The Coming hyperinflation

Though I do not want this to occur the reality of this occuring in the future is probable, if we continue our path of wasteful spending.

An Intro into Hyper Inflation

en.wikipedia.org...

hyperinflaton is great if you own gold or silver. since these metals are commodities thier value stays the same no matter how many dollars it costs to buy an ounce. Especially silver since one person can actually buyevery ounce that exists. Lets say that an ounce of silver at 7.7 dollars is enough to buy 2 big macs and a drink at mcdonalds. If hyperinflation sets in the big macs might cost 100 dollars but your ounce of silver will be able to still buy 2 bg macs and a coke.
you should go to your coin dealer and stock up on some sludge.

Originally posted by scienceguy94
hyperinflaton is great if you own gold or silver. since these metals are commodities thier value stays the same no matter how many dollars it costs to buy an ounce. Especially silver since one person can actually buyevery ounce that exists. Lets say that an ounce of silver at 7.7 dollars is enough to buy 2 big macs and a drink at mcdonalds. If hyperinflation sets in the big macs might cost 100 dollars but your ounce of silver will be able to still buy 2 bg macs and a coke.
you should go to your coin dealer and stock up on some sludge.

Err, it doesn't work like that. Gold and silver have no inherent value at all - they are only worth what people think they are worth. That is the markets decide their price (worth). If the world was collectively to decide that silver was worth no more than lead then it's price would drop to the same as lead. Gold and silver prices fluctuate all the time.

Also I'd like to see how you would pay for your Big Mac with an ounce of silver....you wouldn't be able to do it, you'd have to convert it to the local currency first, such as dollars......

Having said that if you suspect that your economy is going into a period of hyper-inflation you would be best off getting rid of any assets you have in that currency (such as your savings account) and buying into something else (such as a foreign currency or even silver) which will hopefully retain it's value.

However there is no evidence that the US, or any other Western economy, is about to go into a hyperinflationary period. In fact the some worry that it might end up with deflation such as Japan and Hong-Kong have had, where prices actually fall day-by-day, which sounds great but really isn't (especially if wages fall faster and unemployment rockets). Although rising oil prices make this unlikely.

Every sensible economist I have read seems to think that the US economy has 2 possible ways it go in the next few years: either a gradual slow down or a nasty crash. It simply can't go on spending beyond it's means:

www.guardian.co.uk...

Originally posted by FatherLukeDuke

Err, it doesn't work like that. Gold and silver have no inherent value at all - they are only worth what people think they are worth. That is the markets decide their price (worth). If the world was collectively to decide that silver was worth no more than lead then it's price would drop to the same as lead. Gold and silver prices fluctuate all the time.

Does fiat have any greater value?? Silver does have intrinsic value. it is a industrial commodity. any economist will tell you that in fiat money gold and silver along with other commodities rise in prise. becuase they do have intrinsic value. while your 100 dollar bill can barely make a fire long enough to warm your hand.

I am not saying that we'll have hyperinflation.

I bought ten Krugerrands back in the eighties at $600 each, watched it go up to $800, and held on to them as gold dropped back to around $350. if I -- and a lot of other people -- bought gold at $400 and sold it at $800, we'd have made a good profit.

But we didn't.

And since then, gold and silver have fluctuated, just like the DJ, but I don't think it's outperformed the DJ on any long term (more than, say, a year) basis.

I do know that gold in 1985 was 317.66, and today, twenty years later, it's 477, for an increase of 50 percent. the Dow Jones, on the other hand, was 1339.94 on this date in 1885, and is 10,268 today, for an increase of 766 percent.

Don['t get me wrong; if you want to buy metals on the chance ther they will zoom up in value, feel free. But I bought my house for $159 in 2001 and it's just been appraised at $303. And my 401(k) which is half Dow indexes and half Boeing stock has been doing quite well for the past ten years. Maybe it's because I'm old and feeble, but i like the idea of going with something with a track record

But you didn't time the markets correctly. how in the world can you expect gold to rise right after a bull market in the commodities. if you study the fundamentals you will see that we are beginning to see a secular bull market emerge. especially when gold rises when fiat dollars rise.
so i take it you work for boeing right?

Originally posted by FatherLukeDuke


Err, it doesn't work like that. Gold and silver have no inherent value at all - they are only worth what people think they are worth. That is the markets decide their price (worth). If the world was collectively to decide that silver was worth no more than lead then it's price would drop to the same as lead. Gold and silver prices fluctuate all the time.

That may be true in theory but in practice gold has more then proven its staying power with concern to value for thousands of years. Humans almost intuitively place a high value on gold, equating it with power, beauty, and the cultural elite. Since humans decided to place a value on gold it has never not been a valuable resouce.

The concept of money, (i.e., gold and silver in standard weight and fineness coins)is what allowed the World's economies to expand and prosper. In theory if everyone decided gold was not worth anything it wouldnt be, but history has proven in practice thats not going to happen.

Gold has value period.. But what people fail to realize that only the markets at this current time, manipulates the commodities on the markets.

Look at this the people who held gold in Germany at the time of the collapse of the weinmar republic

www.appropriate-economics.org...

Shadow - I totally agree with you. I was just making a point that everything only has the value that people attach to it, and that includes gold, silver and currency.

If the US economy did go into hyperinflation it would screw the world economy in ways we probably can't imagine. Who knows what would happen to the price of gold and silver in this situation......

What is almost sure is that the relative value (to other currencies) of the $ is going to go down over the next few years, how much is a matter for debate. If a load of countries, especially China, lose their confidence in the dollar and decide to get rid of their enormous holdings of it it could plunge at a frightening rate. However, despite what some right wingers might think, China does not want the US to go into a deep recession as it would take them down with it (who's going to buy all their cheap stuff?).

The US taxes less than it spends and imports more than it exports. This can't go on for ever.......

Ok but do u know China has other options too, That's the fallacy we think, China doesn't want to dump the dollars. But they have other options


Here's a few Facts:

1. China has the Largest saving population in the world.

2. China has actually entice(for want of a better word) Encouraged their people to buy and hold commodities esp. Gold, and silver in abundance..

3. As the above Some middle Eastern countries are encouraging their citizens to do the same.

Originally posted by FatherLukeDuke
Shadow - I totally agree with you. I was just making a point that everything only has the value that people attach to it, and that includes gold, silver and currency.

Thats true its really funny in a way that humans put so much value on a shiny rock. If things got really bad items that insure survival like food, water,fuel,ammo etc.. could become much more valuable then gold.

But it would have to be bad like a Mad Max type scenario

Most paper currencies which ever existed have been inflated out of existence. Even the very few which have survived a hundred years or more, have seen almost all of their value eroded by the printing of paper money, or the inflation of the money supply. Rising prices, known as inflation are a symptom of the inflation of the money supply. In times when inflation is high, or is expected to be high, because it is rising, people seek protection through holding real assets rather than fiat money, which can be printed ad infinitum. History is littered with examples of currencies which have collapsed in hyperinflation. Gold, which is a real asset, can never be printed by any government, nor is it a claim against any creditor. The demand for gold rises in inflationary times, pushing up the gold price.

en.wikipedia.org...

Here's a Chinese perspective on this.
Interesting read and one some may find enlightening, because quite frankly, when the big dog falls, so do the little dogs, as well.
It's Time To Take Seriously....







seekerof

[edit on 11-10-2005 by Seekerof]

but he/she sure sounds like it. (Greetings, fellow traveler!)

NOTHING has any inherent value, in my book. The whole world runs on the "greater fool" proposition. The greater fool is the one who is holding said commodity (everything transferable is a commodity) when the market plunges.

Just make sure the "greater fool" is not you.

The only difference between investing and speculation is the time frame. There is no "sure fire" investment that you can merely purchase and "fuggetaboutit."

If you want to put your money to work you have to supervise it carefully; and fire it when it misbehaves!

I don't give investment advice for free (I charge for that), but LukeDuke sounds like a 1%-er to me. He gets a "way above" from me.

You want to know the BEST investment over the last 15 years? Guns. No dips down, and price appreciation steeper than inflation. And they make their own gravy!

try keeping your guns when the jack boot NWO troops rip down your doors to take them. don't forget that they will have kevlar taped to thier bodies so your lead won't hurt'em

Originally posted by scienceguy94
try keeping your guns when the jack boot NWO troops rip down your doors to take them. don't forget that they will have kevlar taped to thier bodies so your lead won't hurt'em

You did read my whole post didn't you?

I have no intention of holding a commodity (in this case, guns) when it becomes worthless.

I was speaking of speculation/investment, not some sort of political statement.

"the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency; "

has anyone seen this ? I still deal in US dollars.


here's a little nugget about price wars. I think most US corporations that deal in retail are thinking along these lines

www.cnn.com...

tHE ULTIMATE commodity in a ravaged society with no more infrastructure is soap. I would gladly hand over my kruggerand for a bar of girly soap for my wife. The second best would be spices.
but what if you knew how to purify water?

Originally posted by dr_strangecraft
I don't know if LukeDuke is a daytrader

but he/she sure sounds like it. (Greetings, fellow traveler!)

Oh no, not me. I wouldn't have the bottle for day trading, or any other kind of gambling, not matter how skillful it could potentially be. I do have a keen interest in economics, but don't put my money where my mouth is, as it were.

NOTHING has any inherent value, in my book. The whole world runs on the "greater fool" proposition. The greater fool is the one who is holding said commodity (everything transferable is a commodity) when the market plunges.

Very true. I've just been reading Neil Stephenson's Quicksilver set in the late 17th century Europe. It's a fantastic read if you can face the 900+ pages. One of it's themes is the start of modern commerce (it also has pirates and lusty maidens), including stock markets, money exchanges and Britain inventing the concept of "national debt" to fund it's growing empire. Coinage back in those days was extremely confusing and any particular coin would have a worth based on several factors: the amount of gold or silver in it, it's weight and lastly which face was stamped on it. Each country might have lots of different coins in circulation at one time, so negotiating payment for something could be very confusing.

The only currency accepted everywhere was the Spanish real. That's were the expression to realize your investment comes from, as a trader, after a period of buying and selling stuff, would finish the transactions by converting whatever they had left into reals.

I don't give investment advice for free (I charge for that), but LukeDuke sounds like a 1%-er to me. He gets a "way above" from me.

Cheers!

You want to know the BEST investment over the last 15 years? Guns. No dips down, and price appreciation steeper than inflation. And they make their own gravy!

Another interesting aside from Quicksilver is that during a war the price of lead used to go through through the roof, for obvious reasons. This meant when an army was attacking a city the lead it had for cannon balls etc was often worth much more than the entire contents of the city. Which meant the people funding the armies were often very keen to minimise the amount of lead they actually fired at the enemy.

intresting article in the china daily I must say.