Could the Weimar Hyperinflation Happen Again in America?

[N Rothschild]

Thank you for pointing that out I am aware. May I counter by stating that if you look carefully on your keyboard you will find a CAPS LOCKS key or if your are reasonably coordinated a shift key that will allow you to use capital letters for names of countries like America and the UK.

Lack of observation and effort leaves a lot to be desired from the the same old Genics with chip on his shoulder - who lacks typing skills and comprehension...

However, I'm sure that is the last of your problems considering your grammer with one sentence attention defecit disorder...


Read the thread from the beginning and see how many references there are to the UK. Then tell me when you woke up to the fact this thread is only about the US??? :whistling


As for that matter - US and UK economies facing same old issues; budget & BoP defecits, massive government debt - two countries at war with aging popullation and impending health crises.


How is your homework come along?

lol, nit picking on grammar and spelling...that all you got?

also if you use the shift key + letter it is actually a quicker way of getting a capital then putting the capslock on, then off again.

 

[Atilla]

In the Thirties, the dollar was deliberately devalued by 40%, a partial default by anyone's standard, and there was deflation anyway. Not mutually exclusive. It all depends on the economic context.

Yes very true... But as the US imports more than it exports today with a negative BoP, situ is considerably different. 40% deval will imply considerable increase in import goods inflation.

Moreover, as oil is priced in dollars (at present) - there is likely to be a spike in the the cost of oil to rest of world further hitting prices.

I'm not sure the dollar could sustain such a devaluation as it did before. I always think there is two sides to this story.

China v US - two sides of the same dollar coin. Mutual interests but will they be able to work things out.

Either way we are on the cusp of a new era and old economic rules no longer apply when it comes to dollar or oil anymore imo.

 

[Benton D Struckcheon]

Yes very true... But as the US imports more than it exports today with a negative BoP, situ is considerably different. 40% deval will imply considerable increase in import goods inflation.

Moreover, as oil is priced in dollars (at present) - there is likely to be a spike in the the cost of oil to rest of world further hitting prices.

I'm not sure the dollar could sustain such a devaluation as it did before. I always think there is two sides to this story.

China v US - two sides of the same dollar coin. Mutual interests but will they be able to work things out.

Either way we are on the cusp of a new era and old economic rules no longer apply when it comes to dollar or oil anymore imo.

In this era of floating exchange rates, we do 40% on a normal basis: check this historical graph of the dollar against all other major currencies. From the Plaza Accord to its bottom in 87 or 88, the dollar dropped more than 40%. There was no increase in inflation, and certainly no hyperinflation. The current account deficit was as much a problem then as it is now, as was the fiscal deficit.
What folks don't get about the US is that it really is a mostly self-contained economy, even if we have those big trade and current account deficits. We import because we choose to; if we wanted, or if circumstances became truly dire and we had to, we could use Wisconsin's coal to run our power plants, for instance, or build enough wind turbines in the northern Plains to do the same, if we wanted to go green. Or we could build nuclear power plants 'til we glowed at night just from the leaked radiation, because we've got plenty of uranium we could use for that purpose too.
Also, if we felt like it, we could import all our oil from Canada's tar sands, and leave the Middle East to twist in the wind. It would be more expensive, but if the political situation demanded it, it would be worth it.
The US has choices other countries can only dream of, especially when it comes to resources. In reality, we trade with the rest of the world because we find it cheaper to do so. But if it were necessary to cut out a trading partner or two because of politics or economics, well, most US citizens would barely notice a difference in their daily lives.
This is a reality China knows can bite them at any time. They're not stupid.

 

[Atilla]

In this era of floating exchange rates, we do 40% on a normal basis: check this historical graph of the dollar against all other major currencies. From the Plaza Accord to its bottom in 87 or 88, the dollar dropped more than 40%. There was no increase in inflation, and certainly no hyperinflation. The current account deficit was as much a problem then as it is now, as was the fiscal deficit.
What folks don't get about the US is that it really is a mostly self-contained economy, even if we have those big trade and current account deficits. We import because we choose to; if we wanted, or if circumstances became truly dire and we had to, we could use Wisconsin's coal to run our power plants, for instance, or build enough wind turbines in the northern Plains to do the same, if we wanted to go green. Or we could build nuclear power plants 'til we glowed at night just from the leaked radiation, because we've got plenty of uranium we could use for that purpose too.
Also, if we felt like it, we could import all our oil from Canada's tar sands, and leave the Middle East to twist in the wind. It would be more expensive, but if the political situation demanded it, it would be worth it.
The US has choices other countries can only dream of, especially when it comes to resources. In reality, we trade with the rest of the world because we find it cheaper to do so. But if it were necessary to cut out a trading partner or two because of politics or economics, well, most US citizens would barely notice a difference in their daily lives.
This is a reality China knows can bite them at any time. They're not stupid.

Interesting points and there are always options for all countries. Here are my views on cause and effect with respect to inflation/deflation.

Back in Raegonomics period the whole global economy was coming out of the horrible 70s stagflation period with the post oil shock of 74 when the ME countries realised they had power via oil price ie. OPEC... Demand for oil thus rose in 80s allong with global economy and demand for dollars used to pay for oil.

That 40% drop corresponds to drop in cost of oil coupled with another down turn in economic activity. I wouldn't call this a normal basis though. I feel you are grossly underplaying fluctuations of this level.

That whole premise takes on a completely different perspective when you consider Saddam rejected dollars and demanded Euros for oil. Likewise with Iran. There is now talk of Euro/Dollar standard. Thus rise and fall not so much the traditional excess money over production but due to Global trade and cost of oil - give or take some wars.

I still hold the view that a 40% drop in the value of dollar again would have severe repurcussions to the US and dollar standard today. I'm not sure other countries including Europe would participate standing on the sidelines continuing to support the dollar. Neither Russia or China pose a military threat any longer. Or even an ideological one at that. In fact I would go as far as to say Europe already has a policy of stepping in with the Euro but that is just my opinion at the mo.

As for China holding all those dollars - they are not stupid indeed - like Japan or perhaps even more so they would end up owning the US at half the price. Like the UK (eg: Cadbury, Mini, Rover etc etc), many of US treasured industries could be bought up by foreign companies.

Finally, I would also add that the earnings ability of the big US companies in Cisco, Intel & Microsoft and Boeing, Lockheed, AT&T etc etc are less than they were 3 decades ago as there now is considerable more competition. In the absence of some new technology or industry - same old input leads to pretty much same output.

US has to consider if in the last 20 / 30 years a BoP defecit was run up and what will change in a more competitive world to reverse that position. I'm afraid looking inwards and closing out international trade will mean US becomes further isolated and a much reduced power.

So far Obama is doing well in restoring US image and reputation. This will ultimately be good for the dollar. But it is a long road and competition is likely to get much tougher in the future.

 

[Ingot54]

In this era of floating exchange rates, we do 40% on a normal basis: check this historical graph of the dollar against all other major currencies. From the Plaza Accord to its bottom in 87 or 88, the dollar dropped more than 40%. There was no increase in inflation, and certainly no hyperinflation. The current account deficit was as much a problem then as it is now, as was the fiscal deficit.

Umm. Sorry guys. I think you will find that in 1987-88 the USA current account deficit was much more manageable than it is today. 22 years ago there was an opportunity to reverse the consumerism mentality that has the USA in its grip. The mentality that says it has the right to consume if it wants to, and go into debt if it wants to.

Today, the wasteful USA is about to pay the piper - the Day of Reckoning is at hand. The current account deficit is so bad today that China has slowed their purchase of US Bonds and T-Bills, so much so that Japan is now the leading creditor nation to the USA.

The big problem the USA has, is the imminent collapse of the Bond market. The best they can hope for is a controlled deflation of the Bond Bubble, rather than a loud "pop!" The rest of the world who think it is prudent to set aside savings, are getting sick and tired of funding the excesses of the wasteful USA. The world is growing tired of exposing their economies to the risk of loaning their savings to the USA. when the USA is showing absolutely NO restraint at all.

They continue to rack up Big Government, instead of prudently downsizing a tad under these difficult times. They continue to escalate spending on wars that they have no need to fight, and which they stirred-up to begin with. If they spent one tenth of their war budget on goodwill gifts to the countries they are at war with, the goodwill that followed would ensure they would NEVER be any need for war.

There is a price to pay, and the USA will pay that price for their consuming ways. They do NOT have a God-given right to own what the rest of the world owns, or to take from those who do not have the means to defend what little they have.

What folks don't get about the US is that it really is a mostly self-contained economy, even if we have those big trade and current account deficits.

This is the cracker of them all - it (the US)really is a mostly self-contained economy!

Rubbish!

The past 40 years have been spent exporting the jobs of millions of Americans, and their manufacturing base with them, to the sweat-labour shops and slave-labor factories of Asia. If I am wrong, why is it that the USA can't even produce an ironed shirt? If you look, nothing is made in the good ole USA any more - all imported from good ole China, because it is cheaper.

Culprit - money once again. In pursuit of cheaper goods, the American consumer has bypassed their own industries which slowly went belly-up. Now they are FORCED - like it or not, to get their consumerables from China and the rest of Asia, because there are NO manufacturers left in the USA - too expensive - can't compete. Oh yes - but the CEO's got their bonuses for increasing the bottom line of the importing companies.

How will the USA recover when they have no production or manufacturing, and can't compete with Asia?

We import because we choose to; if we wanted, or if circumstances became truly dire and we had to, we could use Wisconsin's coal to run our power plants, for instance, or build enough wind turbines in the northern Plains to do the same, if we wanted to go green. Or we could build nuclear power plants 'til we glowed at night just from the leaked radiation, because we've got plenty of uranium we could use for that purpose too.

No - the USA imports because they have consumer demand ... end of story.

And this: "if circumstances became truly dire and we had to" ... what a laugh BS - and what would alert you to "circumstances becoming truly dire"? What would you call a collapsing Bond Market Bubble?? If your "could" do something about it. why aren't you already doing it?? Because the Democracy Model in the USA is well-and-truly-fecked!

Washington is so Partisan today, they can't even agree on what day of the week it is. The Republicans are so bitter about losing the elections, that they still think they have the right to govern, even after Bush over-saw the beginning of the bail-out problem that should never have happened, but for which his admin was responsible for regulating. And for bailing out their buddies in the Wall Street dens and lairs, the US Taxpayer has been put on the nail.

So the Republicans find fault with everything Obama wants to do - right or wrong - they don't want to give him a go, even though they themselves were a failed administration.

It's the laughing stock of the world right now, and even Moodies warned that the USA is in danger of losing its AAA Credit Rating.

http://www.telegraph.co.uk/finance/economics/7153180/US-credit-rating-at-risk-Moodys-warns.html

Also, if we felt like it, we could import all our oil from Canada's tar sands, and leave the Middle East to twist in the wind. It would be more expensive, but if the political situation demanded it, it would be worth it.
The US has choices other countries can only dream of, especially when it comes to resources. In reality, we trade with the rest of the world because we find it cheaper to do so. But if it were necessary to cut out a trading partner or two because of politics or economics, well, most US citizens would barely notice a difference in their daily lives.
This is a reality China knows can bite them at any time. They're not stupid.

Never heard so much tripe in my entire 60 years!!!

Do you even know at what price oil would need to be, in order for the extraction of the Tar Sands Project to be at break-even? Of course you don't - otherwise you would not have said that. And who do you think could afford to use that oil at that price?

And waffling about some "political situation" than "would demand it" referring to a cessation of purchase of ME Oil ... what are you on - mushrooms??

Look - oil has just now begun to take off again - USD$77/bbl 12 hrs ago, and what do you think will happen to inflation and indeed to employment, if oil even gets back to USA$100/bbl, let alone the USA$146 we had in mid-2008.

Your statement that the "USA has choices that other countries can only dream of" shows you truly are right out of your depth. And what are those choices, in an imminent Bond Market collapse?? What will you do when your Bond Market Auctions fail?? When no one wants your debt any longer, how will you finance your Big Government ... like Russia did, with I.O.U.'s?? Devalue the dollar further??

The only way out then is for the Treasury to create more Bonds, and for the Fed Res to purchase them - Quantitive Easing - or the true printing of money from nothing but paper. You see the recent $150 jump in the price of Gold? That was in response to the amount of money the Fed created through QE. When you see the price of Gold begin to rise this week, and go even higher, you will know the Treasury failed to sell Bonds overseas, and the Fed purchased them instead.

They have to. The USA needs money to run itself, and if no one wants to buy Bonds, then they have to buy them from themselves ... and that brings us to a little problem ... inflation.

So we confront the "if circumstances became truly dire and we had to" situation you seem to think is far off in some airy-fairy land in the future, I think you will find it is actually quite imminent.

I think it is well past the opportunity time the USA had to deal with their problem.

I think collapse is imminent, and will be spectacular, and will usher in a period of hyper-inflation and then a Greater Depression. We are actually in a Depression right now, if you look at the Shadow Stats, and are not fooled by the BLS rubbery figures.

http://www.shadowstats.com/

Anyway BS - I really expect much of this to have gone right over your head - you are too much caught up in your own huffed-up ability to cope with whatever, and can not see your true and real vulnerability.

Here's a scary little table for you to read before you go to bed ... sobering isn't it?
Please note the decline in Bond purchases by China.

Weimar again? ... oh yes indeedy!

 

[maiden22]

Couldn't really get the gist of what you're saying there Ingot.

Don't hold back now - tell us what you really think .

(Agree with much of what you say - the US is facing a serious problem. Like most great empires, I expect this one will expire through suicide rather than murder).

 

[N Rothschild]

Umm. Sorry guys. I think you will find that in 1987-88 the USA current account deficit was much more manageable than it is today. 22 years ago there was an opportunity to reverse the consumerism mentality that has the USA in its grip. The mentality that says it has the right to consume if it wants to, and go into debt if it wants to.

Today, the wasteful USA is about to pay the piper - the Day of Reckoning is at hand. The current account deficit is so bad today that China has slowed their purchase of US Bonds and T-Bills, so much so that Japan is now the leading creditor nation to the USA.

The big problem the USA has, is the imminent collapse of the Bond market. The best they can hope for is a controlled deflation of the Bond Bubble, rather than a loud "pop!" The rest of the world who think it is prudent to set aside savings, are getting sick and tired of funding the excesses of the wasteful USA. The world is growing tired of exposing their economies to the risk of loaning their savings to the USA. when the USA is showing absolutely NO restraint at all.

They continue to rack up Big Government, instead of prudently downsizing a tad under these difficult times. They continue to escalate spending on wars that they have no need to fight, and which they stirred-up to begin with. If they spent one tenth of their war budget on goodwill gifts to the countries they are at war with, the goodwill that followed would ensure they would NEVER be any need for war.

There is a price to pay, and the USA will pay that price for their consuming ways. They do NOT have a God-given right to own what the rest of the world owns, or to take from those who do not have the means to defend what little they have.



This is the cracker of them all - it (the US)really is a mostly self-contained economy!

Rubbish!

The past 40 years have been spent exporting the jobs of millions of Americans, and their manufacturing base with them, to the sweat-labour shops and slave-labor factories of Asia. If I am wrong, why is it that the USA can't even produce an ironed shirt? If you look, nothing is made in the good ole USA any more - all imported from good ole China, because it is cheaper.

Culprit - money once again. In pursuit of cheaper goods, the American consumer has bypassed their own industries which slowly went belly-up. Now they are FORCED - like it or not, to get their consumerables from China and the rest of Asia, because there are NO manufacturers left in the USA - too expensive - can't compete. Oh yes - but the CEO's got their bonuses for increasing the bottom line of the importing companies.

How will the USA recover when they have no production or manufacturing, and can't compete with Asia?



No - the USA imports because they have consumer demand ... end of story.

And this: "if circumstances became truly dire and we had to" ... what a laugh BS - and what would alert you to "circumstances becoming truly dire"? What would you call a collapsing Bond Market Bubble?? If your "could" do something about it. why aren't you already doing it?? Because the Democracy Model in the USA is well-and-truly-fecked!

Washington is so Partisan today, they can't even agree on what day of the week it is. The Republicans are so bitter about losing the elections, that they still think they have the right to govern, even after Bush over-saw the beginning of the bail-out problem that should never have happened, but for which his admin was responsible for regulating. And for bailing out their buddies in the Wall Street dens and lairs, the US Taxpayer has been put on the nail.

So the Republicans find fault with everything Obama wants to do - right or wrong - they don't want to give him a go, even though they themselves were a failed administration.

It's the laughing stock of the world right now, and even Moodies warned that the USA is in danger of losing its AAA Credit Rating.

http://www.telegraph.co.uk/finance/economics/7153180/US-credit-rating-at-risk-Moodys-warns.html



Never heard so much tripe in my entire 60 years!!!

Do you even know at what price oil would need to be, in order for the extraction of the Tar Sands Project to be at break-even? Of course you don't - otherwise you would not have said that. And who do you think could afford to use that oil at that price?

And waffling about some "political situation" than "would demand it" referring to a cessation of purchase of ME Oil ... what are you on - mushrooms??

Look - oil has just now begun to take off again - USD$77/bbl 12 hrs ago, and what do you think will happen to inflation and indeed to employment, if oil even gets back to USA$100/bbl, let alone the USA$146 we had in mid-2008.

Your statement that the "USA has choices that other countries can only dream of" shows you truly are right out of your depth. And what are those choices, in an imminent Bond Market collapse?? What will you do when your Bond Market Auctions fail?? When no one wants your debt any longer, how will you finance your Big Government ... like Russia did, with I.O.U.'s?? Devalue the dollar further??

The only way out then is for the Treasury to create more Bonds, and for the Fed Res to purchase them - Quantitive Easing - or the true printing of money from nothing but paper. You see the recent $150 jump in the price of Gold? That was in response to the amount of money the Fed created through QE. When you see the price of Gold begin to rise this week, and go even higher, you will know the Treasury failed to sell Bonds overseas, and the Fed purchased them instead.

They have to. The USA needs money to run itself, and if no one wants to buy Bonds, then they have to buy them from themselves ... and that brings us to a little problem ... inflation.

So we confront the "if circumstances became truly dire and we had to" situation you seem to think is far off in some airy-fairy land in the future, I think you will find it is actually quite imminent.

I think it is well past the opportunity time the USA had to deal with their problem.

I think collapse is imminent, and will be spectacular, and will usher in a period of hyper-inflation and then a Greater Depression. We are actually in a Depression right now, if you look at the Shadow Stats, and are not fooled by the BLS rubbery figures.

http://www.shadowstats.com/

Anyway BS - I really expect much of this to have gone right over your head - you are too much caught up in your own huffed-up ability to cope with whatever, and can not see your true and real vulnerability.

Here's a scary little table for you to read before you go to bed ... sobering isn't it?
Please note the decline in Bond purchases by China.

Weimar again? ... oh yes indeedy!

this entire post is drivel. another classic post of someone who spends to much time reading the telegraph and the economist and who doesnt actually know how money really works.

lol just noticed u actually linked the telegraph in ur post, says it all. and moodys will downgrade the usa when hell freezes over..and maybe not even then!

 

[Benton D Struckcheon]

Umm. Sorry guys. I think you will find that in 1987-88 the USA current account deficit was much more manageable than it is today. 22 years ago there was an opportunity to reverse the consumerism mentality that has the USA in its grip. The mentality that says it has the right to consume if it wants to, and go into debt if it wants to.

Today, the wasteful USA is about to pay the piper - the Day of Reckoning is at hand. The current account deficit is so bad today that China has slowed their purchase of US Bonds and T-Bills, so much so that Japan is now the leading creditor nation to the USA.


<<<<Yadda yadda yadda...blah blah blah...>>>>


Here's a scary little table for you to read before you go to bed ... sobering isn't it?
Please note the decline in Bond purchases by China.

Weimar again? ... oh yes indeedy!

In 1971, Nixon ended the dollar's last link to gold. The Seventies weren't pretty, partially because of this.
When it was all said and done, the US left the Arabs, the ogre of the Seventies, and the Japanese, the ogre of the Eighties, in the dust.
This cycle will see a similar sequence of events.
What made your post completely irrelevant and mistaken by the way, is that little part about the US losing its manufacturing base. That statement, which is made over and over and over by doomsayers about the US such as yourself, is a clear marker of someone too lazy to actually investigate reality.
Consumer goods are the smallest part of any truly advanced economy. Most transactions, and certainly the largest ones by value and, far more important, by value added, happen business-to-business.
That's the only hint I'll give you. For the rest, you'll have to actually do some independent thinking and reading.

 

[Benton D Struckcheon]

Interesting points and there are always options for all countries. Here are my views on cause and effect with respect to inflation/deflation.

Back in Raegonomics period the whole global economy was coming out of the horrible 70s stagflation period with the post oil shock of 74 when the ME countries realised they had power via oil price ie. OPEC... Demand for oil thus rose in 80s allong with global economy and demand for dollars used to pay for oil.

That 40% drop corresponds to drop in cost of oil coupled with another down turn in economic activity. I wouldn't call this a normal basis though. I feel you are grossly underplaying fluctuations of this level.

That whole premise takes on a completely different perspective when you consider Saddam rejected dollars and demanded Euros for oil. Likewise with Iran. There is now talk of Euro/Dollar standard. Thus rise and fall not so much the traditional excess money over production but due to Global trade and cost of oil - give or take some wars.

I still hold the view that a 40% drop in the value of dollar again would have severe repurcussions to the US and dollar standard today. I'm not sure other countries including Europe would participate standing on the sidelines continuing to support the dollar. Neither Russia or China pose a military threat any longer. Or even an ideological one at that. In fact I would go as far as to say Europe already has a policy of stepping in with the Euro but that is just my opinion at the mo.

As for China holding all those dollars - they are not stupid indeed - like Japan or perhaps even more so they would end up owning the US at half the price. Like the UK (eg: Cadbury, Mini, Rover etc etc), many of US treasured industries could be bought up by foreign companies.

Finally, I would also add that the earnings ability of the big US companies in Cisco, Intel & Microsoft and Boeing, Lockheed, AT&T etc etc are less than they were 3 decades ago as there now is considerable more competition. In the absence of some new technology or industry - same old input leads to pretty much same output.

US has to consider if in the last 20 / 30 years a BoP defecit was run up and what will change in a more competitive world to reverse that position. I'm afraid looking inwards and closing out international trade will mean US becomes further isolated and a much reduced power.

So far Obama is doing well in restoring US image and reputation. This will ultimately be good for the dollar. But it is a long road and competition is likely to get much tougher in the future.

The short answer to whether the same old input leads to pretty much the same output is here: Starting a business ranking

To be at the bottom of this list is better. Almost all of the countries at the bottom are the UK, the US, and present or former colonies of both. Over the long term, what that means, guarantees, even, is that future outputs will be different and higher on the value added chain than current outputs.

 

[Ingot54]

this entire post is drivel. another classic post of someone who spends to much time reading the telegraph and the economist and who doesnt actually know how money really works.

Attacking the man and not the message is a good response when you want to boost an ego, but does nothing to advance a discussion. Of course you may not actually have anything to contribute, and that's OK - feel free to post away at random.

lol just noticed u actually linked the telegraph in ur post, says it all. and moodys will downgrade the usa when hell freezes over..and maybe not even then!

The fact that Moodies even mentioned a possible downgrade means that it has already happened - just not officially. Talk of downgrades are available via Google search, and are not new.

Would you trust the USA with your Billions? Or would you be looking to quit the Bond market right now? China is voting with their feet.

I have no interest in being right or wrong - just an observer.

What's your interest in this, Gomer?
Bored with losing?

 

[Ingot54]

What made your post completely irrelevant and mistaken by the way, is that little part about the US losing its manufacturing base. That statement, which is made over and over and over by doomsayers about the US such as yourself, is a clear marker of someone too lazy to actually investigate reality.

So, BS, can you explain (a short response will suffice) why it is that the USA sees a need to run a Foreign Account Deficit, negative Trade Balance, and negative Balance of Payments?

Why is it that Moodies have gone public with a statement that shakes the investing foundations of the world?

Why is it that the USA feels there is a need to run a Quantitative Easing policy?
http://www.reuters.com/article/idUSN1758004020100217

Why is the Fed needing to support their own Bond Auctions at all, according to the above link? (Reuters, no less)

Why is it that the USA weekly Bond Auction is having increasing difficulty clearing the 30-yr notes, with yields rising, and spreads widening?

Why are there so many foreclosures in residential dwellings in the USA?

Why is there still massive deleveraging in the US Financial markets?

Why are more US banks expected to fail in 2010 than in 2009?

Why are people like Jim Rogers avoiding investing in the US?

Why are people getting their money out of the US as fast as they possibly can? (investing in Foreign Sovereign Debt, or Gold in other Sovereignties).

I could go on, but I do expect to see a crisis in the US Dollar this year, precipitated by a collapsing Bond Market, and rising Inflation as a direct result of QE over the past 12 months. It has already begun, and anyone fooled by the recent up-tick in the USD Index, had better think carefully about how they would manage such an event. My assessment is that the USD Index has bumped up against Resistance at 80.5, and is likely to fail to continue any rally.

Gold hasn't responded as expected, but there is time ... waiting for the herd, that's all, and at such time it occurs, the Fed Res will be powerless to stop a spike in Gold and PM's. Personally I couldn't care if I am right or wrong on any of this stuff - it will be a crisis of USA making, and the USA will be the direct beneficiary and respondent to the collapse of their dollar.

Unfortunately the repercussions will be global, and that is not fair.
Expect a general back-lash against the US for their impropriety.

Consumer goods are the smallest part of any truly advanced economy. Most transactions, and certainly the largest ones by value and, far more important, by value added, happen business-to-business.
T

BS, you have once again shown your poor grasp of Basic Economy 101.

You seem to be stuck in the old model of "debt is good, more debt is better" as run by the banking system before the collapse. (Keynesian thinking)

Unfortunately, debt needs to be repaid. Bugger!

Have a look at the advancing economy of South Korea, and tell me that production does not make an economy! Try telling Seoul and of course, Beijing, that "Consumer goods are the smallest part of any truly advanced economy"

a) Who is making the goods?
b) Who is purchasing the goods?
c) Who is experiencing wealth growth?
d) Who is experiencing debt growth?

The old model where debt was seen as an asset was a false god for the usurers, and now with defaults left, right and centre, with more to come, suddenly that debt is not so popular any more. Banks are collapsing because of their false beliefs.

We are taught these days that some debt is "good" as long as it is used to purchase an appreciating asset. And the transaction remains en train until one of a few things happens:

1) The price of the asset stops appreciating, and begins to decline
2) The lender experiences a ratings shock (ie a loss of AAA credit status) or worse,
3) The lender actually files for bankruptcy.

Now that wouldn't be any problem in a truly advanced economy would it?

Do you mean by "advanced" that you borrow someone else's savings and use them to prop up a collapsing economy, and then default on the loan to the saver?

Look, this time, try to keep the petty name-calling, and defensiveness out of it. I am not interested in anyone's assessment of my mental sate, education, or financial acumen.

What I am asking for is an advancement of the idea, not a personality competition.

 

[N Rothschild]

Attacking the man and not the message is a good response when you want to boost an ego, but does nothing to advance a discussion. Of course you may not actually have anything to contribute, and that's OK - feel free to post away at random.



The fact that Moodies even mentioned a possible downgrade means that it has already happened - just not officially. Talk of downgrades are available via Google search, and are not new.

Would you trust the USA with your Billions? Or would you be looking to quit the Bond market right now? China is voting with their feet.

I have no interest in being right or wrong - just an observer.

What's your interest in this, Gomer?
Bored with losing?

you mean moodys who rated all the sub prime mbs junk as aaa yeh? yeh coz theres a company who doesnt know how to play ball when there is something in it for them...

and saying you dont know what you are talking about is hardly atacking the man...if i said u were a **** sucker, that would be attacking you

 

[N Rothschild]

and my intrest in this was to dig up a thread that is almost a year old and to ask where is this hyperinflation, that i argued agasint for almost a year vs people like you

 

[Benton D Struckcheon]

So, BS, can you explain (a short response will suffice) why it is that the USA sees a need to run a Foreign Account Deficit, negative Trade Balance, and negative Balance of Payments?

Why is it that Moodies have gone public with a statement that shakes the investing foundations of the world?

Why is it that the USA feels there is a need to run a Quantitative Easing policy?
http://www.reuters.com/article/idUSN1758004020100217

Why is the Fed needing to support their own Bond Auctions at all, according to the above link? (Reuters, no less)

Why is it that the USA weekly Bond Auction is having increasing difficulty clearing the 30-yr notes, with yields rising, and spreads widening?

Why are there so many foreclosures in residential dwellings in the USA?

Why is there still massive deleveraging in the US Financial markets?

Why are more US banks expected to fail in 2010 than in 2009?

Why are people like Jim Rogers avoiding investing in the US?

Why are people getting their money out of the US as fast as they possibly can? (investing in Foreign Sovereign Debt, or Gold in other Sovereignties).

I could go on, but I do expect to see a crisis in the US Dollar this year, precipitated by a collapsing Bond Market, and rising Inflation as a direct result of QE over the past 12 months. It has already begun, and anyone fooled by the recent up-tick in the USD Index, had better think carefully about how they would manage such an event. My assessment is that the USD Index has bumped up against Resistance at 80.5, and is likely to fail to continue any rally.

Gold hasn't responded as expected, but there is time ... waiting for the herd, that's all, and at such time it occurs, the Fed Res will be powerless to stop a spike in Gold and PM's. Personally I couldn't care if I am right or wrong on any of this stuff - it will be a crisis of USA making, and the USA will be the direct beneficiary and respondent to the collapse of their dollar.

Unfortunately the repercussions will be global, and that is not fair.
Expect a general back-lash against the US for their impropriety.



BS, you have once again shown your poor grasp of Basic Economy 101.

You seem to be stuck in the old model of "debt is good, more debt is better" as run by the banking system before the collapse. (Keynesian thinking)

Unfortunately, debt needs to be repaid. Bugger!

Have a look at the advancing economy of South Korea, and tell me that production does not make an economy! Try telling Seoul and of course, Beijing, that "Consumer goods are the smallest part of any truly advanced economy"

a) Who is making the goods?
b) Who is purchasing the goods?
c) Who is experiencing wealth growth?
d) Who is experiencing debt growth?

The old model where debt was seen as an asset was a false god for the usurers, and now with defaults left, right and centre, with more to come, suddenly that debt is not so popular any more. Banks are collapsing because of their false beliefs.

We are taught these days that some debt is "good" as long as it is used to purchase an appreciating asset. And the transaction remains en train until one of a few things happens:

1) The price of the asset stops appreciating, and begins to decline
2) The lender experiences a ratings shock (ie a loss of AAA credit status) or worse,
3) The lender actually files for bankruptcy.

Now that wouldn't be any problem in a truly advanced economy would it?

Do you mean by "advanced" that you borrow someone else's savings and use them to prop up a collapsing economy, and then default on the loan to the saver?

Look, this time, try to keep the petty name-calling, and defensiveness out of it. I am not interested in anyone's assessment of my mental sate, education, or financial acumen.

What I am asking for is an advancement of the idea, not a personality competition.

Manufacturing Value Added By Country, Most Recent

As for your very first question: the dollar is the reserve currency for the world. That's why.
That would be Foreign Exchange Basics 100, not even 101.

 

[Benton D Struckcheon]

Also, from the CIA World Factbook, exports by category, US and China:

United States: agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0%

China: electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment

Note that exports from the US are mostly made up of capital goods (49%) and industrial supplies (26.8%): business-to-business transactions. Consumer goods are a small part of what we export.
Apparently, it's a large part of what China exports as well, which is all to the good. Their gain isn't our loss. That would be Economics 100, FYI.

 

[Ingot54]

Re: almost a year

and my intrest in this was to dig up a thread that is almost a year old and to ask where is this hyperinflation, that i argued agasint for almost a year vs people like you

No, you behave like a sh1t stirrer, and you may even be one - I wouldn't say for sure, until I check your neck for circumcision scars.

A stirrer like yourself maybe, would know that Hyperinflation in the Weimar Republic took quite some time to develop ... not "almost a year" as you say, that the question was posed. So why the innocent defence? You know that it will come after the Bond Market crisis, followed by the Currency crisis ... neither have occurred yet - so what's your problem ... impatience?

You will get your hyperinflation, Gomer, but it will come like a thief while you are least ready.

Most of the respondents in this thread have answered the question : "Could the Weimar Hyperinflation Happen Again in America?" and some have been bold enough to give their opinions and a bit of back-up for their reasoning.

Not you, though Gomer. Your play is to stir sh1t at every opportunity - you get your kicks from playing mind games with people who unfortunately post with good intent.

Where I come from we call that a "dingo act" but I have never called anyone that, or used the term wrt anyone ... ever in my life - it is too low a term - it means a cowardly attack on others - usually weaker others - for the purpose of self gratification, amongst other things.

You see, Gomer, a quick Cook's Tour of your forum posts reveals the type of member we are dealing with in you, and of course you may notice that no one takes you seriously - you post for sport, not for contribution or enlightenment.

But keep posting - I am enjoying your revealing how your mind works.

 

[Ingot54]

Manufacturing Value Added By Country, Most Recent

As for your very first question: the dollar is the reserve currency for the world. That's why.

And for how long do you think the USD will be the Reserve Currency for the World, when the Bond Market is lying in a smoking ruin, and the trillions the USA owes the rest of the world, is all written off?

How long do you think the USD could retain "Reserve" status, when it has to be devalued in order to manage debt and commitments?

To be a "Reserve" currency, confidence is required in that currency. Let's see how long that confidence lasts when the Bond Markets are gone.

I think the USA could well find itself under threat of military retaliation in a few years, if it keeps going like this. Their fatal error is that they think they are "too big to fail." I can think of a few enemies the USA has - and any two of them combined would whup the backside of Uncle Sam!

We are facing a watershed here, the likes of which has never occurred before, and all you can come up with : "Nah! Can't happen! We're too strong/big/ugly/whatever."

Let's see what they do when China begins to sell some of their Bonds, like they did over the past few months, and other countries begin to follow suite. Ever heard of the snowball effect?

If you like, we can keep a running commentary on the success/failure of Bond Market Auctions, and the Quantitative Easing (the Fed purchasing the Bonds themselves, that other sovereign governments and institutions didn't want to buy). Shouldn't be hard to do a month-by-month table - then we can all see who is correct about the collapsing Bond Markets.

 

[Ingot54]

Note that exports from the US are mostly made up of capital goods (49%) and industrial supplies (26.8%): business-to-business transactions. Consumer goods are a small part of what we export.
Apparently, it's a large part of what China exports as well, which is all to the good. Their gain isn't our loss. That would be Economics 100, FYI.

BS - you make me smile mate - you really do.

You quote percentages, but fail to state percentages of WHAT!!!!!

You really don't have any idea do you.

If US exports are $20 Billion, and your percentages break up into fractions of that, then that is one thing.

But if US imports are $120 billion, then I don't care which way you want to cut and dice it, you have a Current Account Deficit of $100 billion ... clear?

You don't seem to grasp that the US needs about $3 billion each and every day JUST TO RUN ITS ECONOMY! It has to get that from somewhere - and it gets it from the BOND MARKET, because its manufacturing base has been destroyed, its production of goods for export are almost insignificant wrt the imports of mainly consumables.

The US runs on CREDIT. It can not pay its bills, so it has to continue to borrow.

Do you understand that?

But every borrower will one day be called upon to repay the loan. failure to do that creates a crisis of solvency, and some sources might call that bankruptcy.

The USA IS BANKRUPT.

Its liabilities are more than its assets. Right now, the sovereign capital the US is attracting is beginning to slow noticeably. That is what the Bond Market is there for - to give entities with surplus cash somewhere to invest it safely. When they no longer have confidence that their loan (cash/credit) is safe, they stop loaning, and they start redeeming.

Do you understand that?

Once a few entities begin to redeem their Bonds, then the whole herd rushes for the exits. They know that if they do not get their money in the first spike of redemption, then they won't get it at all.

The signs of that are:
* Countries like China slowing their purchases of Bonds, or refusing to participate in Bond sales at all.
* Widening spreads on Bonds
* Rising Yields on Bonds
* Increase in Quantitative Easing
* Increasing frequency of failure of Bond sales to clear
* Increase in the number of SHORT TERM Bonds offered for Auction
* Decrease in the number of 30-yr Bonds, or none offered at all

Do you understand that?

Rabitting on about Economics and Finance like you have a PhD, and then showing your ignorance of basic account balances!

C'est très amusant, n'est ce pas?
C'est drôle!
Mais, continue monsieur, continue.
Il vaut mieux hasarder de sauver un coupable que de condamner un innocent.

http://www.businessforum.com/debt01.html

How much is YOUR share of the debt??

 

[Atilla]

Also, from the CIA World Factbook, exports by category, US and China:



Note that exports from the US are mostly made up of capital goods (49%) and industrial supplies (26.8%): business-to-business transactions. Consumer goods are a small part of what we export.
Apparently, it's a large part of what China exports as well, which is all to the good. Their gain isn't our loss. That would be Economics 100, FYI.

Good many fundamental arguements have been put and I'm afraid I fail to understand the significance of value added or the benefits of US and UK being at the bottom of value added charts etc... The crux of the matter is both countries have budget financing issues today coupled with credibility to service debt.

Also, looking at the micro composition of exports imports mean very little as one has to look at the bottom line which is the net current account Balance of Payments. US has defecit in this area. When was the last time it had a surplus BoP?
Country Comparison :: Current account balance I was surprised to see the US right at the bottom of this list and China at the top.

There is a knee jerk response to defend the USA for some reason in all its acts and I feel as a common stance there is much talk with no credible policy for overcoming the challenges it is facing.

Just as you point out the removal of the gold standard in early seventies took a full decade + many more years to play out its impact on global economy I feel the ramifications of current policies will similarly be visible perhaps 2015-20 onwards.

Our mutual jester friend is about as dense as a plank piece of wood to expect inflation in under a year...

With respect to inflation / hyperinflation - I doubt the trillion dollars have been spent yet. No doubt they have been allocated to unaccounted secret Pentagon or NASA projects with some portion to the banks and smallest to industry. These dollars are yet to be spent with possibly some % success in project product delivery. I fail to see how the banks will repay this debt whilst they are still going under.

Similarly in the UK - on one hand they are all trying to raise capital to bolster their reserves whilst dishing out dollops of bonuses to their elite lazy do nothings. The system is so awash with money it has got to be the biggest heist of the Millenium as the mighty empire endures last spasm before giving up the ghost.

With a much reduced technology gap and no new World beating industry coupled with increasing global competition the US is facing a bleak outlook.

In general appetite for government debt is much reduced. Rates are going up and servicing debt will become much dearer in the future. Much more impending financial turmoil is due and I can't see the light out of this situation as yet.

 

[N Rothschild]

Re: almost a year

No, you behave like a sh1t stirrer, and you may even be one - I wouldn't say for sure, until I check your neck for circumcision scars.

A stirrer like yourself maybe, would know that Hyperinflation in the Weimar Republic took quite some time to develop ... not "almost a year" as you say, that the question was posed. So why the innocent defence? You know that it will come after the Bond Market crisis, followed by the Currency crisis ... neither have occurred yet - so what's your problem ... impatience?

You will get your hyperinflation, Gomer, but it will come like a thief while you are least ready.

Most of the respondents in this thread have answered the question : "Could the Weimar Hyperinflation Happen Again in America?" and some have been bold enough to give their opinions and a bit of back-up for their reasoning.

Not you, though Gomer. Your play is to stir sh1t at every opportunity - you get your kicks from playing mind games with people who unfortunately post with good intent.

Where I come from we call that a "dingo act" but I have never called anyone that, or used the term wrt anyone ... ever in my life - it is too low a term - it means a cowardly attack on others - usually weaker others - for the purpose of self gratification, amongst other things.

You see, Gomer, a quick Cook's Tour of your forum posts reveals the type of member we are dealing with in you, and of course you may notice that no one takes you seriously - you post for sport, not for contribution or enlightenment.

But keep posting - I am enjoying your revealing how your mind works.

you clearly havnt read this thread form the beginning have you? there is an abundance of posts from me providing my thesis against hyperinflation in DETAIL. the bond market colpase and currency crisis? you talk like these things are set in stone... now i remember why i stopped posting here! its full of retards! so im a gomer? what are you then, an enlightened economist who knows best? lol. the biggest thing your morons cant grasp is that America IS the world economy...so no longer reserve currency huh..what shall we use instead..the euro? how much have you lost on your pro hyperinflation dollar destructive positions? (i presume you back up your theory with some money)

and weimer germnay hyperinflation snt possible in america. and if you dont know why, you shoudlnt even be talking about weimar germany!