Causes of hyperinflation

[STT]

Hyper is over 30% inflation per month I believe so there is only one real cause, excessive production of irrefutable bank notes.   At present USA or Japan or UK have hyper inflated bond prices, which means just as much that debt could deflate to zero worth and the currency would still retain its value.     With the FED holding gov debt as an asset backing dollar, it would lose value also but Im not sure that is hyper or if a overnight 50% loss and a one time revaluing doesnt count

having a currency backed by nothing, over printing the currency and unregulated derivative banking policies.

Not the derivatives because that is a private contract and just as much can be lost as made.  Usually it spikes then drops terribly, not nice to experience but ultimately the inflation value is lost and the net effect is just volatility not monetary expansion
The problem is the dollar notes because they cannot be refused without causing a failure of them all.   Separate issued bonds have terms that be renegotiated, a haircut or whatever.  Its a product which can fail where as the notes are the bottom line.   AIG screwing up whatever is not a cause of hyper inflation.  Maybe expansion and maybe a horrible mess, default and basically the effect deflation.  Only when gov refuses to allow the failure, then its a problem as they are likely issuing dollars and then its hyper inflation


If Im wrong, feel free to say how.  Most people take gov debt under too much influence, all that debt the trillions of it is promising dollars (in cash if demanded ?) so I cant see why you could look anywhere else for excessive dollar production

[RoadTrain]

Hyper is over 30% inflation per month I believe so there is only one real cause, excessive production of irrefutable bank notes.   At present USA or Japan or UK have hyper inflated bond prices, which means just as much that debt could deflate to zero worth and the currency would still retain its value.     With the FED holding gov debt as an asset backing dollar, it would lose value also but Im not sure that is hyper or if a overnight 50% loss and a one time revaluing doesnt count

If you speak of government debt, you are wrong.

[BillieGin]

"Humble" Ben Bernanke explains that he prints trillions out of thin air and causes hyperinflation with great "humility" some say.

But for me these words from The Daily Bell make more sense: "There is nothing humble about what Bernanke is doing or has done. He's playing around with the lives and savings of billions. It's impossible for a handful of good, gray men to manage a global economy of tens of trillions. It cannot be done. It is arrogant to try, and it seems to us even more arrogant to speak of humbleness while doing so."

[bitcoinboy163]

it's not that easy to explain.need some long words.

[r34tr783tr78]

Yes, lets do nothing and allow things to take their natural course, like in 1929 and end up like in 1932.

[STT]

Its ironic that natural action is not as destruction as deliberate acts by government.   Done in the hope of good effect they have unintended consequences, its practically a second law of government that everything they do has a secondary unseen unplanned effect.

I'd argue alot of the negatives in the 30's were not from stock prices falling but acts of government like the Smoot-Hawley Tariff which meant to increase USA business by cutting off foreign trade.   It ignored comparative advantage and obviously basic freedoms of a citizen to choose where to place their business best and at the best prices

If you speak of government debt, you are wrong.

You'd need to say how.   Debt is a promise of dollars in the future.    We have produced alot of debt, do you mean this cannot be that alot of dollars will come into existance.

I know QE in theory is supposed to reverse, Im going on their actions far more.  In the last six years they have instigated more then a few QE campaigns and right now are still continuing the 2008 recession actions.   Its just possible sometime this year they do stop increasing QE.   I will be surprised if they ever manage to reverse it though.   So all those new dollars I count as inflation


When its said bitcoin is going to 10,000 then this is it.  It can do it today because most of the damage is here now, its not apparent but its present

[twiifm]

They already started to taper QE.  QE by itself was not enough to stimulate the economy, but what it did was try to relieve liquidity issues via The Fed buying MBS from the banks.

The problem is The Fed can only have tools of monetary policy, they can't force the banks to lend it out.  Especially when private sector is paying down balance sheets cause they think a economic downturn is coming.

The thing that hasn't happened yet is a big stimulus action like Roosevelt's New Deal. Perhaps that will come next

[RoadTrain]

If you speak of government debt, you are wrong.

You'd need to say how.   Debt is a promise of dollars in the future.    We have produced alot of debt, do you mean this cannot be that alot of dollars will come into existance.

Because the government debt is a form of money (especially zero-coupon notes). This is a consequence of its virtually zero credit risk nature. It's widely used as collateral in many markets, and more importantly in monetary operations with Fed. This creates a lot of liquidity.

[NotLambchop]

Hyper is over 30% inflation per month I believe so there is only one real cause, excessive production of irrefutable bank notes...

Or people losing faith in the banknotes already printed.
Hyperinflation is a runaway condition, seldom intentional.  The evol bankers don't want it to happen any more than the people holding the notes

[STT]

This is a consequence of its virtually zero credit risk nature.

I dont accept zero risk.   This is like those TV adverts, with a lifetime guarantee.  You will never need to worry (or think) again.   There is not a no zero risk option, this is what we want life to be but there is risk.  Dollars definitely are risky, the question is are they safer then alternative stores of value.
There is demand for dollars, immense demand by billions of people or at least the governments representing them.  There are not even half a billion in USA so the weight of numbers supports the idea of an infallible dollars however I believe it can fail or at the least degrade badly and become volatile.  Something the FED has always sworn they are established to never allow again.

Ben B is on record saying T bills are not money, they are an asset

They already started to taper QE.

This is political double speak.  They are increasing the QE every day however they are decreasing the amounts its going up by.  Its still going up and Im still waiting for them to stop nevermind reverse, some 6 years after they started this bailout train

[RoadTrain]

This is a consequence of its virtually zero credit risk nature.

I dont accept zero risk.   This is like those TV adverts, with a lifetime guarantee.  You will never need to worry (or think) again.   There is not a no zero risk option, this is what we want life to be but there is risk.  Dollars definitely are risky, the question is are they safer then alternative stores of value.

That's the reason I wrote credit risk, not just risk. Credit risk is a risk of a bond not being paid when due. The only thing that leaves room for default is possible inability of congress to raise debt ceiling. There are other risks, like interest rates risk, dollar devaluation risk, etc.

[STT]

Depends what you call default, when they raise the retirement age for pensions its a form of default.   You are not getting back the expected returns but you will get them at some point, so its arguable I guess.
I'd argue Zimbabwe defaulted but perhaps others would say not but they fulfilled their promise in name only.

Gold has a risk to it in some ways, Im no fan especially but in my judgement its less then the political risk return at present hence I expect it to rise in comparison.  

http://en.wikipedia.org/wiki/Good_faith

[Zarathustra]

having a currency backed by nothing, over printing the currency and unregulated derivative banking policies.

The currency is backed by debt, and debt isn't inflating as fast as before. That's the reason why we are far away from inflation.
Over-indebted economies (Japan, Europe, US) can hardly expand debt/credit anymore; therefore we don't see infation in those economies.

[RoadTrain]

having a currency backed by nothing, over printing the currency and unregulated derivative banking policies.

The currency is backed by debt, and debt isn't inflating as fast as before. That's the reason why we are far away from inflation.
Over-indebted economies (Japan, Europe, US) can hardly expand debt/credit anymore; therefore we don't see infation in those economies.

You mistakenly included Japan into this list. While I agree that US and Europe private sectors can hardly expand debt currently, for Japan the situation is different. Japanese are unwilling to borrow, not unable. In fact, they have enormous savings stash compared to the rest of the world.

[hamza171]

That's why bitcoins are awesome , no government can control it.

[gts476]

Don't know about an equation but I would say hyperinflation is the inevitable result of renting our money from a central bank and I would considered it to be the result of compounded interest on rented money.

the graph shown earlier is clearly y(t) = a^f(t) or similar. Comparison of previous data to a current model that fits the plot on the graph would give you a good enough equation.

G.

[Este Nuno]

having a currency backed by nothing, over printing the currency and unregulated derivative banking policies.

The currency is backed by debt, and debt isn't inflating as fast as before. That's the reason why we are far away from inflation.
Over-indebted economies (Japan, Europe, US) can hardly expand debt/credit anymore; therefore we don't see infation in those economies.

You mistakenly included Japan into this list. While I agree that US and Europe private sectors can hardly expand debt currently, for Japan the situation is different. Japanese are unwilling to borrow, not unable. In fact, they have enormous savings stash compared to the rest of the world.

Don't some people say that their obsessive savings holds back their economy?

[RoadTrain]

having a currency backed by nothing, over printing the currency and unregulated derivative banking policies.

The currency is backed by debt, and debt isn't inflating as fast as before. That's the reason why we are far away from inflation.
Over-indebted economies (Japan, Europe, US) can hardly expand debt/credit anymore; therefore we don't see infation in those economies.

You mistakenly included Japan into this list. While I agree that US and Europe private sectors can hardly expand debt currently, for Japan the situation is different. Japanese are unwilling to borrow, not unable. In fact, they have enormous savings stash compared to the rest of the world.

Don't some people say that their obsessive savings holds back their economy?

That's true, but it's not that simple. Some cite comparatively low social protection as a reason for elevated savings rate. Some cite mentality. Some cite indecisive government.
By the way I don't think that consumerism can magically solve their problems.

[Malin Keshar]

lack of trust too. If you believe prices will rise, you consume as fast as you can and do no savings, so putting more pressre on price.

If people abroad dont trust your coin, they wont buy it and this will make more coins avaliable, therefore putting pressure on prices

[STT]

The currency is backed by debt

Whats backing the debt, the issuing of more currency in many cases.   Thats an unfortunate circular relationship and what supports tax revenues, 50% of gdp is government who are in a deficit in any case.  Another problem waiting.     The big deal is you cant readily exchange your currency at the highest tiers, where governments hold trillions they have a real problem of gaining its value without upsetting their ongoing trade not with USA so much but the world which relys on dollars still

Don't some people say that their obsessive savings holds back their economy?

Thats from Keynes and even he didnt agree with USA as the sole regulator of world reserve currency.   The current scenario proves him right in that respect yet he is used to justify many modern practices


Savings are used, not many people are holding raw notes in any quantity.   If the money is with a bank then its a security used for their activities, even if its simply reloaning the cash at a higher rate this is a form of investment.   If a country does not spend its cash immediately, it is likely used in business.   Its probably no coincidence Japan has such large investment overseas.
       Since government can now just create money without saving, many believe it pointless to do anything else; a sharp readjustment will be a nasty wakeup probably not hyperinflation but maybe