Could the Weimar Hyperinflation Happen Again in America?

This is a discussion on Could the Weimar Hyperinflation Happen Again in America? within the Economic & Fundamental Analysis forums, part of the Methods category; thats if they scrapped the currency, you could stop fiat currency creation slowly without having to replace the actual currency..(i ...

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Old Jul 13, 2009, 5:09pm   #29
 
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thats if they scrapped the currency, you could stop fiat currency creation slowly without having to replace the actual currency..(i think) perhaps we can discuss this at our next meeting of the secret order of zion
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Old Jul 13, 2009, 6:01pm   #30
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Originally Posted by Genics View Post
for one, if such mega hyper world destorying inflation is coming, why is gold not even trading above last years highs?

imo the entire fiat monetary system is slowly failing..
are you joking or what

fiat money is expanding at a never seen rate before, whats these reckless loans, bailouts, stimulus packages.

all this money right now is with the banks when it gets to the public inflation will rise so fast your pants will fall down. gold will obviously rise with it,
this will happen most likly in 2010-11 or maybe into 2012
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Old Jul 13, 2009, 6:23pm   #31
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Throughout history currency debasement has had only one outcome. Since Nixon ended the final link to the gold standard in 1971 then inflation has really taken off. For 300 years almost until the middle of the 20th century, prices of basic goods remained stable, despite various wars, recessions etc. Inflation was followed by deflation. The US has been engaged in deficit spending for decades. They have eroded the value of their currency as a matter of govt policy. That policy carries on today, because there is no other way to repay the national debt other than to inflate it away. Deflation is not an option.
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Old Jul 13, 2009, 6:29pm   #32
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Originally Posted by WallStreetHero View Post
all this money right now is with the banks when it gets to the public inflation will rise so fast your pants will fall down.
In order for the money to get to the public, as you say, it needs to be borrowed. That means demand for lending and the willingness of banks to make the loans. The public is too busy paying down debt to go out and borrow and the banks have tightened lending standards. We"re not going to get a ramp up in bank money any time soon, and that's what's needed to induce inflation.

My concern is more with a long period of stagnation because of the debt overhanging everything. In order for the gov't to pay down that debt it's either going to have to print money (I don't think they're that stupid) or it's going to have to run a surplus. If it's running a surplus that means more tax income than fiscal spending, which means a net drain of reserves out of the system, reducing the monetary base.
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Old Jul 13, 2009, 6:36pm   #33
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Originally Posted by poborsky View Post
Throughout history currency debasement has had only one outcome. Since Nixon ended the final link to the gold standard in 1971 then inflation has really taken off. For 300 years almost until the middle of the 20th century, prices of basic goods remained stable, despite various wars, recessions etc. Inflation was followed by deflation.
You're looking at the destination without considering the path. It was those high inflation, sharp deflation cycles that caused so much economic upheaval.

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The US has been engaged in deficit spending for decades. They have eroded the value of their currency as a matter of govt policy. That policy carries on today, because there is no other way to repay the national debt other than to inflate it away. Deflation is not an option.
Won't necessarily disagree with that. But don't think the US is alone in this boat. The ECB has a 2% inflation target. Not zero. They want inflation.

The question, though, is whether persistent relatively low inflation is better or worse than the extreme inflation/deflation cycles seen prior.
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Old Jul 13, 2009, 6:49pm   #34
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You're looking at the destination without considering the path. It was those high inflation, sharp deflation cycles that caused so much economic upheaval.
No, the path was relatively smooth compared to what is happening now.


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Originally Posted by Rhody Trader View Post
Won't necessarily disagree with that. But don't think the US is alone in this boat. The ECB has a 2% inflation target. Not zero. They want inflation.
When the US went off the gold standard, by default so did the rest of the world.
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Old Jul 13, 2009, 8:08pm   #35
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No, the path was relatively smooth compared to what is happening now.
Look again. The volatility of inflation/deflation was much greater pre 1950 than post.

Here's a 1914 to present chart.
File:US Historical Inflation.svg - Wikipedia, the free encyclopedia

And here's one back to 1774
US Inflation: Annual Percent Change (1774-2007) Visualizing Economics

A good book on the subject of historical inflation is The Great Wave.
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