worse. Because agencies are not direct obligations of the federal government, agencies by definition are of lesser quality than Treasuries. So with this revised quantitative easing program, the Fed is also lowering the quality of the assets on its balance sheet.

Quantitative easing is a pernicious and harmful policy. The US government and the Federal Reserve are pursuing policies that are sending the US dollar in the wrong direction. The US dollar remains on the road to the fiat currency graveyard.

Source

Another interesting correlation to add to the evidence that the U.S. is under a high risk of hyperinflation.
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Benthamus
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Well with the US's interest rates so low they should be able to combat it more effectivly.
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Ryan
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Benthamus
25 Oct 2009, 05:43 PM
Well with the US's interest rates so low they should be able to combat it more effectivly.
It's the low interest rates that CAUSED this problem of cheap credit and will CREATE hyperinflation by simply running the printing press. What we need is to jack up interest rates real high and real fast if we ever want to save the USD.

The Central Bank of Australia was the first major economy to raise its interest rates, and the Australian Dollar appreciated as a result.
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Benthamus
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The Reserve Bank of Australia did increase interest rates and if the news here is anything to go by they will probably increase it more. Then again we were in a good position that at the start of the GFC our interest rates were at about 6% thus allowing us some maneouverability to lower them to stimulate the economy.

In regards to the appreciating Australian dollar it is both a blessing and a curse. A blessing for the imports, but for the agricultural sector it is a bit of a curse as consumers move to cheaper markets.

Furthermore if you pushed up interest rates real high and real fast it could possibly do more harm by stagnating an economy that is near recession. This could potentially cause more harm than good.
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Ryan
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Benthamus
25 Oct 2009, 07:49 PM
The Reserve Bank of Australia did increase interest rates and if the news here is anything to go by they will probably increase it more. Then again we were in a good position that at the start of the GFC our interest rates were at about 6% thus allowing us some maneouverability to lower them to stimulate the economy.

In regards to the appreciating Australian dollar it is both a blessing and a curse. A blessing for the imports, but for the agricultural sector it is a bit of a curse as consumers move to cheaper markets.

Furthermore if you pushed up interest rates real high and real fast it could possibly do more harm by stagnating an economy that is near recession. This could potentially cause more harm than good.
All of that is true.

There is going to be short term pain no matter what. It's simply a result of the economic boom from the asset bubble (mostly in subprime mortgages). The recession and economic stagnation that will result will reset the economy back to health. The only thing is if the governments and CBs of the world keep interest rates low and release "stimulus packages" into the economies - we will have long term recession instead of a quick recession. We need to hurt for a while to get stronger - but they won't let us hurt, so we're going to enter a depression unless they cut their losses.
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Benthamus
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That's where I believe Britian is heading. Their government debt is growing very large, and the bureaucracy is stifling private enterprise thus allowing no recovery.

Australia seems pretty good but then again we had just come out of 11 years of Liberal/National party rule which focused heavily on budget surplus and ensuring the economy was in good health.
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Maxwell Wilder
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fuck that, end money

GIFT ECONOMY

(im drunk so ill come up with a defensive argument tomorrow whenever that is)
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Benthamus
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We need money, or some form of medium (such as gold), to serve as a currency in our advancded economy. Perhaps if you are living in some sort of commune perhaps a gift economy would work but we are in the industrialised world and things would be much more complicated if it were not for a medium of exchange.
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Maxwell Wilder
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Why?
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Ryan
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Money's most basic function is a medium of exchange.

Without money, it's bartering - which requires a double coincidence of wants (if you want butter and I want bread, I had better find some butter if I'm not a dairy farmer). Money alleviates that need by having a medium that everyone is willing to hold and exchange for other goods.

In a gift economy, there is also no incentive to trade or be anything other than complete isolated autarky except for those few good Samaritans.
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