Is a hyper inflation in the USA possible in the future?

Question

Looking for interesting debate on whether a hyper inflation is possible in the future...

Yes or No answers acceptable.. but am seeking lengthy explanations to convince me one way or the other.

Thanks, Tim

Answer 1

If a Republican, Democrat or Independent becomes president, the answer would be NO.
If we had a nuclear showdown with an OPEC nation, the answer would be NO.
If the US Stock Market dropped 20% overnight, NO.
Housing Market bubble bursts, still NO
The cause of hyperinflation is a massive shift in the Supply or Demand Curve of the dollar. Historically, this occurs when a country mints more money than it has in foreign currency (Germany for example) or simply adds zeros on to their current currency (Yugoslavia and the Ukraine). The US Federal Reserve has stopgap measures to prevent this from happening.

The only conceivable opportunity for hyperinflation in the US would be if China decided to “cash-in” all of their US T-Bills. This would force the US to pay out of the current fiscal budget. This would cause massive deficit spending on an unprecedented scale; thus, a global Dollar panic ensues. This is highly unlikely though, because China uses US T-Bills to pay for their version of Social Security. Cashing out would kill their “social safety net” and increase the price of their exported goods inside the US invariably ending our decades long trade imbalance with China.

By the way, if for some reason the dollar did hyper-inflate and the international solution to hyperinflation is dollarization, what exactly would the US do? Euro-ization?

Answer 2

possible? yes. Probable? no. Hyperinflation generally depends upon the government increasing credit too much, too fast. Many people would be crying out if they saw the government doing this. The President responsible for such behavior would have to be a nut, even bigger than GWB. GWB is inflating our currency but not so rapidly that there is much of a hue and cry. An impending depression is one of the main reasons our leaders would be tempted to rapidly increase the money supply. FDR had to increase the money supply to get us out of the depression. You might think it was the war, but war is just another way of increasing the money supply. GWB's war has led to an increase but at a time when the economy wasn't showing signs of an impending depression. Ironically governmental deficit spending can lead to a depression or an inflation as they are really manifestations of the same thing, except that during an inflation the general population is not really aware of what is happening, so they don't run to the bank and pull out their savings and buy hard assets with it (only the smart people do that); during a depression, everybody does it at once causing a cessation of trade or paralysis of the economy. Economists who advise the government are pretty good at jockeying the economy left and right as needed by manipulating interest rates and money supply and thus hyperinflation is extremely unlikely. They are more likely to lose control and precipitate a depression.

Answer 3

Plenty of articles on this query.
This is just a cool short piece.
Mentions hyperinflation briefly.
Michael Rozeff
Professor of Finance
$10,000 Gold
http://www.lewrockwell.com/rozeff/rozeff16.html


"There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers."-- Richard Feynman

February 26, 2004
Remarks before the House Financial Servies Committee,
"It is long past time for Congress to examine seriously the need to reform the fiat currency system. The committee also should examine how Federal Reserve policies encourage excessive public and private sector debt, and the threat that debt poses to the long-term health of the American economy. Additionally, the committee should examine how the American government and economy would be affected if the dollar lost its privileged status as the world’s reserve currency. After all, the main reason the United States government is able to run such large deficits without suffering hyperinflation is the willingness of foreign investors to hold US debt instruments. If, or when, the dollar’s weakness causes foreigners to become reluctant to invest in US debt instruments, the results could be cataclysmic for our economy."--Ron Paul

Answer 4

No. The Americans are often reluctant to change and look for solutions in hurry but when they are in a crisis they respond very well by innovating and adjusting to changes in the environment. A hyper inflation as soon it would tend to appear in the horizon, US consumers will tighten belts even if they do not like to do it, US fiscal and monetary policies would change drastically in favour of cutting down subsidies, raising taxes at higher income levels, BPO would be tolerated even more and protectionism against imports would go down (the US is the World's largest importer with 15 % share above Germany with 7.4% share) to reduce costs, and there will be a great spur in innovation and adopting new technologies to reduce costs and make the US economy internationally competitive even in commodities/ services which the US currently imports as well as the goods and services that India and China import from other countries or does not import. USA will not keep her export growth dependant on mere high tech know how and equipment. When the crisis seems imminent, brain power will be used more intensively to improve the economy's productivity and capabilty in relation to the World's needs and willing to change from being an importer and domestic demand satisfying approach to one of exporter of all kinds of goods and services the World need. US will reply to Chinese strategy of producing everything on earth at massive scale by doing the same thing in a more cost competitive manner. The earlier the hyper-inflation approaches the better for the US economy.

Answer 5

Will he submit to in suggestions asserting that as quickly as he's explaining why it has befell in our destiny? Or will it in simple terms be Bush's fault? the present government has constantly been caught mendacity the previous couple months in some vogue or yet another. no longer that they do no longer all lie, by fact they do, yet that's in simple terms shameful!

Answer 6

I would have to say it is possible. Nothing is impossible, and if there is an extreme depression there can also be an extreme inflation, too. As much as none of us want to believe that it could actually affect us....it is only a matter of time until it strikes.

Answer 7

Yes, if Hilary gets elected.

Answer 8

Outlook Not so Good