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Forum - Hyperinflation, is it even actually possible in the US?

Tags: hyperinflation, Federal Reserve, collapse porn [ Add Tags ]

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The Real RoxettePosted: May 20, 2011 - 09:23

There ARE more sluts in public schools. Shut up and let me explain.

Level: 8
CS Original

I live in a place where hyperinflation does exist and has happened (~1,000% in 1992 and ~1,000% again in 1995). Yet, when it comes to America, which apparently is the only economy in the world that matters (see conspiracy theorists), I get the feeling that it would be a lot harder for it to happen.

If the Federal Reserve helps create currency and its interest rates and "printing" are controlled offset from the demands of government, and that seems to be working decently now, how can there be hyperinflation?

I can't help but think that maybe there would need to be a massive devaluation of assets in America for it to happen or a massive increase in interest rates, which was at 5.25% during the economic troubles of early 2008, but dropped and avoided a much larger problem.

Furthermore, I also wonder if the Federal Reserve has existed for almost 98 years now, why there hasn't been hyperinflation? Obviously inflation has occurred, but no where near predictions by Austrians since the 1970s. My guess is that it's because unlike in shit holes like Argentina, Zimbabwe, Russia, etc, the American central bank is not under control by the government, so idiots that know nothing about economics can't destroy the economy. So why would it be a good idea to nationalize the Federal Reserve like many paleo-conservatives want?

I'd also like to know why metal backed currencies are better, even though gold, just like paper money, only has value because people say it does, not because it actually does. You can't eat gold, you can't really do anything with it (except some minor electronic-related stuff). So it's more tradition than anything, just like fiat currency.

I'd like JimJesus and anyone else that leans or believes in Austrian Economics to weigh in on this. Because even Stefan Molyneux seems to believe massive hyperinflation is imminent, and I thought he was smarter than that.

P.S. I'd like to stay on topic, I don't want this thread to derail into a bunch of bullshit about the "rights" and "freedoms" of property or anything else, because I don't think it's relevant to the questions above.

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Agent MattPosted: May 20, 2011 - 09:25

Genuine American Monster

Level: 70
CS Original

Excellent thread. My knowledge on the subject is not vast enough to weigh in, but I look forward to reading more informed posters' responses.

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JimJesusPosted: May 20, 2011 - 13:32

Bacon Pancakes! Making Bacon Pancakes, take some Bacon and I'll put it in a Pancake! Bacon Pancakes that's what it's gonna make...Bacon Pancaaaaaake!! ♪

Level: 3

I'm not a palio-convervitive, ancap, or minarchist. I come from the voluntarist camp so we have some disagreements with AE.

Is hyperinflation possible? Yes. It's also possible for Bush to write another memoir called "Sorry guys, I was just trollin'"

Hyperinflation is very alarmist, it's more likely to be over-inflation. Just a gradual devaluation of the dollar that might lead other nations to not accepting them as much. Like you said, the American Fed has differences from other central banks I think a lot of AEs keep forgetting when they look in historical examples. There's a balance and it prevents a lot of it. However they could if they all agreed it would be a good idea to hyperinflate the currency, I doubt banks being represented at the Fed would be interested in ruining the life blood of their system. The Federal Reserve has been around this long, but we were on a quasi-gold standard up until the 70s.

“I'd also like to know why metal backed currencies are better, even though gold, just like paper money, only has value because people say it does, not because it actually does. “

Humans decided gold had value together over time, paper money is dictated to have value. There's a difference, but this is where I get off the AE bus. I'm a competing commodity backed currency advocate but I do think gold is a good medium of exchange. Gold is not the end all-be all of money, and if there was competition we might find an even better medium of exchange. The reason why gold was used wasn't because an office or a government imposed it, it spontaneously emerged when other mediums of exchange failed or didn't work as well. (i.e. pressed tea leaves and bird feathers for example didn't have a good shelf life, prone to damage, nor was it stable as you could easily inflate it.) The reason why it's preferred is because it has a high value to volume ratio, it's durable, scarce, and it's sexy enough to make people universally preferred to act as a medium of exchange. Value is subjective individually, but objective in the economy as a whole.

The reason why it's preferred it's not prone to devaluation. If I wanted to save for the future, only an idiot would stock pile FRNs in their closet because they loose their value over time. So in order to save we have to become financial speculators where most of us have no place of being. Savings comes first if you want to invest in capital for entrepreneurial enterprises to produce economic growth, whereas paper money encourages consumption over savings.

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Wolf BirdPosted: May 20, 2011 - 16:52

I shoot you dead.

Level: 9
CS Original

Awesome thread.

Do you mean this Stefen Molyneux? <-- I'm not sure I'd take much of what this guy says as credible.

Anywho, your assessment seems fairly accurate, Rox. Like Matt, I don't know much economics outside basics. I think hyperinflation stuff appeals because it's intuitive, and the arguments against it seem counterintuitive. I find a good read for decent, sensible economics is Paul Krugman. He's not end-all, but when I have a question about economics, I usually turn to his blog first.

And JimJesus, good post. <-- Here's a pretty decent thread about hyperinflation and collapse porn from JREF.

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