On a fundamental note: USD is soon going to go into hyperinflation:
Actually, no, it's not. As bad as that is, the hyperinflationary stage of a fiat currency
always requires a political driver. Not to say it
can't happen in the near future, but there would still need to be some major black birds landing on Swan Lake. Mild inflation favors the banks and those closely connected to them, but they know that massive inflation kills the golden goose. The central bankers would not permit such inflation rates
unless they are forced into that position, which for all practical purposes means that political authorities have forced them to do so. In the case of the Wiemar Republic, that political force came from outside the country. In the case of Zimbabwe, it was a misguided series of political decisions by an uneducated dictator with tribal tendencies that none of his yes men had enough balls left to say anything.
Not to derail the thread but don't you think there's plenty of political motivation right now? Unsustainable spending and debt levels will certainly encourage the money spigot to continue to flow, even if the political class denies it. There is far more motivation for that then to drastically cut spending. In addition all it takes is one major creditor to decide our bonds aren't safe and it could start a run, with the Fed as the only remaining buyer.
Don't get me wrong its looking more and more like another deflationary scare this summer first but that'll just be an excuse to print more. I agree the bankers prefer the slow and steady inflation but I think they're finally losing control of the system.
On a bitcoin note who's rooting for 18?
A sovereign debt default by the US is not just remote, it would signal to the world's bondholders that there was
no safe haven left on Earth. Gold, silver and some classes of commodities would shoot for the moon, but that is not the same as inflation. Inflation, at it's core, is expansion of the monetary base beyond the growth of the underlying economy; which favors those with first access to the new currency. Hyperinflation, therefore, is the panic expansion of monetary base by political will. No bankers would voluntarily do this, they would rather have massive deflation because with deflation at least their con game could potentially resume after the crunch. Once hyperinflation begins, there is no historical evidence that it can be stopped prior to the total destruction of the currency itself; if for no other reason than the public has already lost trust (in the government, in the currency itself) and will actively avoid transacting in the currency at all, and when they must will actively avoid holding that currency. This results in a massive increase in velocity, as every buyer is trying to spend what they have before the value goes down further.
If this were to happen to the US (not impossible) where then would the wealthy find haven?
I'll take the Austrian definition of inflation as an increase of the money supply, period. Even inflation that only keeps pace with economic growth still robs the people of the increased purchasing power they would have had if the inflation had not taken place. Rising prices in gold and silver are not inflation per say, however they are the "canary in the coal mine" that to a certain degree indicates inflation expectations. I agree that hyperinflation is not in the interest of bankers or politicians, as hyperinflation represents a loss of control over the system for them. My argument would be that we are actually in the early stages of this happening, and Bernanke and his political buddies are trying to orchestrate just enough inflation to make the debt level manageable while retaining confidence in the dollar as a safe haven of value. I cannot imagine at this point that there are many sophisticated investors or major governments left that actually believe in the strong dollar policy. I wouldn't be surprised if many of them are actively trying to dump US bonds without tipping off the market that that is their intention. A true debt default by the US (meaning an acknowledgement that they will not honor payments) is extremely unlikely, which is why they will go the inflation route instead, and blame rising prices on anything but their policy of printing money. At this point they are between a rock and a hard place: Default and declare bankruptcy, or print and risk loss of confidence in the dollar. I just can't imagine a politician standing up and telling the people "sorry, we can't pay you your social security this month because we owe China their interest payment".
Maybe the wealthy will buy bitcoins? Seriously the truly wealthy will do just fine as they know enough to hold their wealth in inflation proof assets.
Rally to 15 then shallow pullback before we test 20? I can't believe we're talking 20 already . . .
i also seen it before.