Are We in Danger of Hyperinflation??

[Highlanders]

and what happens when those rates start rising?

the amount that we have been paying on that debt starts going way UUUUUUUPPPPPPP

and instead of 700b a year for debt service, we will be looking at maybe a trillion or more out of a 4 trillion total income (or around 25%)

we are fast approaching what Wil Robinson would refer to as "danger zone....danger zone" Sorry, that one may go way over most heads from a TV show from the 60's

No.... fully understand the analogy ..... !
But if I may point out, there was no visible inflation in America until foreigners took over the Federal reserve and held Americans by the short and curlies. Except during the American civil war. It can't be bad, getting a skim of 5% of GDP year in and year out, for absolutely nothing. For producing paper.

 

[craig]

The good news is that the US is spending the money in the US. The bad news is that the Fed has been buying securities. We have not had a real stock market since last April. This is the biggest stock market bubble ever and I am not sure how we get out of it.

 

[Highlanders]

The good news is that the US is spending the money in the US. The bad news is that the Fed has been buying securities. We have not had a real stock market since last April. This is the biggest stock market bubble ever and I am not sure how we get out of it.

The same way you always get out of it, a bigger and better war! Or collapse the American currency, or lastly but should be first priority, take responsibility and ownership of the federal reserve back into American oversight and ownership.

 

[EMNofSeattle]

Thankfully you're not making those decisions.

San Francisco had the 1918 flu under control. And then it lifted the restrictions.

A cautionary tale about the dangers of reopening too soon.

www.nbcnews.com

The people in 1918 didn’t want to be saferfrom a flu as a result of lockdowns. It was an era when most Americans were Christians and had a healthier view of death.

 

[Matthew Mussolini]

I don't have anything real meaningful to say.
Just I love the Augusto Avatar @EMNofSeattle

 

[Mircea]

1. What is America's national debt burden to GDP percentages?

That's irrelevant.

The only thing that is relevant is that foreign and domestic entities continue to buy US government over-spending packaged as treasury bills, notes and bonds.

There is a long term issue, meaning that at some point the Future, foreign and domestic entities will not be able to purchase US treasury bills, notes and bonds (pronounced "debt") for any number of reasons.

One reason is the fact that Euro-States purchasing US debt will not be able to purchase it, and worse, will have to sell the US debt they do hold to pay the unfunded liabilities they owe through about 2045 or so.

Ooh, and the fed, isn't audited!
So inflation is what ever they want it to be.....

That's not how it works. There is no type of Inflation that is based on audits or any other form of accounting.

2. BRICS have off loaded Trillions of American treasuries, and rid themselves of trillions of dollars holdings, which was an illegal position, to hold secure the dollars position as the preferred currency and the only currency allowed to purchase oil and gas.

That's a false statement.

As of November 2020, China (the "C" in BRICs) holds $1.063 TRILLION in US debt and never held more than $1.2 TRILLION as far the data shows.

Brasil (the "B" in BRICs) has never held more than $282 Billion and currently holds $262 Billion.

To my knowledge, Russia (the "R" in BRICs) has never held US debt although it is possible now that non-government entities such as Russian banks, Russian companies and Russian individuals may hold small insignificant amounts.

India (the "I" in BRICs) has actually purchased more US debt, from $159 Billion to $220 Billion.

Subsidised the dollar, but no longer. Oil and gas transactions are now taking place using sovereign currency. America lost its special status when China became the number one economy.

The US Dollar is not subsidized. It is the de facto international reserve currency and currency of international trade and will continue to be until it is displaced by another currency. The Euro had little effect on the US Dollar.

3. War resolves debt, the winner rules, okay!

Not on this Earth.

 

[Highlanders]

That's irrelevant.

The only thing that is relevant is that foreign and domestic entities continue to buy US government over-spending packaged as treasury bills, notes and bonds.

There is a long term issue, meaning that at some point the Future, foreign and domestic entities will not be able to purchase US treasury bills, notes and bonds (pronounced "debt") for any number of reasons.

One reason is the fact that Euro-States purchasing US debt will not be able to purchase it, and worse, will have to sell the US debt they do hold to pay the unfunded liabilities they owe through about 2045 or so.



That's not how it works. There is no type of Inflation that is based on audits or any other form of accounting.



That's a false statement.

As of November 2020, China (the "C" in BRICs) holds $1.063 TRILLION in US debt and never held more than $1.2 TRILLION as far the data shows.

Brasil (the "B" in BRICs) has never held more than $282 Billion and currently holds $262 Billion.

To my knowledge, Russia (the "R" in BRICs) has never held US debt although it is possible now that non-government entities such as Russian banks, Russian companies and Russian individuals may hold small insignificant amounts.

India (the "I" in BRICs) has actually purchased more US debt, from $159 Billion to $220 Billion.



The US Dollar is not subsidized. It is the de facto international reserve currency and currency of international trade and will continue to be until it is displaced by another currency. The Euro had little effect on the US Dollar.



Not on this Earth.

I know what BRICS stands for, goodness me!
It's only reserve currency because of 1964 Saudi oil and gas agreement!
Even Kuwait allows foreign currency to purchase condensates oil and gas. As does most other BRICS nations, no need to hold currency.
As for the rest of your post, sorry, you're wrong.

Dump the dollar: Russia has now gotten rid of over 96% of its US debt holdings

Dump the dollar: Russia has now gotten rid of over 96% of its US debt holdings

www.rt.com

Venezuela Dumps US Dollar in Oil Trade

Venezuela has ordered oil traders to convert crude oil contracts into euro and not to pay or be paid in US dollars anymore.

alwaght.com

Here’s How China DUMPS MASSIVE Amounts Of U.S. Dollars Without Selling A Single U.S. Treasury

www.silverdoctors.com

GULP: India Dumps Dollars, Says West Has Collapsed

Reserve Bank of India, the central bank of the Indian government, sold off $6.7 billion in US dollar reserves to buy 200 tons of gold on November 3. The move came as a surprise to investors and sho…

themessengerdontshoot.wordpress.com

Now please if your not interested in anything but dogma, please put me on ignore.

 

[Fledermaus]

No.... fully understand the analogy ..... !
But if I may point out, there was no visible inflation in America until foreigners took over the Federal reserve and held Americans by the short and curlies. Except during the American civil war. It can't be bad, getting a skim of 5% of GDP year in and year out, for absolutely nothing. For producing paper.

What "foreigners"?

 

[jpn]

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

After WWII, America never repaid its war debt. It just issued new debt as the old debt came due.

But because of inflation and growth, debt as a share of GDP declined steadily, so that by the 60s the war debt was negligible in economic terms.

Today, we have an economy where dollar GDP can be expected to grow 3-4% a year, while the feds can borrow at ~1%.

This means that debt tends to melt away as a share of GDP unless we run deficits far, far larger than any envisioned today:

 

[Visbek]

We'll see how half baked it is and exactly whose opinions are utter garbage.

Why wait, when we already know the answer?

 

[Visbek]

and what happens when those rates start rising?

the amount that we have been paying on that debt starts going way UUUUUUUPPPPPPP

lol.... No, that's not quite how it works.

Federal debt is structured in securities with a variety of term lengths, anywhere from 4 weeks to 30 years.

As a result, this is not like a credit card company, which can raise your rates on all your debt at once. An increase in interest rates will be spread out over time.

we are fast approaching what Wil Robinson would refer to as "danger zone....danger zone"

Y'know, Republicans have spent the past 40 years proclaiming that debt is a massive problem... only to see them increase federal debt by slashing tax revenues, and increasing spending (usually on the military), and then conveniently forget that "debt is a problem!" when a Republican is President.

While it is true that eventually federal borrowing might become a problem, we are nowhere near it being a problem. In fact, the economy will be in far, far worse shape if we don't borrow right now, and spend it on propping up the economy, and recovering from COVID.

 

[Kushinator]

After WWII, America never repaid its war debt. It just issued new debt as the old debt came due.

But because of inflation and growth, debt as a share of GDP declined steadily, so that by the 60s the war debt was negligible in economic terms.

Today, we have an economy where dollar GDP can be expected to grow 3-4% a year, while the feds can borrow at ~1%.

This means that debt tends to melt away as a share of GDP unless we run deficits far, far larger than any envisioned today:
View attachment 67314632

Indeed!

All that matters is that nGDP grows faster than the deficit in order for long term public debt to, as you put it, melt away.

 

[Highlanders]

Or

lol.... No, that's not quite how it works.

Federal debt is structured in securities with a variety of term lengths, anywhere from 4 weeks to 30 years.

As a result, this is not like a credit card company, which can raise your rates on all your debt at once. An increase in interest rates will be spread out over time.



Y'know, Republicans have spent the past 40 years proclaiming that debt is a massive problem... only to see them increase federal debt by slashing tax revenues, and increasing spending (usually on the military), and then conveniently forget that "debt is a problem!" when a Republican is President.

While it is true that eventually federal borrowing might become a problem, we are nowhere near it being a problem. In fact, the economy will be in far, far worse shape if we don't borrow right now, and spend it on propping up the economy, and recovering from COVID.

why not all of us pay our just dues..... including the rich the extremely rich and the thieves!

 

[Fledermaus]

Or

why not all of us pay our just dues..... including the rich the extremely rich and the thieves!

Asked again.

What "foreigners"?

 

[Highlanders]

Asked again.

What "foreigners"?

Sine die

 

[Fledermaus]

Sine die

Ignorant use of a phrase.

A person isn't sine die.

Instead of spamming a phrase you can't understand how about answering the question based on your claim.


What "foreigners"?

 

[Logophile]

Hyperinflation in practice. The same 2 x6 x 12 pressure treated boards that cost LAST WEEK a little less than 14 dollars are now 23 bucks a week later. Same boards. Thanks!!

 

[Visbek]

Hyperinflation in practice. The same 2 x6 x 12 pressure treated boards that cost LAST WEEK a little less than 14 dollars are now 23 bucks a week later. Same boards. Thanks!!

That's... Not.... Hyperinflation.

 

[iguanaman]

Came across a disturbing article from last May:

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go

The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

www.usatoday.com

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go
The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

What is Hyperinflation?
In economics, hyperinflation is used to describe situations where the prices of goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation.
Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip Cagan first studied the economic concept in his book, “The Monetary Dynamics of Hyperinflation.”

Causes of Hyperinflation
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Simply put, it is caused by dramatically increasing the amount of money in an economy.

The increase in money supply is often caused by the government printing and infusing more money into the domestic economy. rise.https://corporatefinanceinstitute.com/resources/knowledge/economics/hyperinflation/

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

Printing money does not cause inflation that is a fallacy.. It is caused by too much demand chasing too few goods. That is not happening is it?

 

[iguanaman]

Because of public perception. The well being of the economy is in part tied to the public sense of security. And the public's perception of security has been shaken. Then there's this:

Jimmy Carter's Accomplishments and Policies

Carter’s immediate challenge was the combination of inflation and unemployment. President Nixon had created inflation by ending the gold standard in 1971. As a result, the dollar's value plummeted on the foreign exchange markets. Import prices rose and created inflation. Nixon tried to stop it with wage-price controls in 1971. That cramped business growth and increased unemployment.3

The Federal Reserve fought the resultant slow growth by lowering interest rates. The economy improved, creating millions of jobs. But inflation threatened the resulting prosperity. In 1979, President Carter appointed Paul Volcker as the Fed chair. He raised interest rates and ended double-digit inflation.

The Volcker Shock caused a recession that helped destroy Carter’s reelection chances. Until the Fed got the economy under control, it suffered from the combination of high unemployment and high inflation. It led to the creation of the misery index. https://www.thebalance.com/president-jimmy-carter-s-economic-policies-4586571

Not being tied to the gold standard means that money has relative worth. So what that means ultimately, is that the dollar's relativity leaves us very vulnerable to "market perception." I am concerned that we are headed for a very rocky few years on the economic front. Thanks!!

The "inflation" under Carter was caused by the trippleing of oil prices overnight and reduced supplies of oil. Raising rates only served to cripple the economy resulting in "Stagflation" where demand goes down but prices keeps rising because they were the result of increased costs of production. The Reagan "miracle" recovery was just a lowering of interest rates and record deficit Govt. spending.

 

[iguanaman]

Hyperinflation in practice. The same 2 x6 x 12 pressure treated boards that cost LAST WEEK a little less than 14 dollars are now 23 bucks a week later. Same boards. Thanks!!

Lumber is an extremely volatile commodity and the prices rapidly change due to supply and demand. That is not inflation at all. Next week those boards may be $10.

 

[EMNofSeattle]

It could be eighteen dollars an hour or twenty dollars an hour. The only thing "magical" about fifteen dollars an hour is that social services cost the equivalent to fourteen dollars an hour and it is rational to expect persons in our capitalism based economy to act on that rational choice.

Why don’t we just eliminate social services? It would be a hard transition but it would likely cause labor rates to go up and living costs to go down.

 

[EMNofSeattle]

We don't need low wage jobs in our first world economy. Why would better jobs not be created with higher productivity from robots?

Better jobs would be created, and they would be fewer in number and go to the upper middle class and not the lower classes the jobs were lost from.

 

[EMNofSeattle]

Don’t equate low income with low wage either. One may get a paid a decent (hourly) wage for picking nuts, but the nut harvesting season is limited, while living expenses are incurred all year long.

Yeah But agricultural workers typically work seasonal agriculture jobs and do something else the rest of the year. In California where good weather leads to a year long growing season those workers can work year round on different crops.

 

[ttwtt78640]

Yeah But agricultural workers typically work seasonal agriculture jobs and do something else the rest of the year. In California where good weather leads to a year long growing season those workers can work year round on different crops.

That is possible in some very limited places, but as a general rule doing so either requires being a migrant worker or suffering seasonal layoffs.