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Author Topic: When hyper-inflation hits how are we going to calculate Gold/Silver prices?  (Read 1742 times)
Lethn
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September 25, 2013, 10:42:36 PM
 #1

So here's a thing that I've been concerned about, when I get a substantial amount of Bitcoins I'm going to buy some Silver Bars perhaps, to store my wealth and for speculation, here's the thing though, if the price keeps rising, rising and rising more and then all of a sudden we realise we're actually in a depression, how are we going to know how many Bitcoins are required to pay for the bars? Are we just going to make it up and maybe go by the amount of Bitcoins in circulation? Or is everyone just going to treat Bitcoin as the new dollar and calculate it based on a time where the purchasing power of the paper money was at comfortable levels.

I just keep thinking that people are placing way too much reliance even mathematically on paper money and because they have no fixed supply to work from it seems like a bad idea, I guess it may turn out like a lot of the alt-coins on cryptsy, I've noticed people placing ridiculous prices at first and then everything sort of fixes itself as people start trying out different prices and seeing what people will actually trade for.
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nobbynobbynoob
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September 25, 2013, 10:50:17 PM
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There are lots of ways to index prices. Gold basis, silver basis, mixed bag of commodities, bitcoin basis (might be too new and volatile for that to be a good bet though), some-fixed-point-in-the-past fiat basis (e.g. USD of the year 2000), and so on. Hyperinflations are nothing new around the globe, and places that have experienced them have handled them okay, or at least muddled through.

There is no guarantee we will even see hyperinflation: it might just be very high like in 1975 or modern-day Argentina, but not hyper (which is total failure of the currency). However, von Mises's theories suggest a hyperinflation is very possible in our current financial climate. Only time will tell.

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September 28, 2013, 07:09:34 AM
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There are lots of ways to index prices. Gold basis, silver basis, mixed bag of commodities, bitcoin basis (might be too new and volatile for that to be a good bet though), some-fixed-point-in-the-past fiat basis (e.g. USD of the year 2000), and so on. Hyperinflations are nothing new around the globe, and places that have experienced them have handled them okay, or at least muddled through.

There is no guarantee we will even see hyperinflation: it might just be very high like in 1975 or modern-day Argentina, but not hyper (which is total failure of the currency). However, von Mises's theories suggest a hyperinflation is very possible in our current financial climate. Only time will tell.

IMO, hyperinflation won't happen. It would have too much of an impact and it would probably not even occur.
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September 28, 2013, 10:59:02 AM
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There are lots of ways to index prices. Gold basis, silver basis, mixed bag of commodities, bitcoin basis (might be too new and volatile for that to be a good bet though), some-fixed-point-in-the-past fiat basis (e.g. USD of the year 2000), and so on. Hyperinflations are nothing new around the globe, and places that have experienced them have handled them okay, or at least muddled through.

There is no guarantee we will even see hyperinflation: it might just be very high like in 1975 or modern-day Argentina, but not hyper (which is total failure of the currency). However, von Mises's theories suggest a hyperinflation is very possible in our current financial climate. Only time will tell.

IMO, hyperinflation won't happen. It would have too much of an impact and it would probably not even occur.

Exactly, hyperinflation only happened when the productivity is very low and the demand for goods/services are very high, currently the productivity is insanely high thus the competition between producers are so tough that they must keep lowering the price

They have lots of ways to reduce the cost like outsourcing to other countries and automation. When all the cheap labor have been used up, there will be robots

On the other hand, since inflation do not happen, bankers print more and more money to put in their own pocket

Only in a war when large amount of goods were destroyed quickly, there will be a run away inflation

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September 28, 2013, 12:22:48 PM
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To express past hyperinflation experiences (generically, not my own), when fiat melts down one doesn't so much price gold and silver as price everything else in terms of gold and silver.

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Miz4r
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September 28, 2013, 08:35:24 PM
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Only thing that needs to happen for hyperinflation is that all trust in paper fiat goes away, and that's not an unrealistic scenario at all in the current financial climate. More and more people are finding out how paper money actually works and look at their government debt and all the money printing and wonder how long it can go on like this. We're going to hit a wall at some point, and I think we're already past the point of no return. But a new system will emerge relatively quickly through all the chaos I'm sure, I don't foresee a total collapse like some do.

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September 28, 2013, 11:52:39 PM
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Nobody ever thinks hyperinflation will happen. But it does. History has shown it,  even to formerly powerful currency it can hyper inflate to zero value.

The US dollar is on that path and it will be very hard to avoid it, they keep printing 85billion more of them every single month, so far. Forget the taper it will never happen. Only more and more printing. oops sorry Quantitative Easing.

Strategically other countries are choosing to abandon it, why base your economy on something another country can inflate at will.

Gold and Silver priced in dollars will be meaningless but you will need a lot less of them to buy property, stocks and shares or anything else of real value.
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September 29, 2013, 09:41:52 AM
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FED use those printed money to buy assets from commercial banks, and then commercial banks deposit them back into FED and receive interest, so, high risk assets become some cash saving that can generate interest. Commercial banks should had loss, but now they have risk free cash with interest, and only those interest (bank's income) were spent, so the inflation is not obvious. All these plays very well, I don't see how such a scheme will destroy the dollar

Keldel
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September 29, 2013, 11:15:21 AM
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Most probably you will not need prices of gold/silver, prices of goods will be IN gold/silver/bitcoin.

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September 29, 2013, 09:06:13 PM
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In chickens.

FAP Turbo 2.0, the FOREX trading robot which also trades bitcoin!

I had to link it because I love the name. Seriously, that is the real name.
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