The dollar may already have been nuked, the new dollar is the "Amero"
Hal Turner muestra el Amero
I'm not sure how factual this is, but it certanly fits the pattern of a planned hyperinflation followed by a new currency. Hal Turner portrays this as a "New World Order" conspiracy to create the North American Union. I'm skeptical, but hey, whatever works, you know? Also, notice that this video was posted prior to the bailout mania.
My question: If this is true, how long with the "Amero" last before it's worthless? What will back the Amero, or will it just be another debt-backed security like the dollar? The hyperinflation cycle is often repeated two or three times before settling down.
UPDATE:
Hooookay, never mind. Hal Turner has gone a bit around the bend.
Hal Turner Show
Right or wrong, advocating violent revenge in a public forum is just dumb.
Revolution may be justified, but I don’t think we’re there yet. And any revolt must be based on supporting and defending the Constitution, not on vengeance. I hope most people remember that: Stand by the Constitution!
And the Amero is probably not quite real:
Amero Coin Con
Tuesday, November 25, 2008
Monday, November 24, 2008
The latest score: $7.7 Trillion
Well, that sure ballooned quickly:
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit
The initial relief package was $700 billion, and that was on October 3rd. Nobody was really surprised that it went over a trillion shortly after that. But this is amazing, not even 2 months later and we're talking ten times as much.
Fortunately gas prices have dropped, which will provide a little relief for the moment. But all of this cash is dispersing into the system right now, and in the next few billing cycles we'll see prices rising, so hang on.
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit
The initial relief package was $700 billion, and that was on October 3rd. Nobody was really surprised that it went over a trillion shortly after that. But this is amazing, not even 2 months later and we're talking ten times as much.
Fortunately gas prices have dropped, which will provide a little relief for the moment. But all of this cash is dispersing into the system right now, and in the next few billing cycles we'll see prices rising, so hang on.
Friday, November 21, 2008
Hat in hand
We beg for money:
US seeks 300 billion dlrs from Gulf states
If they lend us the money, it just pushes the problem farther back. There is also the little matter of what the Gulf states may want from us in return.
If they won't lend us the money, that would be a major blow to our standing as a reliable borrower. When the world loses confidence in the US and stops buying our treasury securities, we can resort to the button!
US seeks 300 billion dlrs from Gulf states
If they lend us the money, it just pushes the problem farther back. There is also the little matter of what the Gulf states may want from us in return.
If they won't lend us the money, that would be a major blow to our standing as a reliable borrower. When the world loses confidence in the US and stops buying our treasury securities, we can resort to the button!
Sunday, November 16, 2008
Obama and Hyperinflation
There is nothing complicated about this. Barack Obama wants to increase government spending in a major way to fund his various programs. To do this, he wants to increase taxes. Sounds reasonable on the surface. Problem is, raising taxes reduces GDP. The economy shrinks, and overall tax revenue is reduced. But the increased government spending remains. How will he pay for all this?
Like anyone who spends more than they take in, Obama will have to borrow money to pay for all these new or expanded programs. The government borrows money by selling treasury securities. People, firms, and governments around the world buy US Treasury securities because they consider the US to be a trustworthy borrower.
Now, what happens if people around the world start losing trust in the United States' ability to pay back it's debts?
A company or individual that cannot borrow will simply have to suck it up and do without. A government, on the other hand, has another option: If you don't have enough money and you can't borrow more, just print what you need!
So with a Democrat President and Democrat-controlled Congress, with a shrinking economy and reduced tax revenue, and with reduced ability to borrow, what will prevent them from ordering up a trillion new dollars? Or five trillion?
Or is this already happening?
Like anyone who spends more than they take in, Obama will have to borrow money to pay for all these new or expanded programs. The government borrows money by selling treasury securities. People, firms, and governments around the world buy US Treasury securities because they consider the US to be a trustworthy borrower.
Now, what happens if people around the world start losing trust in the United States' ability to pay back it's debts?
A company or individual that cannot borrow will simply have to suck it up and do without. A government, on the other hand, has another option: If you don't have enough money and you can't borrow more, just print what you need!
So with a Democrat President and Democrat-controlled Congress, with a shrinking economy and reduced tax revenue, and with reduced ability to borrow, what will prevent them from ordering up a trillion new dollars? Or five trillion?
Or is this already happening?
Friday, September 19, 2008
Bailout Mania: We Are Cleared for Takeoff!
Suddenly, the media is tossing the word "Trillion" around a lot. This may be the start of the ramp-up:
Wall St. Bailout Could Cost Taxpayers as Much as $1 Trillion
Paulson plan could cost $1 trillion
Analysis: Washington's Trillion Dollar Wall Street Bailout
If this is indeed the ramp-up phase, we appear to be right on schedule for the short-duration hyperinflation scenario, which would actually be the best of a set of bad options.
I often wonder how much this was all planned out ahead of time.
Wall St. Bailout Could Cost Taxpayers as Much as $1 Trillion
Paulson plan could cost $1 trillion
Analysis: Washington's Trillion Dollar Wall Street Bailout
If this is indeed the ramp-up phase, we appear to be right on schedule for the short-duration hyperinflation scenario, which would actually be the best of a set of bad options.
I often wonder how much this was all planned out ahead of time.
Wednesday, June 25, 2008
Hyperinflation Scenarios
I'm projecting three possible scenarios for hyperinflation, based on reading the different historical accounts.
1. Short Duration: This is the soonest that hyperinflation could realistically hit.
2. Middle Duration: The "average" time scale scenario
3. Long Duration: Hyperinflation that is years away, but still based on current conditions.
This is not any kind of statistical analysis, just a range of values for planning purposes:
I wrote this in March, so taking these numbers and laying them out on the calendar, here's my predictions with March 2008 as a starting point:
See previous post for more explanation. Mileage may vary. Feedback is welcome.
Sources:
http://en.wikipedia.org/wiki/Hyperinflation
http://www.sjsu.edu/faculty/watkins/hyper.htm
1. Short Duration: This is the soonest that hyperinflation could realistically hit.
2. Middle Duration: The "average" time scale scenario
3. Long Duration: Hyperinflation that is years away, but still based on current conditions.
This is not any kind of statistical analysis, just a range of values for planning purposes:
DURATION ESTIMATE
PHASE SHORT MID LONG
Slow climb: 6mo 1y 2y
Ramp-up: 2mo 6mo 1y
Crazy: 1mo 2mo 5mo
Dollar Nuked: 1 day 1 day 1 day
Recovery 6mo 1y 2y
I wrote this in March, so taking these numbers and laying them out on the calendar, here's my predictions with March 2008 as a starting point:
SHORT-DURATION SCENARIO:
Slow climb: (already happening)
Ramp up: Sep 2008
Crazy: Nov 2008
Dollar Nuked: Dec 2008
Recovery: Dec 2009 - May 2010
MEDIUM-DURATION SCENARIO:
Slow climb: (already happening)
Ramp up: Mar 2009
Crazy: Sep 2009
Dollar Nuked: Nov 2009
Recovery: Nov 2009-Nov 2010
LONG-DURATION SCENARIO:
Slow climb: (already happening)
Ramp up: Mar 2010
Crazy: Mar 2011
Dollar Nuked: Aug 2011
Recovery: Aug 2011 - Aug 2013
See previous post for more explanation. Mileage may vary. Feedback is welcome.
Sources:
http://en.wikipedia.org/wiki/Hyperinflation
http://www.sjsu.edu/faculty/watkins/hyper.htm
Wednesday, May 7, 2008
Discerning the Pattern
Hyperinflation has happened before, quite a few times. For that matter it's happening in Zimbabwe right now. Given that this is not a unique phenomenon, we should be able to learn from past data.
Looking at the historical record, there does seem to be a pattern to hyperinflation:
1. Slow Climb: 6 months to 2 years
2. Ramp-Up: 2 months to 1 year
3. Crazy: 1 month to a year
4. Currency Nuked: 1 day
5. Recovery: 6 months to years
In more detail:
1. Slow Climb: This is arguably "normal" inflation, but with a noticable upturn. By itself it doesn't guarantee hyperinflation, as inflation typically fluctuates anyway, but I have not found a case of hyperinflation that started with deflation. So an uptick in "normal" inflation may be a red flag that something bigger is on the way. Approximate time scale is 6 months to 2 years.
2. Ramp-up: This is the transition from "normal" inflation to something unusual. In this phase, the majority of people start changing their spending patterns due to inflation. It starts significantly affecting economic behavior. Approximate time scale is 2 months to 1 year.
3. Crazy: Full-fledged hyperinflation is truly crazy. This is the Weimar Republic, wheelbarrow full of money to buy a loaf of bread phase. There is no mistaking this one. The primary economic effort will be getting rid of your cash as fast as possible. Got money in your bank account? Wrong! Get rid of it now! Buy stuff as soon as you get paid, otherwise your paycheck is worthless by next week. Better hope your employer starts making COLA increases for each paycheck. This could last perhaps 1 month to a year.
4. Currency Nuked: Inevitably, hyperinflation is halted by revaluing the currency. There is no time scale to this, you just wake up one morning and bam! The Central Bank (The Fed in our case) puts the hammer down and says "The value of the currency is now [whatever]." It's that [whatever] that is critical. Often they will simply issue new currency at, say, 1000 times the value of the previous currency, and call it "New!". The "New Peso", the "Rentenmark", the "New Dollar", whatever. This is not a revaluation, it's just shifting the decimal point and it doesn't solve the underlying problem. Argentina tried this several times. The key to nuking the currency is to tie it down to something of real value. In the Weimar Germany, with typical German efficiency, the currency was revalued only once by tying it to a mortgage on all the land in Germany.
5. Recovery: Nuking the currency doesn't necessarily solve everything. There will be instabilities and hyperinflation could even start over again. Or you can get a recession. In the end, the solution is always for the government to maintain a sound, stable, and sustainable monetary policy while the economy sorts itself out. Recovery can happen fairly quickly (6 months), or could go on for years.
At this point, I'm not sure if we're in phase 1 or 2. Feedback is welcome.
Sources:
http://en.wikipedia.org/wiki/Hyperinflation
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999-2002)
http://www.sjsu.edu/faculty/watkins/hyper.htm
Looking at the historical record, there does seem to be a pattern to hyperinflation:
1. Slow Climb: 6 months to 2 years
2. Ramp-Up: 2 months to 1 year
3. Crazy: 1 month to a year
4. Currency Nuked: 1 day
5. Recovery: 6 months to years
In more detail:
1. Slow Climb: This is arguably "normal" inflation, but with a noticable upturn. By itself it doesn't guarantee hyperinflation, as inflation typically fluctuates anyway, but I have not found a case of hyperinflation that started with deflation. So an uptick in "normal" inflation may be a red flag that something bigger is on the way. Approximate time scale is 6 months to 2 years.
2. Ramp-up: This is the transition from "normal" inflation to something unusual. In this phase, the majority of people start changing their spending patterns due to inflation. It starts significantly affecting economic behavior. Approximate time scale is 2 months to 1 year.
3. Crazy: Full-fledged hyperinflation is truly crazy. This is the Weimar Republic, wheelbarrow full of money to buy a loaf of bread phase. There is no mistaking this one. The primary economic effort will be getting rid of your cash as fast as possible. Got money in your bank account? Wrong! Get rid of it now! Buy stuff as soon as you get paid, otherwise your paycheck is worthless by next week. Better hope your employer starts making COLA increases for each paycheck. This could last perhaps 1 month to a year.
4. Currency Nuked: Inevitably, hyperinflation is halted by revaluing the currency. There is no time scale to this, you just wake up one morning and bam! The Central Bank (The Fed in our case) puts the hammer down and says "The value of the currency is now [whatever]." It's that [whatever] that is critical. Often they will simply issue new currency at, say, 1000 times the value of the previous currency, and call it "New!". The "New Peso", the "Rentenmark", the "New Dollar", whatever. This is not a revaluation, it's just shifting the decimal point and it doesn't solve the underlying problem. Argentina tried this several times. The key to nuking the currency is to tie it down to something of real value. In the Weimar Germany, with typical German efficiency, the currency was revalued only once by tying it to a mortgage on all the land in Germany.
5. Recovery: Nuking the currency doesn't necessarily solve everything. There will be instabilities and hyperinflation could even start over again. Or you can get a recession. In the end, the solution is always for the government to maintain a sound, stable, and sustainable monetary policy while the economy sorts itself out. Recovery can happen fairly quickly (6 months), or could go on for years.
At this point, I'm not sure if we're in phase 1 or 2. Feedback is welcome.
Sources:
http://en.wikipedia.org/wiki/Hyperinflation
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999-2002)
http://www.sjsu.edu/faculty/watkins/hyper.htm
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