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; and my intrest in this was to dig up a thread that is almost a year old and to ask ...

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Old Feb 18, 2010, 5:00pm   #393
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

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
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Old Feb 18, 2010, 8:00pm   #394
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

Quote:
Originally Posted by Ingot54 View Post
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.
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Old Feb 18, 2010, 8:35pm   #395
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

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

Quote:
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.
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Old Feb 18, 2010, 11:53pm   #396
 
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Re: almost a year

Quote:
Originally Posted by N Rothschild View Post
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.
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Old Feb 19, 2010, 12:03am   #397
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

Quote:
Originally Posted by Benton D Struckcheon View Post
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.
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Old Feb 19, 2010, 12:36am   #398
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

Quote:
Originally Posted by Benton D Struckcheon View Post
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??
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Old Feb 19, 2010, 12:57am   #399
 
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Re: Could the Weimar Hyperinflation Happen Again in America?

Quote:
Originally Posted by Benton D Struckcheon View Post
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.
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