posted on Aug, 20 2009 @ 06:56 PM
reply to post by MikeboydUS
The US has one advantage over nations like Argentina that slid quickly into hyperinflation: all our debt is denominated in US dollars. In fact, the US
and Japan are the only two nations on earth to have debt denominated in their own currencies.
When Argentina's creditors came calling, they had to print up money to buy the US dollars necessary to pay them back, which led to inflation and
degrading of their currency, which led to more creditors demanding US dollars, and thus more printing, and so on...a rapid, viscious circle.
The US, on the other hand, can simply run the presses and create money to pay its debt. Since our debt is so massive, this could very well lead to
hyperinflation as well, but it would be of a different sort than that faced by most nations in this situation. I would predict a much slower form of
inflation which could shade into hyperinflation...but at a slower, more grinding pace. This is not necessarily better, because it means it will take
longer to "bottom out" and drag the pain out. Its like being a cancer patient versus being shot in the skull.
One thing I think is happening now...all the recent credit creation and bailout money is sitting in banks. This means the banks are, on paper,
massively wealthy. Meanwhile the average American grows poorer. I think the general "strategy" is to create two seperate financial systems within
one, as it were: massive wealth among a very small number of people and institutions, who will try to "sit on it" as long as possible while pushing
the average American into a lower standard of living, actually REDUCING prices on that level. This is a kind of two-one punch that will make the rich
even richer than one's wildest dreams. This plan could work for some time, but its probably ultimately due to failure, due to the fact that so much
of our debt is now in foreign hands and thus we have put our financial architecture at the mercy of foreigners -- Something Andrew Jackson
specifically warned us against.