How do you substantiate that position?
$100,000 Gold, Bill Holter
- Thread starter jroly
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How do you substantiate that position?
Exactly. We’re not war torn and our economies have the capacity to meet consumer demand.
He doesn't, he's just talking out of his rear end like Stoic, and then they have cheek to accuse me of not substantiating my position.
See the post above.
But how does that substantiate your position? That's merely an observation and a belief glad-wrapped with assumptions.
Can a currency hyperinflate? Yes! So what makes the above mentioned currencies impervious to hyperinflation?
I did substantiate my position, I just didn't want to be drawn into the lengthy explanation, particularly as the pro-hyperinflation crowd don't like economics.
Currencies can't just hyper inflate. Certain pre-requisites need to exist in order for that to happen. The most important of which is that a country can't meet the needs of its people, so prices for goods rise rapidly and out-of control. No matter how bad our economic situation becomes, we have the capacity to meet domestic consumer need (X-boxes and Teslas aside).
Mugabe trashed the economy of Zimbabwe and its social fabric:
That's a 48% decline in 17 years.
A 73% decline over 7 years.
And most importantly:
From 1990 until 2016, annual wheat production fell from 300 000 tonnes to about 20 000.
https://news.sky.com/story/how-zimbabwes-economy-has-collapsed-under-mugabe-11127628
I would argue that currency values are eventually determined by the market. At the end of the day It's a system of faith, and that faith appears to be eroding.
I can't see how currency creation without increased production/taxation could result in anything less than high levels of inflation, assuming the newly created currency (or a decent portion of it) makes its way into the real economy. I think we're seeing that in real-estate price inflation in Australia today and I believe we'll eventually see a significant increase in prices of everyday goods sooner than later.
I don't see runaway inflation happening too soon, but I think it's coming as an inevitability by design of the system. I think the position you hold that there's a near 0% chance of hyperinflation occuring is a bit optimistic for these reasons.
Exactly, which is one of the pre-requisites as to whether a currency will hyper inflate or not. Despite what goldbugs maintain there is no loss of faith in the USD or AUD. Instos and retail investors are flocking to gold and crypto to preserve their wealth rather than looking for a currency alternative. They're investing in those two assets to preserve their fiat wealth.
Firstly, the definition of hyperinflation is not runaway inflation, there are a number of boxes that need to be ticked before hyperinflation could occur and I've laid out three of them.
Yep, runaway inflation is a real threat, especially if central banks and governments don't follow sound economic policy within the framework of our fiat currency system. At the moment, inflationary pressure is generally anaemic across most consumer goods. The real problem is asset inflation which you pointed out and stagnation in wages growth. The latter can be addressed with fiscal policy designed to raise productivity.
And I can't see runaway inflation occurring until the government steps in to make up the shortfall in the real economy with $billions of spending on infrastructure and other areas which are experiencing a growing gap between consumer demand and the willingness of the private sector to meet that demand.
Asset inflation is a threat to social stability. The systematic stripping of wealth from the middle class to the well off is a direct result of Central Bank monetary policy. And I would argue that it is deliberate.
Not now, but under what environment would the market begin to lose faith? I'd say a reckless expansion of the currency supply and irresponsible fiscal expenditure would be a good start.
I wasn't trying to suggest runaway inflation was hyperinflation, but runaway inflation precedes hyperinflation, and for that, I believe there is a significant risk we could see runaway inflation in the mid-term.
The government has been stepping in with billions of methadone Dollars just to fill the gap they've created from their draconian lockdown efforts. That doesn't come across to me as sound economic policy by a long shot.
I understand there's more to your point than you're prepared to invest the time to share. I don't have a major issue with what you're saying in summary, but I think your perception there's a "next to 0% Chance" is a bit off the mark. However, that's based on the assumption that you're referring to mid to long-term, as well as short term.
I've gone back and forth on this numerous times over the years. At the end of the day, I think managing a Central Bank is essentially an impossible job, in the same way that running a Socialist system so that practice matches theory is also impossible. I think that most Central Bankers delude themselves that this is not true and that they just need to refine what they see as the "science of central banking". My guess is they think to themselves no system is perfect but they are doing a good job holding it all together. It could even be that they have somewhat of a bunker mentality in this regard.
Also, there is this tendency to feel like they are beyond reproach by most people in society since few understand what they actually do and most criticism gets directed at the government. I refer to them as the modern day high priests, and the religion they espouse is that of fiat money.
Wrong, I to call you a moron for being unable to logically substantiate your position you crusty old bitch.
Don't act all butthurt at me just because you realised you could not justify your stance. Go play martyr somewhere else.
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Yep, they think they are holding it together. But in the end they are just looking after themselves and their mates.
There are a host of well-informed vocal critics of monetarism from all schools of economic theory but our central bankers choose to ignore what these guys are doing or actively dispute what these guys are saying. They deliberately discount the alternative policies and theories available. Now if a doctor did that, he'd be out on his arse. If a doctor committed malpractice, he could also face jail time.
I generally think hyperinflation is unlikely for similar reasons already mentioned. However, I would never say never because things can change faster than anyone expects. Sometimes you can start going down a road thinking you can pull back before things get too out of hand but events get away from you. I think it's a dangerous time now that conventional monetary policy is pretty much exhausted.
In saying that, the more likely outcome seems to me to be a high-inflation/stagflation type of environment. There's a substantial amount of debt that needs to be got rid of, without going into a deflationary spiral. How else can it be done other than inflation? I don't think it's likely to be a good time for society. I see the amount of unrest increasing.
In saying that, the more likely outcome seems to me to be a high-inflation/stagflation type of environment. There's a substantial amount of debt that needs to be got rid of, without going into a deflationary spiral. How else can it be done other than inflation? I don't think it's likely to be a good time for society. I see the amount of unrest increasing.
We go back to one of the other two criteria mentioned originally, that the economy of a nation becomes trashed to the point that it can't meet domestic consumer demand eg Venezuela. On its, own accommodative monetary policy is not a trigger for hyperinflation, so if the other boxes aren't ticked you won't get hyperinflation.
It's been going on longer than the lowdown, try 40 years. But essentially, economies experiencing balance sheet recessions as a result of central bank monetary policy and austere fiscal policy measures need governments to step in and make use of currently under-utilised resources.
Yeh, and that doesn't mean Jobkeeper or Jobseeker either. They're just bandaids.
What alternative policies are we talking about? When i look at what the central bankers are doing, I'm vehemently against the institution itself, or at least the idea of humans doing monetary policy, but I think they have mostly behaved logically, within what I see as an illogical system. If that makes sense. It's like they are constantly scrambling, constantly reacting and largely unable to make good decisions. When the Fed tried to normalise interest rates a few years ago the market revolted. The problem from my view was thinking that humans could properly manage a money system that had no physical constraints (eg. gold).
MMT. Within a system I am also vehemently opposed to what they argue makes the most sense. Fiscal rather than monetary policy.
Oh no, Shiney, tell me it isn't true.
Not a fan of MMT. But I do think we are going that way anyway, at least to some degree. I'm not of the opinion that it is going to work out. We'll see who's right or not.