Syria in the Throes of Hyperinflation

Syria Central Bank

Living in the United States or other "stable" countries, we tend to think that Hyperinflation is a relatively uncommon event but that is far from the truth. In our post What is Hyperinflation? We list 26 instances of hyperinflation 11 of which have occurred since 1990. It seems that every couple of years there is another one. Even in the midst of deflationary pressures we have seen Zimbabwe (which ended in 2008), North Korea (2010-13) and now Syria. In Surviving a Hyperinflation we noted that "Hyperinflation only occurs in countries where the government has already broken down. Weimar Germany was mired in a social Civil War… Zimbabwe never had a working democratic government and the … [Read more...]

Will Greece Follow Iceland or Weimar Germany?

Euro& Marks2

In Iceland the bankers were told to stuff it. In Weimar Germany they resorted to the printing press. Which model will modern day Greece follow?It seems that the words Weimar Germany and Hyperinflation are almost synonymous. The Weimar Republic (Das Weimarer Republik in German) is the name of the democratic government which was established in 1919 when Germany was defeated in WWI and Emperor Wilhelm II abdicated the throne. The problem came from the War repairations that were foisted upon Germany by the winners and the growing internal unrest which was allowing the Nazi's to gain a foothold. In an effort to pay their debts, promote full employment, and fight back against growing competitive … [Read more...]

What is the Significance of the Fiat Currency?

fiat currency

Last month in an article entitled What Is Fiat Currency? we told you that "Fiat currency is a term that is used to describe a currency which is created by “fiat” or “arbitrary order or decree” of the government."  This month we would like to talk a little about the significance of Fiat currency. ~ Tim McMahon, editor. Fiat Currency Currency that is declared by a government to be a legal tender is referred to as a ‘Fiat Currency’. This type of currency owes its value strictly to the government’s acceptance of it for paying taxes and requiring its acceptance for "all debts public and private". It is not backed by reserves or any physical commodity and is defined as nonconvertible paper money … [Read more...]

What is Hyperinflation?

Hyperinflation Curve

Hyperinflation Hyperinflation is an extremely rapid period of inflation, usually caused by a rapid increase in the money supply. Usually due to unrestrained printing of fiat currency. See: How Does Gold Fare During Hyperinflation? Unfortunately, there is no exact percentage where inflation turns from "ordinary Inflation" to "Hyperinflation". So you can't say for instance that 9.9% inflation is ordinary but 10% inflation is hyperinflation. Typically in hyperinflation it just gets progressively worse. Every month the inflation rate just gets higher and higher until the curve goes hyperbolic. Classic Hyperinflation Classic examples are the Hyperinflation of Weimar Germany and the more … [Read more...]

How Does Gold Fare During Hyperinflation?

Weimar Hyperinflation 100 Million Marks

By Jeff Clark, Casey Research Inflation is a natural consequence of loose government monetary policy. If those policies get too loose, hyperinflation can occur. As gold investors, we'd like to know if the precious metals would keep pace in this extreme scenario. Hyperinflation is an extremely rapid period of inflation, but when does inflation (which can be manageable) cross the line and become out-of-control hyperinflation? Philip Cagan, one of the very first researchers of this phenomenon, defines hyperinflation as "an inflation rate of 50% or more in a single month," something largely inconceivable to the average investor. Hyperinflation has One Root Cause While there can be … [Read more...]

Why Deficits Are Politically Convenient

Terry Coxon of Casey Research discusses the effects of deficits on the economy and politics. ~editor Deficits: How Far to the Wall? By Terry Coxon, Casey Research Decades of manipulation by the Federal Reserve (through its creation of paper money) and by Congress (through its taxing and spending) have pushed the US economy into a circumstance that can't be sustained but from which there is no graceful exit. With few exceptions, all of the noble souls who chose a career in "public service" and who've advanced to be voting members of Congress are committed to chronic deficits, though they deny it. For political purposes, deficits work. The people whose wishes come true through the … [Read more...]

Hyperinflation and Double-Dip Recession Ahead

An interview with Karen Roche of The Gold Report Economic recovery? What economic recovery? Contrary to popular media reports, government economic reporting specialist and ShadowStats Editor John Williams reads between the government-economic-data lines. "The U.S. is really in the worst condition of any major economy or country in the world," he says. In this exclusive interview with The Gold Report, John concludes the nation is in the midst of a multiple-dip recession and headed for hyperinflation. The Gold Report: Standard & Poor's (S&P) has given a warning to the U.S. government that it may downgrade its rating by 2013 if nothing is done to address the debt and deficit. … [Read more...]

Hyperinflation in Weimar Germany vs. The U.S. Now

Weimar Hyperinflation 100 Million Marks

Postcards From Weimar Germany Justice Litle, Editorial Director, Taipan Publishing Group Monday, September 20, 2010 The Weimar Republic is perhaps the quintessential example of hyperinflation. But the buildup took longer than one might think. Walter Levy is a German-born oil consultant. His father, a German lawyer, took out a life insurance policy in 1903.   Every month he had made the payments faithfully," recounts Levy. "It was a twenty-year policy, and when it came due, he cashed it in and bought a single loaf of bread.   Such was life in the German Weimar Republic. Things got so bad there for a while, dentists and doctors stopped asking for currency, seeking … [Read more...]

How Paper Money Fails

Porter Stansberry, in the S&A Digest About right now, I imagine 90% of our subscribers and most of the analysts in my building think I'm nuts. Truthfully... I feel a little bit like Chicken Little. I've been saying the risk of hyperinflation is a more serious threat to our wealth (and way of life) than a massive deflation. Meanwhile, just about every month it looks more and more like Europe's banking crisis will cause another round of serious deflation in the world's asset prices. I'm starting to look pretty foolish... I thought economic growth would be stronger than expected, not weaker. I thought job growth would be stronger than expected, not weaker. I thought yields on … [Read more...]

What the Deflationists Are Missing

US Monetary Base

by David Galland, Managing Editor, The Casey Report An interesting article by Ambrose Evans-Pritchard came my way the other day. It’s worth a read, if for no other reason than that he paints an appropriately dark picture of the current state of the U.S. economy. You can read it here. While I very much share Mr. Evans-Pritchard’s view that the global economy is far from out of the woods, our views diverge in that he sees devastating deflation speeding our way down the tunnel. Casey Research readers of any duration know that we see devastating inflation. While we could both be right, with deflation first and inflation later, I’m not so convinced. For starters, there is already a … [Read more...]