It is difficult to determine when we have reached or passed the “tipping point” regarding inflation or hyperinflation. This post from bearish news is an excellent one for anyone concerned about hyperinflation. It reviews Peter Bernholtz’ results from studying many national hyperinflations:
Hayman Advisors provided a good summary of Bernholz’s research in their October letter (viaFS):
“ There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money. In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations – all ofwhich were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceed 40% of its expenditures.”
The US will have a deficit exceeding 40% this year.
There are links in the article to investment strategies to protect oneself from high inflation, including specific funds. A good read.
$1 Million Dollar Bill Coming?
Wisdom: Inflation as a Political Tool
Inflation Discussed
Exploitation by The Fed
John Williams on Hyperinflation
The Debt Ceiling Charade
My name is Piter Jankovich. oOnly want to tell, that your blog is really cool
And want to ask you: is this blog your hobby?
P.S. Sorry for my bad english
It is a hobby. I feel very strongly about what is happening to this country and the rest of the world.
Monty,
In your view, how long do we have before hyperinflation kicks in?
Thanks,
Terry
Terry,
That is virtually impossible to predict. There is an old economist joke regarding forecasting: “If you give them a number, never give them a date.”
Seriously, though, I would estimate between 2 – 5 years. But, it could be sooner if the dollar collapses.
Monty
Monty:
I believe now that you really are an economist. It is hard to know when you are dealing with someone operating under pen name, but that joke is exactly how economists forecast. In my opinion, if economists were actually good at forecasting, they would be the richest people in the world!
I really appreciate your blog. As a DIY investor, I’ve made moves to short the US dollar. Recently, with the passage of Obamacare, my reflection has been that investors will likely flee to US cash as they seek “safety” (ha, ha) in the uncertainty of how Wall Street will react. This seems to be happening as gold and the loonie are down from last Friday (these are two indicators that I track daily). But I believe when the market doesn’t collapse, people will realize that Obamacare just exasperates the problem of deficit spending and they will turn back to hedge themselves against inflation through gold and foreign currencies like the loonie. So I am holding firm, and waiting to see if another buying opportunity comes up where I can short the US $$ further.
As soon as all investors think like me about the dollar, hyperinflation could happen in a day. Many thanks for your contributions.
P. W. Dunn,
Thanks for the nice note.
It is interesting if one is unable to tell impostors from real economists, one might wonder why have economists. Actually we have many impostors that have economics degrees.
Monty
This unique post makes us understand that most people have to take much more care of yourself and each other.