Agoracom Blog
Don’t Watch This If You Have Trouble Sleeping
Posted by
at 10:19 PM on Sunday, May 31st, 2009
Hyperinflation – Economic Justice
The Ultimate Iceberg
Hyperinflation of the currency has already occurred and therefore prices will rise noticeably at some point before long; probably when we turn the page on a new decade. More than likely, it will be a quick & dramatic rise of prices caused by convergence of several factors, most notably unfavorable currency translation for the Dollar and significant reliance upon imports. Not only manufactured goods are imported, but 1/3 of our food which leaves basic necessities including Oil vulnerable to price rises.
If Matt Simmons is right that depletion will erase the World’s spare Oil capacity of about 6% in less than a year, that will add fuel to the fire of rising prices. Anywhere around the end of the year and forward, he’s looking for unstoppable Oil prices, believing the recent collapse of energy prices has been especially discouraging to new production, including U.S. exploration & drilling policy through government policy.
But you had to be there for the inflation during the late 1970’s. There was a constant erosion in the Standard Of Living with price increases generally outstripping wage gains. As a consequence, disposable income was squeezed, intensifying recessionary conditions for businesses providing inessentials. Less necessary expenditures were curtailed as prices for everything rose. With discretionary income squeezed, most households were unable to afford basic necessities as real income vanished.
We’ll see it again, and I would expect prices to minimally double at least every three years (25% per anum) while the officially posted rate of price increases is much lower. It just might be ‘Economic Justice’ for the failed policies of deficit spending, and mistaken policies to socialize ordinary hardships. In the end there will be very few winners and among those who do succeed to prosper, the government will try to take it away with confiscatory tax rates.
Deflation can be quite beneficial to citizens who still hold jobs because they see a rise in real value of their income. Hyperinflation ruins almost everyone and it’s unbearable for the citizenry. It’s an economic upheaval that you might say is “The Ultimate Iceberg”. It should mark the end of the current system and government. The question is whether we change our ways and return to Free Enterprise with much less government or finish up the journey with a total loss of economic freedom under Marxism in a 3rd World type existence.
On a similar happening during ‘77 to 87, gasoline prices jumped from 55 to 150 , as did all other commodities, then gold receeded to 250 for two decades. The price of equities also went up and I believe we will experience that again in this bull rally. While that period was not as extreme as the present situation, we are in for a wild rollercoaster ride. To be cautious is wise, but to miss this bull move is not.
Fear is a paralyzing emotion, being vigilant and confident sedates the fear and becomes manageable. Works for me !!!