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Hyperinflation worries in the UK & USA warranted?

Anything related to investing, including crypto

JamesQB8

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I have a feeling with the FED and BoE printing a ton of money and providing support to the people without a productive economy could lead to hyperinflation. What do you think is the percentage chance of this happening and is it worth putting more money into commodities or physical assets?
 
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Matt Sun

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As a person from a printing money country (Argentina). First you need high inflation (like 50% a year) before you get to hyperinflation (wich Argentina is expected to have this year, sadly, after almost two decades of high inflation).
 

GIlman

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I have a feeling with the FED and BoE printing a ton of money and providing support to the people without a productive economy could lead to hyperinflation. What do you think is the percentage chance of this happening and is it worth putting more money into commodities or physical assets?

Yeah, this is definitely a significant concern of mine. Ironically I was looking at the gold chart in the past couple days and price was down since the meltdown started, I would have thought it would have spiked Given the devaluation of stocks and the fed printing money.
 

Minuz

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As a person from a printing money country (Argentina). First you need high inflation (like 50% a year) before you get to hyperinflation (wich Argentina is expected to have this year, sadly, after almost two decades of high inflation).

Jajajajajja me causan hasta un poco de ternura. Si vieran la hiperinlfacion que se viene en Argentina, proximamente va a ser mas barato limpiarse el culo con billetes que con papel higienico
 
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ChickenHawk

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I was looking at the gold chart in the past couple days and price was down since the meltdown started, I would have thought it would have spiked Given the devaluation of stocks and the fed printing money.
One theory is that investors are liquidating their "paper" gold positions to cover their steep losses in the stock market. I just checked an online store that I've ordered from in the past, and premiums to get physical gold seem high right now. For example, even though the spot price for gold is $1,500, it costs nearly $1,700 to buy a single 1 oz. gold coin, and the Web site indicates that due to high demand, buyers should expect shipping delays.

This suggests that the demand for physical gold is quite high, even if other market forces are driving the price down. It will be interesting to see how this settles out in the coming weeks.
 

lowtek

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It's not a guarantee by any means, but we are trending in that direction. Government is promising to bail out everybody, which means even more money printing. The more money we print, the less desirable our bonds become for foreign investors, particularly when coupled to the fact that they (foreign governments) are dealing with economic crises of their own.

All of this and it's only the first few months of something that is expected to last 18 months, or more. What will the governments do 6 months from now? A year?

I expect massive printing and all the associated problems that come with it. If not outright hyperinflation, certainly the inflation that has propelled stocks to heights not supported by the fundamentals will creep down into every day goods.

Also, @GIlman check out the situation with silver and gold coins at just about any online dealer. While the spot price is down, demand for precious metals went through the roof. Good luck finding any silver eagles at even $7 over spot. That means the big boys are probably unloading to cover their short positions, while the rest of us hoover it up because we can read the tea leaves.


The next important question to ask:

Who has been buying gold like it's been going out of style, for years? Who has been buying up infrastructure, land, and resources in Africa for the last several years? Who is forcing their people back to work despite the virus (if you believe they don't have any new cases, I got some ocean side property in Idaho for you)? China, of course.

While we're wallowing in the next great depression, they'll be sitting on real money, real industrial production capacity, and real physical resources.

This is precisely the situation at the end of WW2 that lead to the USA being the global reserve currency. Specifically, having the only functional industrial production capacity and a hoard of gold meant that there was no better option.

Could we see China make a play for a gold backed Yuan as the next reserve currency? Quite possibly. They've not hid the fact that they want to be the big dog superpower on the world stage, and this sure would be a golden opportunity.

The final and most important question:

How will Uncle Sam respond? You think we have a stockpile of nukes, aircraft carriers and jets to just sit back and let the empire collapse?

I'm not saying any of this with certainty, but my intuition about the virus was spot on. As soon as I heard about it, and China's response in particular, I knew what was coming. Seeing the way the western governments are responding sure leads me to believe the above scenario is a very real possibility (again, not certain) and I'm starting to take what little steps I can to prepare - at the least mentally.
 

Florian

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It's not a guarantee by any means, but we are trending in that direction. Government is promising to bail out everybody, which means even more money printing. The more money we print, the less desirable our bonds become for foreign investors, particularly when coupled to the fact that they (foreign governments) are dealing with economic crises of their own.

All of this and it's only the first few months of something that is expected to last 18 months, or more. What will the governments do 6 months from now? A year?

I expect massive printing and all the associated problems that come with it. If not outright hyperinflation, certainly the inflation that has propelled stocks to heights not supported by the fundamentals will creep down into every day goods.

Also, @GIlman check out the situation with silver and gold coins at just about any online dealer. While the spot price is down, demand for precious metals went through the roof. Good luck finding any silver eagles at even $7 over spot. That means the big boys are probably unloading to cover their short positions, while the rest of us hoover it up because we can read the tea leaves.


The next important question to ask:

Who has been buying gold like it's been going out of style, for years? Who has been buying up infrastructure, land, and resources in Africa for the last several years? Who is forcing their people back to work despite the virus (if you believe they don't have any new cases, I got some ocean side property in Idaho for you)? China, of course.

While we're wallowing in the next great depression, they'll be sitting on real money, real industrial production capacity, and real physical resources.

This is precisely the situation at the end of WW2 that lead to the USA being the global reserve currency. Specifically, having the only functional industrial production capacity and a hoard of gold meant that there was no better option.

Could we see China make a play for a gold backed Yuan as the next reserve currency? Quite possibly. They've not hid the fact that they want to be the big dog superpower on the world stage, and this sure would be a golden opportunity.

The final and most important question:

How will Uncle Sam respond? You think we have a stockpile of nukes, aircraft carriers and jets to just sit back and let the empire collapse?

I'm not saying any of this with certainty, but my intuition about the virus was spot on. As soon as I heard about it, and China's response in particular, I knew what was coming. Seeing the way the western governments are responding sure leads me to believe the above scenario is a very real possibility (again, not certain) and I'm starting to take what little steps I can to prepare - at the least mentally.

Great argumentation @lowtek !

What would be your recommendations?
 
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Last edited:

Martin.G

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It's funny to find other Argentinian here. And it's true what they said. In the USA, you have 2-3% of inflation a year, that what we have here in a month. The worse part is that is very probably that we have and hyperinflation in the next year, but now our government has the perfect excuse with the pandemic.
I consider myself a very optimistic person, but when it comes to Argentina, I cannot avoid thinking that it's condemned.
 
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Kak

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Gold isn’t the only safe haven... Any asset with inelastic demand is good too.

Remember, with inflation, money gets easier to earn because its spending power is decreased.

Imagine, for example an apartment complex with a big loan. If you had significant inflation. Like 20-70 percent in one year, you would be renewing your leases at 20-70 percent higher. Your loan on the other hand is still the same. You profitability skyrockets because over time the loan becomes negligible.

Banks will hurt the most. Interest rates will skyrocket. I would NOT be looking at ARM mortgages right now. Fixed rate all day. Eventually lending will totally dry up.

I wonder if this time, when/if hyperinflation does rear its ugly head, if a non state controlled currency, and more easily divisible value hold like a crypto, might actually become preferable to the barter system that would have emerged in the past.

Don’t be a bank. Don’t be a bond holder. Equities are better than cash. Assets with inelastic demand are the best. Gold is good to store value, but not a very good currency. Crypto might make a showing.
 
Last edited:

JamesQB8

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The music. Hahahaha
Hahaha the music got me as well

It's not a guarantee by any means, but we are trending in that direction. Government is promising to bail out everybody, which means even more money printing. The more money we print, the less desirable our bonds become for foreign investors, particularly when coupled to the fact that they (foreign governments) are dealing with economic crises of their own.

All of this and it's only the first few months of something that is expected to last 18 months, or more. What will the governments do 6 months from now? A year?

I expect massive printing and all the associated problems that come with it. If not outright hyperinflation, certainly the inflation that has propelled stocks to heights not supported by the fundamentals will creep down into every day goods.

Also, @GIlman check out the situation with silver and gold coins at just about any online dealer. While the spot price is down, demand for precious metals went through the roof. Good luck finding any silver eagles at even $7 over spot. That means the big boys are probably unloading to cover their short positions, while the rest of us hoover it up because we can read the tea leaves.


The next important question to ask:

Who has been buying gold like it's been going out of style, for years? Who has been buying up infrastructure, land, and resources in Africa for the last several years? Who is forcing their people back to work despite the virus (if you believe they don't have any new cases, I got some ocean side property in Idaho for you)? China, of course.

While we're wallowing in the next great depression, they'll be sitting on real money, real industrial production capacity, and real physical resources.

This is precisely the situation at the end of WW2 that lead to the USA being the global reserve currency. Specifically, having the only functional industrial production capacity and a hoard of gold meant that there was no better option.

Could we see China make a play for a gold backed Yuan as the next reserve currency? Quite possibly. They've not hid the fact that they want to be the big dog superpower on the world stage, and this sure would be a golden opportunity.

The final and most important question:

How will Uncle Sam respond? You think we have a stockpile of nukes, aircraft carriers and jets to just sit back and let the empire collapse?

I'm not saying any of this with certainty, but my intuition about the virus was spot on. As soon as I heard about it, and China's response in particular, I knew what was coming. Seeing the way the western governments are responding sure leads me to believe the above scenario is a very real possibility (again, not certain) and I'm starting to take what little steps I can to prepare - at the least mentally.

Man this seems more true than not right now. Interesting times ahead for sure.
 
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MJ DeMarco

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Just a note that the dollar continues to sink and commodity prices are starting to rise.

Silver recently broke into new highs that haven't been tested in nearly ten years.

Gold also near highs.

Also the markets are still flirting with near highs and seems severely disconnected to the real realities that are going on in the economy. My estimate of the fair market value of the S&P should be around 23-2500 ... right now it is at 3250.
 

Mckenzie

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Just a note that the dollar continues to sink and commodity prices are starting to rise.

Silver recently broke into new highs that haven't been tested in nearly ten years.

Gold also near highs.

Also the markets are still flirting with near highs and seems severely disconnected to the real realities that are going on in the economy. My estimate of the fair market value of the S&P should be around 23-2500 ... right now it is at 3250.
Screen Shot 2020-06-28 at 8.28.41 pm.png
 

Kevin88660

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I have a feeling with the FED and BoE printing a ton of money and providing support to the people without a productive economy could lead to hyperinflation. What do you think is the percentage chance of this happening and is it worth putting more money into commodities or physical assets?
I have been hearing that since QE in 2009.

Do not take me wrong it is a real long term concern. I have some precious metals to hedge against that.

But no one knows when the sh@t will hit the fan. The money has been circulating in the financial market and global demand has been too weak to trigger a hyperinflation. We are seeing a shaky building that is too weak to last another decade, but strong enough to be just standing without anyone pulling of any trigger.

Who can pull the trigger? No one knows.

Ten years ago I was a devote doomsday porn consumer of zerohedge and silver doctor when I was in college. The time could be better spent building business.
 
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biggeemac

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I have a feeling with the FED and BoE printing a ton of money and providing support to the people without a productive economy could lead to hyperinflation. What do you think is the percentage chance of this happening and is it worth putting more money into commodities or physical assets?
My personal answer to this.....I have nearly $1mil in debt, mostly in residential real estate, that I would be happy to pay off with inflated dollars. I have a few thousand dollars of junk silver laying in my safe. I am preparing to build a house on one of my properties.
 

Kevin88660

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My personal answer to this.....I have nearly $1mil in debt, mostly in residential real estate, that I would be happy to pay off with inflated dollars. I have a few thousand dollars of junk silver laying in my safe. I am preparing to build a house on one of my properties.
Unless you have all the rates locked in, the banks will surely increase the rates in an anticipation of hyperinflation.

It is not that easy to screw the banks as they have carefully planned how to transfer the risk to everyone else but themselves.
 

socaldude

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Lol no way, you mean our economy is basically fake? :rofl:

But in all seriousness, I think we will see some inflation for sure. Printing money is a privilege and that privilege is being abused as an easy fix to bypass scarcity, utility and productivity.

Any kind of hard asset that maintains its Intrinsic value and is free from manipulation is a good defense to inflation.

Money is just a piece of paper. It’s movement governed by human faculties of judgment and perception. One of those criteria is TRUST. If the system is corrupt or abusive, it opens the gates to hyperinflation. Right now our government and central bank is abusive and cannot be trusted.

Although economics is a notoriously divided field , I know it’s governed by powerful hidden psychological laws. You can’t mess with scarcity.
 
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Flint

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Also the markets are still flirting with near highs and seems severely disconnected to the real realities that are going on in the economy.

Meanwhile in the UK (see chart 1):

"For this quarter (April, May and June 2020), repayments have exceeded payments, creating negative Net Home VAT. Total VAT is close to zero for this quarter." (it was nearly £35bn last year)

Contrast with (numbers as of 19 July):
  • Job Retention Scheme:
    • Total number of jobs furloughed: 9.5m
    • Total number of employers furloughing: 1.2m
    • Total value of claims made: £29.8bn
  • Self-Employment Income Support Scheme:
    • Total number of claims made: 2.7m
    • Total value of claims made: £7.8bn
Source: HMRC coronavirus (C0VlD-19) statistics

I assume most people are just spending their support money without changing their sidewalk and slowlane habits. Which can't last.

How does it look like in your countries?
 

Kevin88660

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Meanwhile in the UK (see chart 1):

"For this quarter (April, May and June 2020), repayments have exceeded payments, creating negative Net Home VAT. Total VAT is close to zero for this quarter." (it was nearly £35bn last year)

Contrast with (numbers as of 19 July):
  • Job Retention Scheme:
    • Total number of jobs furloughed: 9.5m
    • Total number of employers furloughing: 1.2m
    • Total value of claims made: £29.8bn
  • Self-Employment Income Support Scheme:
    • Total number of claims made: 2.7m
    • Total value of claims made: £7.8bn
Source: HMRC coronavirus (C0VlD-19) statistics

I assume most people are just spending their support money without changing their sidewalk and slowlane habits. Which can't last.

How does it look like in your countries?
Singapore has liquidated a portion of her sovereign wealth investment to give out support cash package. People can receive a lump sum of 3-9k sgd depending on how their income has been affected.

Tourism is still dead. Massive retrenchment is taking place in that sector.
 

rpeck90

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Good article I read when looking into this myself.
 
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GatsbyMag

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It seems that something big is on its way.

For those who aren't knowledgeable about scenarios/climates such as this - how would you recommend that they begin to prepare? Aside from reading more.
 

MJ DeMarco

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Well the markets keep ripping higher with no end in sight.

With the new high surpassed from a technical basis, it usually signals a new leg up, SPX 4000? NDX 15000?

VIX still above 20 which demonstrates that we're still in unchartered territory.

This is an option seller's dream and I regret I haven't been selling more. From a traditional investment perspective, I still can't fathom the idea of dropping money into the market ... I don't want to buy the SPY at 350. But part of me realizes I'm not buying corporate assets, I'm buying the inflation pressure that surrounds the assets.

Also, regardless who wins the election, I don't think the money printing will slow ... just a matter of who will print more and how fast. This will continue the inflationary pressure.

Interesting times indeed.
 

socaldude

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Also, regardless who wins the election, I don't think the money printing will slow ... just a matter of who will print more and how fast. This will continue the inflationary pressure.

Yeah exactly, its almost like everyone said "im short cash" ,why would anybody be long cash.

Its like walking into a gas station and a soda that used to cost $1.79 now cost $2.69.

Although i have noticed the FED tends to lean left.

The whole aggregate demand and supply excuse is just a bunch of BS. With that kind of logic you can inject 20 trillion into the economy and somehow it evens out.

As ray dalio said cash is trash.
 

socaldude

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Lets say congress granted socaldude the right to print corporate stock certificates from his moms basement.

Thats right i get to create value out of nothing. I own an asset that entitles me to ownership and rights in a publicly traded corporation.

Socaldude prints 20% more Apple stock. Would you be long apple stock? Or short apple stock?

Remember cash is an asset too. Its called charging interest.

Im pretty sure that asset loses value. And investors would be pissed.
 
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Yeah exactly, its almost like everyone said "im short cash" ,why would anybody be long cash.

Its like walking into a gas station and a soda that used to cost $1.79 now cost $2.69.

Although i have noticed the FED tends to lean left.

The whole aggregate demand and supply excuse is just a bunch of BS. With that kind of logic you can inject 20 trillion into the economy and somehow it evens out.

As ray dalio said cash is trash.

To be fair, cash is only trash because of the Fed and our neverending inflation.

I think they've proven that inflation can stave off recessions (somewhat) in the short term (as in, looking across a few decades) but who knows what the economic effects could be in 100, 200 years?

Keynesians always say "in the long run, we're all dead."

Well, disregard for the future doesn't sound like responsible economics to me, but what do I know? I'm just a random guy on the internet (who studied engineering).

When sh*t hits the fan, there are still a few countries left with strong currencies that respect liberty.

A few.
 
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daivey

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It's a good twitter thread. I would review some of Peter Schiffs podcasts about inflationary pressures that are going to start mounting:

- forbearance will end.
- some lost jobs lost will not come back
- as companies begin to adjust to shrinking demand, they will OVER Shoot.
- this over-shoot will create a shortage in supply curve, more so than the demand curve has fallen.
-because of the decrease in outputs, companies will lose economies of scale, pushing their prices up to offer fewer goods in the economy.
- while in the short term, companies will off-load inventories which might add some short term deflationary pressures, in the long term, that supply chain will be reduced, leading to higher prices.
 

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