7 Hyperinflation essentials
Here are 7 hyperinflation essentials to consider when evaluating the commercial risk.
[1] https://www.cato.org/sites/cato.org/files/pubs/pdf/hanke-krus-hyperinflation-table-may-2013.pdf
[2] https://www.zerohedge.com/markets/great-monetary-inflation-ptj-explains-why-bitcoin-will-dominate-gold-stocks-public-trust
[4] Nathan Lewis Gold the Final Standard p37. https://newworldeconomics.com/gold-the-final-standard/
[5] https://seekingalpha.com/article/4249657-hyperinflation-seldom-occurs-can-rapid-speed
[6] https://resources.redpillmoney.nz/blog/alasdair-macleod-usd-on-its-way-to-zero-by-the-end-of-the-year
- What is hyperinflation? Hyperinflation is the rapid loss of a currency’s value. In extreme cases prices can double every 15 hours.[1]
- Cause. A currency looses its value when people no longer have confidence in it. This is usually the result of government over-issue.
- What kind of money hyperinflates? Only fiat money, that is money issued by government that is not linked to the stable value of gold can hyperinflate. When a currency is pegged to the value of gold this discipline prevents hyperinflation.
- Current Situation. Today we have an unprecedented expansion of fiat money. On 9th April 2020 legendary hedge fund investor Paul Tudor Jones said: We are witnessing the Great Monetary Inflation (GMI)—an unprecedented expansion of every form of money unlike anything the developed world has ever seen.[2]
- Likely Result. In every historical period on every continent over-expansion of money supply has led to hyperinflation. In the words of currency historian Nathan Lewis: Those who claim “this time is different” simply have no idea how much it is the same.[4]
- Speed. Once started hyperinfation happens very fast, often in a matter of months.[5] This speed makes Alasdair Macleod’s forecast of the USD hyperinflating by the end of the year more plausible.[6]
- Mitigation. The single most important factor in managing a hyperinflationary environment is finding a stable means of exchange. Otherwise customers cannot buy and suppliers and staff cannot be paid. All other considerations are secondary to this overriding need.
[1] https://www.cato.org/sites/cato.org/files/pubs/pdf/hanke-krus-hyperinflation-table-may-2013.pdf
[2] https://www.zerohedge.com/markets/great-monetary-inflation-ptj-explains-why-bitcoin-will-dominate-gold-stocks-public-trust
[4] Nathan Lewis Gold the Final Standard p37. https://newworldeconomics.com/gold-the-final-standard/
[5] https://seekingalpha.com/article/4249657-hyperinflation-seldom-occurs-can-rapid-speed
[6] https://resources.redpillmoney.nz/blog/alasdair-macleod-usd-on-its-way-to-zero-by-the-end-of-the-year