4 ms·

I haven’t seen any well-reasoned arguments for hyperinflation.

by 542458 5y ago

ericmay 5y ago
Yea same. Inflation now has been lead by automobiles and semiconductors as far as consumer prices are concerned. And go figure that’s due to just-in-time manufacturing having a black swan event. The idea of hyperinflation meaning 20%-50% increases in prices month over month is nonsense. People point to countries like Germany at the end of WWI as if it’s relevant or telling - it’s not. The circumstances are so completely different you might as well argue we’ll have deflation because of it. Pure nonsense. There’s some concern about asset prices, though. Again, this is general inflation, however. I’d love to see a well-reasoned argument saying we are heading toward hyperinflation (somehow the U.S. only). But… I’ll believe it when I see it.
- tryonenow 5y ago
  I think politically circumstances are far more similar in the US to pre-WWII Germany than most people realize.
lasagnaphil 5y ago
Hyperinflation will ensue once the US dollar suddenly and completely loses its status as a global reserve currency. This is because the US is a heavily import-based country that has relied on the it strength of the dollar. When that dollar stops having foreign purchase power, there will be a huge scarcity in a variety of commodities (mainly manufactured goods), which would only recover once domestic manufacturing recovers to provide the supply (which takes quite some time, to rebuild all those factories and infrastructure that were gone due to deindustrialization) That might possibly happen in the next few decades, but obviously this is quite far from what others have been talking about (money-printing and QE leading to hyperinflation)
- activez 5y ago
  > This is because the US is a heavily import-based country Is it really? It is probably one of the countries that rely less per % of GDP on imports: https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-GDP_ratio https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-...
  - didericis 5y ago
    That part of the argument is wrong, but the gist is roughly correct, as far as I understand it. Most of why we don’t see huge amounts of inflation is the massive amount of currency sitting in reserves collecting interest. If that were to get released very quickly it’d be a monumental disaster.
    - ivalm 5y ago
      But it would be a disaster to foreign holders as well. It’s like saying “if we go into a full scale nuclear war it will be a disaster” — absolutely true but also the whole world is trying to avoid it. Any US dollar unwinding as a reserve currency will be necessarily slow.
      - didericis 5y ago
        It would not be quite as bad for other countries, as their own currencies would improve in relative value. And it would be massively beneficial to whatever currency replaced it. Unlike nuclear war, there is potential for a winner. That is what makes this scenario somewhat plausible. Long term China’s objective is to replace the dollar as a world reserve currency. A rapid shift would I think only occur after an alternative reserve currency were more obvious, and I think you’re right about a slow unwinding at first. However if it passed a tipping point the latter end of an unwinding scenario would I think be very fast.

I haven’t seen any well-reasoned arguments for hyperinflation.

by 542458 5y ago

I haven’t seen any well-reasoned arguments for hyperinflation.

Yea same. Inflation now has been lead by automobiles and semiconductors as far as consumer prices are concerned. And go figure that’s due to just-in-time manufacturing having a black swan event. The idea of hyperinflation meaning 20%-50% increases in prices month over month is nonsense. People point to countries like Germany at the end of WWI as if it’s relevant or telling - it’s not. The circumstances are so completely different you might as well argue we’ll have deflation because of it. Pure nonsense. There’s some concern about asset prices, though. Again, this is general inflation, however. I’d love to see a well-reasoned argument saying we are heading toward hyperinflation (somehow the U.S. only). But… I’ll believe it when I see it.

tryonenow 5y ago
I think politically circumstances are far more similar in the US to pre-WWII Germany than most people realize.

lasagnaphil 5y ago

Hyperinflation will ensue once the US dollar suddenly and completely loses its status as a global reserve currency. This is because the US is a heavily import-based country that has relied on the it strength of the dollar. When that dollar stops having foreign purchase power, there will be a huge scarcity in a variety of commodities (mainly manufactured goods), which would only recover once domestic manufacturing recovers to provide the supply (which takes quite some time, to rebuild all those factories and infrastructure that were gone due to deindustrialization) That might possibly happen in the next few decades, but obviously this is quite far from what others have been talking about (money-printing and QE leading to hyperinflation)

activez 5y ago
> This is because the US is a heavily import-based country Is it really? It is probably one of the countries that rely less per % of GDP on imports: https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-GDP_ratio https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-...
- didericis 5y ago
  That part of the argument is wrong, but the gist is roughly correct, as far as I understand it. Most of why we don’t see huge amounts of inflation is the massive amount of currency sitting in reserves collecting interest. If that were to get released very quickly it’d be a monumental disaster.
  - ivalm 5y ago
    But it would be a disaster to foreign holders as well. It’s like saying “if we go into a full scale nuclear war it will be a disaster” — absolutely true but also the whole world is trying to avoid it. Any US dollar unwinding as a reserve currency will be necessarily slow.
    - didericis 5y ago
      It would not be quite as bad for other countries, as their own currencies would improve in relative value. And it would be massively beneficial to whatever currency replaced it. Unlike nuclear war, there is potential for a winner. That is what makes this scenario somewhat plausible. Long term China’s objective is to replace the dollar as a world reserve currency. A rapid shift would I think only occur after an alternative reserve currency were more obvious, and I think you’re right about a slow unwinding at first. However if it passed a tipping point the latter end of an unwinding scenario would I think be very fast.