The US is currently experiencing a deflation; the Fed and the Administration are taking extraordinary steps (massive deficits and stimulus spending) to avoid a deflationary spiral. Unfortunately, they have been unable to offset the fall in consumer spending, and the money printing has been overwhelmed by credit contraction.
Yields are low, unemployment is high, CPI numbers are down – every indicator screams ‘deflation’. So the notion of an impending hyperinflation seems bizarre; and yet that is what Lira predicts.
Hyperinflation is not an extension or amplification of inflation; inflation and hyperinflation are two very different things. They look the same – in both cases the currency loses its purchasing power – but they are not the same.
Inflation occurs when the economy overheats, when consumables (labour and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomenon.
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just as in an inflationary environment, but they rise not because people want more money for their labour, but because people are trying to get out of the currency. They don’t want more money – they want less of the currency, and they will pay anything for goods that are not the currency.
Lira discusses why the recovery is not going to happen; why Treasuries are the new toxic asset; how hyperinflation will happen; why commodities will be king; why the US government cannot stop the runaway train; the parallels to Japan; when to expect America’s hyperinflation; and what to do about it.
The current situation cannot long continue, says Lira. The Global Depression is being exacerbated by the very measures being used to fix it – stimulus is putting pressure on Treasuries, which are being shored up by the Fed. There can be no happy ending. The smart money will prepare for what is going to happen next. Lira thinks that will be hyperinflation.
Read more How Hyperinflation Will Happen