Could the Weimar Hyperinflation Happen Again in America?

[Atilla]

hey if you dont want me to bash the telegraph, dont post links to it to back up your claims lol

Question is dear NR - I post many links not one. Why have you singled out the Telegraph and not the others?

Similarly with Ingot? You seem to have picked on the Telegraph with him too despite his 5 other links.

What is your fascination with the Telegraph?

 

[N Rothschild]

intresting question.. i think its mainly because when i think of the telegraph it conjures up a certain stereotypical image and made me laugh when i used to think of you on the train every morning to work catching up on the world economy and ive sorta stuck with it!

 

[N Rothschild]

also i would say the telegraph is quite a good paper for economics and markets etc..how ever i regard anything in the printed press as complete rubbish and totally misleading...lets remember that 99% of joe public couldn't trade there way out of a paper bag based on there profound economic knowledge and if something is in the paper or in joe publics mind..its probably best to go the other way. there for i regard anyone who actually reads such drivel as a complete morn and prolly cant trade for ****

 

[Atilla]

intresting question.. i think its mainly because when i think of the telegraph it conjures up a certain stereotypical image and made me laugh when i used to think of you on the train every morning to work catching up on the world economy and ive sorta stuck with it!

Oohhh. A serious reply. I think subconciously you despise the Telegraph for personal reasons. If you go to a psychiatrist they can put you into a hypno trans and extract your reasons.


In return here is an honest reply.


I used to read the Economist but now have contempt for it as it is written by eye brow raising bodies who take the same old view and approach to news. One dimensional.

I used to read the Sunday Times but news was just the same old mediocre stuff. Got bored of same old stuff - pretty much like the Economist.

I used to read the Investors Chronicle when I was a newbie but grew out of that too and moved on to Technical Analysis.

However, in all honesty I never bought the Telegraph as I always considered it to be a one sided Tory paper with no free thinking. Always trumpeting same ol capitalist free market crap - slagging off Labour policies.


I should add I read a lot mainly on the web. I never look to see who the publisher is but more simply just the article. Normally kicks off from Google. Follow the headline link. You know the rest...

 

[N Rothschild]

Oohhh. A serious reply. I think subconciously you despise the Telegraph for personal reasons. If you go to a psychiatrist they can put you into a hypno trans and extract your reasons.


In return here is an honest reply.


I used to read the Economist but now have contempt for it as it is written by eye brow raising bodies who take the same old view and approach to news. One dimensional.

I used to read the Sunday Times but news was just the same old mediocre stuff. Got bored of same old stuff - pretty much like the Economist.

I used to read the Investors Chronicle when I was a newbie but grew out of that too and moved on to Technical Analysis.

However, in all honesty I never bought the Telegraph as I always considered it to be a one sided Tory paper with no free thinking. Always trumpeting same ol capitalist free market crap - slagging off Labour policies.


I should add I read a lot mainly on the web. I never look to see who the publisher is but more simply just the article. Normally kicks off from Google. Follow the headline link. You know the rest...

well i think alot of the theory in these publications has seriously rubbed off on you and thats what im picking up on

i read one site only for journalism and thats www.zerohedge.com

 

[N Rothschild]

eye brow raising bodies who take the same old view and approach to news. One dimensional.

that is to be honest how i see yourself and most other people on this site! its all about thinking outside the box...(which most of my theory is as you know!)

 

[N Rothschild]

http://www.zerohedge.com/article/broader-rally-has-just-begun-advance-repeat-2008-deleveraging

 

[Ingot54]

well i think alot of the theory in these publications has seriously rubbed off on you and thats what im picking up on

i read one site only for journalism and thats www.zerohedge.com

Hi NR

Thanks for that link.

I think I have overdone the "honourable adversary" bit with you and BS, so I'd like to pull my ears down towards my collar a tad. I do like to get my teeth into issues, and as much as I like my point of view to be heard, I am certain both of you would also like to be heard, and taken a little bit more seriously.

NR - I know you can give as good as you get, and it doesn't bother you much. Even so - I've had enough of making ratbaggery comments, and will engage on a better level, if we can continue this discussion.

BS - to you I'd like to say that you do have some valid points, and I haven't really tried to listen to your views as much as you deserved. Sorry Bud - I hope you don't quit the thread because of some trash I poured over you.

Anyway - I would like T2W to improve and to be a place worth having a discussion about the financial future of the world. To that end, I apologise for not engaging you both in the best way.

My views are that the US is in deep, and the Bond Market's antics will reveal that in time, with dire threats to the USD Reserve status.

But I'll re-read your comments, and try to understand your views.

Hope we can get this back on track.

Cheers

Ivan

 

[Benton D Struckcheon]

Eh, it's alright. For my part, I was just cranky from having a bad week in the markets. But as I'm seriously exhausted (and still a bit cranky) right about now, I'll continue tomorrow. RIght now, it's time for a creme de cassis.

 

[Pat494]

There is one hell of a dilemma imho for political parties and politicians to cure this nation's ills. The present Govt won't admit they should have moved on the financial problem a lot lot sooner. Oh no it's always someone else's fault.

In a democracy will the majority vote for the party who proposes sensible measures even if they are a bit harsh. I think probably not, especially if your average politician is filling his own bank account with public money etc.

They will make the appropiate noises and do too little too late. A recipe for future disaster on a problem that should never have happened and would never have happened if they were competent.

 

[N Rothschild]

it would have happened, financial instability is garuntueed with a fiat currency

 

[Pat494]

Another point worth considering is the attitude of Americans in high places to the financial crisis.
They mostly couldn't give a stuff about the millions suffering the loss of their jobs, homes etc. and are getting huge rewards again, so soon and the crisis is not even over yet.
Get caught stealing $100 of goods from the corner store and the offender is in trouble but waste billions and the only punishment is a few hard words and on with the game by the untouchables !! They are too big to fail and they know it. Fair is a dirty word in the States. They are the authors of their own and our troubles and noone is able to even smack their wrists !

 

[montmorencyt2w]

I'm glad to see some peace and harmony break out, and let me apologise for any ratbaggy comments I may have made in the past. We all have bad days/weeks/...

Actually there is a hell of a lot to be said on both sides. I can see that in the short term, deflation is a more serious risk than inflation, but actually, either could happen, and both may even happen. OK, maybe not hyperinflation, not for a good long while anyway. Either way, we are in big trouble.

Slightly veering off there was a good article in Guardian the other day about the "rate tarts" who ended up putting all their money (or a lot of other people's) in Icelandic banks.

They got bailed out, and it is the taxpayer who got the bill. (The UK and Dutch taxpayers for the moment, and maybe eventually the Icelandic ones, depending on how things go).

http://www.guardian.co.uk/commentisfree/2010/feb/18/icelanders-right-furious-wrong-blame


(I also like some of the articles in zerohedge; sometimes the comments below are the best bits though ).

 

[Atilla]

I'm glad to see some peace and harmony break out, and let me apologise for any ratbaggy comments I may have made in the past. We all have bad days/weeks/...

Actually there is a hell of a lot to be said on both sides. I can see that in the short term, deflation is a more serious risk than inflation, but actually, either could happen, and both may even happen. OK, maybe not hyperinflation, not for a good long while anyway. Either way, we are in big trouble.

Slightly veering off there was a good article in Guardian the other day about the "rate tarts" who ended up putting all their money (or a lot of other people's) in Icelandic banks.

They got bailed out, and it is the taxpayer who got the bill. (The UK and Dutch taxpayers for the moment, and maybe eventually the Icelandic ones, depending on how things go).

http://www.guardian.co.uk/commentisfree/2010/feb/18/icelanders-right-furious-wrong-blame


(I also like some of the articles in zerohedge; sometimes the comments below are the best bits though ).

I'm surprised people are still referring to deflation...

The figures don't support deflation even though we are still in recession (ignoring technical recession or not).

Inflationary pressures in the economy is brewing and interest rises are inevitable in the absence of taxation. These are facts and can not be escaped. Rate rises required to;

1. To ease off on inflationary pressures &
2. To support government bond sales to make returns remotely attractive and more importantly to compensate for risk of PIGS tittering, ready to fall off a cliff edge.

Also, the rise in dollar is purely due to some minor hot capital flows. Nothing of substance has changed in the economy. Moreover, countries like the UK are trying to talk their currencies down - trying to give an edge to exports. When interest rates also rise in Europe and the UK the dollar will fall again further compounding internal inflationary pressures.

Eitherway all that money is feeding into the markets with no significant increase in output.

Stagflation is a distinct possibility too.

 

[N Rothschild]

be interested to know what these inflationary pressures are considering the record contraction in money supply and consumer credit? and the cpi... (talking usa here)

also along as the is demand for dollars in the world it will keep inflation at bay...(and yes there will always be demand for dollars)

 

[N Rothschild]

http://www.zerohedge.com/article/its-supposed-work-dammit-further-adventures-keynesian-theory

easier for me to post links as im sure you have all noticed im not the most articulate of people when it comes to getting my point across!

 

[Atilla]

http://www.zerohedge.com/article/its-supposed-work-dammit-further-adventures-keynesian-theory

easier for me to post links as im sure you have all noticed im not the most articulate of people when it comes to getting my point across!

I've read the article and it looks at the surface without digging.

In contrast you have to ask your self why did the Fed raise rates if prices are falling?

How does one reconcile rising interest rates with falling inflation?


Bond markets are jittery and investors have reasons to be nervous.

The decision last week by the U.S. Federal Reserve Board to raise the discount rate - the interest it charges on the emergency loans it makes to banks - suggests the days of easy money marked by the Fed's zero-interest rate policy are numbered.

The Fed raised the discount rate by one-quarter of a percentage point, to 0.75 per cent.

While that signals another step in the return of financial markets to a more normal state, given the weak economy it will likely be some time before the Fed begins to raise its key federal funds rate. That is the rate that helps to hold short-term interest rates down in order to stimulate economic growth.

And it is that policy that has bond investors antsy. The worry is that the continuing low interest rate and loose monetary policies of the Fed will fuel inflation.

So far, inflation pressures as measured by the consumer price index have been relatively tame, if rising gasoline and food prices are excluded. The U.S. core consumer price index (excluding food and energy) on a year-over-year basis was 1.6 per cent in January, compared with 1.8 per cent in December.

However, overall the annual inflation rate is 2.6 per cent, reflecting higher gasoline prices and the beginning of higher food prices resulting from the impact of the Florida freeze on fruit and vegetables, according to BMO Nesbitt Burns Inc.

Bond investors are being torn between the safety of holding U.S. Treasuries and the risk of seeing their savings eroded by inflation. Recent action in the bond markets illustrates the forces at work.



It is all very well bragging about inflation rates but the Government is the culprit in devising so many to suit their own purpose - inlcude housing, include fuel, exclude heating - what next...

Headline grabbing news for the masses is what they are interested in. Don't be one of the herd would be my advice.



Once again how does one reconcile rising interest rates with falling inflation? Are we to understand rate rises are merely to encourage the purchase of bonds to alleviate buyers fears about buying government debt?

 

[N Rothschild]

but the fed havnt really risen rates..they raised the discount rate... not the same thing

and yes i believe the fed would raise rates purely to support the bond market..i dont tihnk many people can arguee agasint any hike in rates would kill any chance of recovery. it would pull even more money from the system which is not good

from the article you posted "given the weak economy it will likely be some time before the Fed begins to raise its key federal funds rate. That is the rate that helps to hold short-term interest rates down in order to stimulate economic growth. "

 

[Pat494]

.




Once again how does one reconcile rising interest rates with falling inflation? Are we to understand rate rises are merely to encourage the purchase of bonds to alleviate buyers fears about buying government debt?

Retired people are really taking the sharp end of the hit, in that their savings are not paying much in the way of interest. There is a big grey vote and the pollies know it.

Plus everyone surmises that most of the top pollies are buddies of the bankers etc. They may not get that invite to a nice warm island somewhere if they don't play ball !!

Dont let them sell you the idea that they are doing it for " the people ". They are filling their own boots as usual !!

 

[N Rothschild]

i suggest you all read this. http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf so you know how money really works.

When you consider that all money is debt, the interest to be paid on this debt does not actually exist. The amount of money in the money supply will always be less than the total debt+interest. The only way this interest can be paid, is the by constant creation of new debt(credit) in order to service the already existing debt. (like someone withdrawing cash from there credit card in order to pay the same credit card). The other way is through bankruptcy.

When the money supply and amount of debt gets to much, the system crashes (credit crunch) and causes a recession. When the system crashes, it means no new debt is being taken on by the economy in order to service the existing debt. Hence contraction in GDP and consumer credit as money is leached from the money supply in order to service the interest on all the debt in the system (remember there is not enough money without the creation of more debt to pay this interest)

When the system crashes like this, the fed steps in and lowers the federal funds rate meaning money is cheap to borrow in order to stimulate the process of creating new credit to prop up the system. the system NEEDS this money so it doesn't completely implode. The level of money being pumped into the economy which many refer to as printing the money etc (which is a joke as all debt in the system is created out of thin air which you will know if you have any clue about the fractional reserve banking system, see the link) by the fed is a TINY amount of money compared to the levels of money created normally within the system. This is quantitative easing, the attempt to stop the system from exploding..proving emergency funds to keep the cycle going. The idea that the fed's efforts could cause hyperinflation is laughable as its entire purpose is to try (and fail) at stopping a massive bone crushing deflationary cycle. Which is actually unavoidable in the banking system UNLESS the cycle of credit creation continues.

How ever this cycle is not continuing. This recession wasn't just the housing market bubble bursting. it was the fiat currency cycle bubble bursting. (see many of George soros books) It was the end of the super cycle. Banks are not lending, people are not borrowing..this is indisputable. Banks are hording cash and not lending all the toxic **** derivatives they are hiding on there books. People are no longer borrowing, they borrowed to much..and have perhaps learnt there lesson (for now, will be soon forgotten) the record contraction in consumer credit shows this nicely.

"Consumer credit decreased at an annual rate of 4-3/4 percent in the fourth quarter of 2009. Revolving credit decreased at an annual rate
of 13 percent, and nonrevolving credit was unchanged on net." Fed

http://www.federalreserve.gov/releases/g19/Current/ (pretty easy to see for yourself what has happend in consumer credit since the recession) And dont remember a huge part of the economy is the consumer..but the consumer has no money as it isnt borrowing any? hmm interesting.

So banks arnt lending, people arnt borrowing it anyway. So what does that mean? It means no new credit, no new credit to pay the interest on the outstanding debt in the system..while the fed desperately tries to make the titanic water tight with some duck tape.

This means that the longer the cycle is broken, the more and more money is leached from the system as world de-leverages from this orgry of debt. (DEFLATION). Deflation is a dirty word in economics, hence few people talk about it. Banking, governments, economists LOVE inflation. but its all a lie. It is just not possible while the cycle is broken. You will struggle to find this sort of explanation and theory in your newspapers as it goes agasint the "machine" and is the true nightmare scenario that people don't want to admit to. "deny till you die"

I seriously suggest reading the pdf along with this post.

I hope this helps some people who have been struggling to understand. If anyone comes back and says what i have written is wrong and we are about to see hyperinflation. You are an idiot.