Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Hyperinflation is a Process

Economics / HyperInflation Mar 16, 2015 - 10:25 AM GMT

By: Dr_Jeff_Lewis

Economics

Reserve currency or no, hyperinflation is a process. And we are fully entrenched in that process. History defines the parameters for us.

Too much debt, too much money created from nothing. And ultimately, the loss of confidence, leading to panic. Those who deny it are not looking, not measuring correctly, or both. Much of the confusion comes from the unnecessary use of jargon and euphemism.


Counterintuitively, confidence in the near term will drive the demand to print more. The more we eat away at what is left of the real economy, the more money will be demanded to quiet the masses and bail out the banks again and again.

The ongoing, growing liabilities and ever diminishing tax base from which to service the cost of keeping debt manageable by desperately keeping interest rates artificially low (and self immolating debt monetization) is a reality - buying and churning our own debt over and over is a temporal phenomenon.

During hyperinflation, with the money supply rising, the velocity of money is accelerating and real GNP is going down in one tightly wound grand singularity.

But this is a process; ultimately a market response. Studies show that sometime after government debt is more than 80% of GDP and the central bank is monetizing more than 50% of the annual deficit, more printing must be employed to keep interest rates under control. In the desperate attempt to manage interest rates, less entities desire to hold bonds; which means more desperate printing until the feedback loop is out of control.

The longer we distort, the further we fall. The further we fall, the harder we step on the debt monetization accelerator. The more we monetize the shortfalls, the closer we get to the point of the no return - the supernova where confidence is lost.

The popular assumption of many in the sound money camp is that it will go down as a currency reset. A benign overnight revaluation. We can only hope that it will happen overnight. However, by the time we see velocity, it will be too late for the masses.

An example of when a shadow of this process is cast was the 2014 Q4 revised personal consumption data. Fourth quarter spending gives a glimpse of where we are headed and how far down the road we’ve gone.

Health care spending far outpaced any other category. Financial services spending came next.

This was perplexing. Not only is health care spending massive in Q4, financial services were just behind. These two entities are tied directly to the government subsidy.

The financial services and health insurance spending is such a huge portion of personal spending; it tells an even more compelling story about this massive Ponzi we are experiencing.

It also points to the future of spending — long awaited health care subsidy, financial services and to a lesser degree, insurance spending contributes very little (if anything at all) to organic economic growth.

From Zerohedge:
Here Is What Americans Spent Their "Gas Savings" On -

http://www.zerohedge.com/news/2015-02-27/here-what-americans-spent-their-gas-savings

“Last quarter, in "This Is What Americans Spent The Most Money On In Q4" we showed that according to the first estimate of Q4 GDP data, the American consumer spent a whopping $20.4 billion in nominal dollars on healthcare, which also resulted in the biggest consumption contribution to GDP in years.

Today, following the first revision of consumer spending, we learn that in the fourth quarter Americans spent even more on healthcare, pushing the total up by $1 billion more, to a whopping $21.4 Bn, or 18% of all spending on goods and services in Q4.
What this really means…”

We are already seeing the great trickle down - health care is fully slated — added on to the enormous pile of existing liabilities. Coming in second was spending on financial ‘services’— which should also be no surprise.

The government will spend to keep the financial system alive — trillions upon trillions in subsidies to rebalance balance sheets in bailouts.

The people will demand it.

Too many are dependent on the status quo, as long as the toxicity can be masked by the bread and circuses, or perceived as an impossibly long way away. Spending for health care was the dominate category. No big surprise.

Here again is the process:

Hyperinflation is a process; a positive feedback loop that once entered is very hard to get out of. This process can go on for years. In the feedback loop the more the central bank prints money and buys bonds, the less other people want to hold bonds.

Enter widespread loss of confidence.

At the same time, the less other people hold bonds, the more the central bank has to buy them so that the government has enough money to spend. This feedback loop can also be called a death spiral, chain reaction, tipping point; like an avalanche, slippery slope, or a debt bomb. Once the conditions are right, it can just go off.

There is no such thing as a free lunch, no matter how much we all enjoy the idea of one. And eventually we all pay the piper. Thus, the effect has its greatest effect on the everyman.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2015 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules