36 South Starts Hyperinflation Hedge Fund Following Black Swan's 234% Gain

I keep hearing deflation, then hyperinflation, then inflation, then neither. Well, which is it?

Those who indicate hyperinflation all seem to agree that it isn't going to happen overnight, if at all. But in the mean time, seems as though some wish to capitalize on a risk of hyperinflation.

36 South Investment Managers Ltd., whose Black Swan Fund gained 234 percent in 2008, is raising money for a new hedge fund, betting that government efforts to pump money into economies could result in hyperinflation.

The Excelsior Fund targets returns that will be five times the average annual rate of inflation of the Group of Five economies -- France, Germany, Japan, the U.K. and the U.S. -- should the rate exceed 5 percent, Jerry Haworth, co-founder of the firm, said yesterday. Raising $100 million for the fund would be a “good” amount, he said.

“There is a sharply increased risk of greater than 5 percent inflation starting from now,” Haworth said in a telephone interview from London. “We are in the lag period between when the seeds of inflation are sown and when their off- spring, that is higher prices, are evident for all to see.”

U.S. President Barack Obama is selling record amounts of debt to try to end the steepest U.S. recession in 50 years, while Japanese Prime Minister Taro Aso has unveiled three stimulus packages worth 25 trillion yen ($261 billion) since taking office in September. Governments around the world selling record amounts of debt may devalue currencies against assets and spark inflation.

Most investors are underestimating the risk of inflation, Haworth said. Consumer prices in the U.S., the world’s largest economy, are set to rise 1.7 percent next year, following a 0.6 percent decline this year, according to the median of 70 economists surveyed by Bloomberg.

Inflation Risk

“There is certainly talk about inflation but people might think of inflation at 5 percent or 6 percent,” Zimbabwean-born Haworth said. “We’re talking 5, 10, 15, 20 percent or more.”

Investor Marc Faber said on May 27 he was “100 percent sure” that U.S. prices may increase at rates “close to” Zimbabwe’s gains, and the U.S. economy will enter “hyperinflation” because the Federal Reserve will be reluctant to raise interest rates. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
www.bloomberg.com...

I do not think any of these things will happen anytime soon either.

Deflation and Inflation only happen if people realize money is becoming rare/very common.

The banks can pump all the fake money they want into the economy, but all of the people at the bottom are still quite poor.

No one can count all of the money in circulation anyway, so I believe inflation/deflation are becoming extremely difficult to gauge.

The recent bailouts around the world prove this point I believe. No one can gauge how much money is in circulation realistically therefore their cash on hand does not experience direct inflation/deflation.

Its a masterful plan, print all you want and nothing happens lol.

reply to post by muzzleflash


Many of us here on ATS have been monitoring everyday thing's that are going up in price over the past few month's. The cost of food in ALL area's of the USA has been on a steady climb. ( there are many threads about it)

Those housing price drop's have yet to be seen ANYWHERE on the west coast. If anything they have gone up even more and bank's are now willing to just leave homes empty rather than loose all the interest they charged the person who had the first loan. In California they have imposed a 90 day moratorium on foreclosures.
Any that are going to be brought up MUST prove that the bank's have tried to renegotiate the loan's to an "affordable" payment. If the court finds they haven't (VERY unlikely) the foreclosure will be stalled until they can prove they have.
It is a little late anyway they are still asking 600,000 dollars for a 2 bedroom in a bad neighborhood and 1 million+ for anything worth even looking at so they can recoup their precious interest.

We are already seeing the seed's of inflation sprouting and they are only going to grow until someone step's up to the plate and puts a stop to this insanity.
You want to see it? When you go to the store over the next few weeks write down the prices on everyday item's needed for nutrition/cooking etc. Be prepared to be surprised!They have been going up on average of 5%+ every other week for three month's now!!!!!