Is hyper inflation on the way?

Smart money of Buffett and Soros is now warning of serious inflation in the medium term and some are now even warning of hyperinflation:
Brace For Hyper-Inflation Blodget, Yahoo
The economy is cratering, so the Fed is printing money. When the Fed prints money, this eventually produces inflation (more dollars, same amount of goods).
 
george.shaw said:
Smart money of Buffett and Soros is now warning of serious inflation in the medium term and some are now even warning of hyperinflation:
Brace For Hyper-Inflation Blodget, Yahoo
The economy is cratering, so the Fed is printing money. When the Fed prints money, this eventually produces inflation (more dollars, same amount of goods).
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That is about the danger of the feds printing more money. Don't think there is any talk of the ECB doing similar.
 
george.shaw said:
If the global reserve currency of the world hyperinflates then we will all experience severe inflation and stagflation - hence Buffet's and Soros recent warnings:

Soros Likes Gold and Says Fed in a Bind: Beware Stagflation, Bursting of Bond Bubble
http://finance.yahoo.com/tech-ticker/article/226767/Soros-Says-Fed-in-a-Bind-Beware-Stagflation-Bursting-of-Bond-Bubble?tickers=dia,spy,GDX,GLD,TLT,TLB,TIP?sec=topStories&pos=5&asset=TBD&ccode=TBD
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Would you care to explain the logic you used to reach the conclusion that hyperinflation in a reserve currency would trigger inflation in another currency?

The way I see it, hyperinflation in a reserve currency effectively breaks that currency's status as a reserve. Hence, you would get a flood of money into other currencies or assets.

You seem to have already made up your mind that gold would become a new reserve under such circumstances. Have you thought about the consequences if it were the Euro instead and how this would affect the portfolio you currently hold?
 
It seems to me (from reading this post at least) that the US are worried about deflation (from previous depressions) and therefore printing more money, wheres the EU are more worried about inflation (from post war German hyper-inflation). If these 2 administrations move in opposite ways, how do people see this panning out?
 
Firefly said:
It seems to me (from reading this post at least) that the US are worried about deflation (from previous depressions) and therefore printing more money, wheres the EU are more worried about inflation (from post war German hyper-inflation). If these 2 administrations move in opposite ways, how do people see this panning out?
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Increased chance of US inflation , reduced chance of it in Europe. This will however make Europe very uncompetitive.
 
Purple said:
Because the dollar gets vert weak against the euro.
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This is where I always got confused in Economics!

If there is high inflation in the US, their exports will cost more in dollars, so a weakening of the dollar would only offset this and the relative impact on competitiveness would be low?
 
DerKaiser said:
This is where I always got confused in Economics!

If there is high inflation in the US, their exports will cost more in dollars, so a weakening of the dollar would only offset this and the relative impact on competitiveness would be low?
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In this case (the US) they will just increase the money supply ahead of inflation. Anyway, they are devaluing their currency at the moment and there's bugger all inflation since their economy is in the toilet.
 
Ok, I'm no economist but here's what I'm thinking.

The US will devalue it's dollar because of it's printing excess. This will mean it's creditors like China, Saudi Arabia, South Korea et all will off load their dollar reserves as they see the value of the dollar reserve plummet.

This will cause:

A. Decrease in the value of dollar will lead to inflation as you need more dollars to bump up purchasing power.
b. Increased number of dollars in circulation will mean too many dollars following an infinite amount of products which will further increase inflation.
 
We all agree that for hyperinflation to happen, the billions being printed now must find its way into the economy and chase the same amount of goods.

Two problems with this
1. There seems to be a problem with the money reaching the wider economy, as the banking system is a little dysfunctional
2. Chasing the same amount of goods. Obama has announced the greatest spending program since 1930's. This creates a new market for new money to chase after
 
The U.S. can get away with printing more of their currency than the other central banks.As the dollar is a world currency,any inflation that is caused is just spread around the globe...even russia uses the dollar as the main exchange currency . Not to mention the middle east and developing and emerging economies.As oil is priced in dollars, buyers of oil in the middle east have to pay for oil in dollars.
All the major western currencies do their fair share of "printing"...it is just that the U.S. can do a lot more without causing damage.Of course behind the scenes ,this is managed so that it doesn`t cause too much inflation or real loss of confidence in the dollar. People in the U.S. and elsewhere still need to spend to buy food etc, and they need dollars or other fiat currencies to do this.Inflation may rise but hyperinflation imo will not happen as the major western governments have too much control over their economies.They aways have the option of having 5% inflation over a number of years in which to reduce the bad debts.
Countries like Zimbabwe cannot solve their problems by printing.
 
The U.S. can get away with printing more of their currency than the other central banks.As the dollar is a world currency,any inflation that is caused is just spread around the globe...even russia uses the dollar as the main exchange currency . Not to mention the middle east and developing and emerging economies.
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So you think the US can get away with printing money because the dollar is the reserve currency? The more money the US prints the more they devalue the dollar. Over the last few years the dollar has devalued by 30%. Why would the Russians, Saudi Arabians, Chinese and South Koreans continue to purchase US dollars when the Fed simply prints this money out of thin air and further devalues it?

As oil is priced in dollars, buyers of oil in the middle east have to pay for oil in dollars. Already we are beginning to see cracks appear in this fiasco of printing money with the Chinese demanding that the US is obliged to shore up its currency so it does not fall further in value. Both the Russians and Chinese want a new reserve currency and a move away from the dollar.
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True but how long will this last? Pricing oil in euros would be far better than dollars. The Iranians have already cottoned on to this.

All the major western currencies do their fair share of "printing"...it is just that the U.S. can do a lot more without causing damage.
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Again you are correct in your assertion about other western currencies but you are wrong to suggest that the US can do this without causing damage. Printing money that's not backed up by anything will devalue that currency and cause rampant inflation.

Of course behind the scenes ,this is managed so that it doesn`t cause too much inflation or real loss of confidence in the dollar.
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Yes, well they haven't being doing a good job of managing the economy and currency over the last few years, which is why we are in this financial mess. It is exactly what they are doing behind the scenes that worry me. Besides China and Russian want a move away from the dollar and have called for a new international reserve monetary unit.

People in the U.S. and elsewhere still need to spend to buy food etc, and they need dollars or other fiat currencies to do this.Inflation may rise but hyperinflation imo will not happen as the major western governments have too much control over their economies.They aways have the option of having 5% inflation over a number of years in which to reduce the bad debts. Countries like Zimbabwe cannot solve their problems by printing.
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Printing money will devalue the currency, therefore reduce spending power. People will then need more dollars to follow an infinite amount of goods. This will lead to inflation. Countries around the world that hold US dollars will realise that the dollar is a busted flush; they will dump their dollars unto the market. The dollar will further devalue and lead to more inflation and now with so many dollars on the market, this will lead to even more inflation.

How bad this inflation will be, is any body's guess.

 
Here's a history lesson: [broken link removed]
I'd say hyperinflation is one of many things on the way! Start clearing your debts.
 
Well its all about size and power.The U.S. dollar is the de facto world currency and the other major world currencies flucuate against its gravitational pull.All these currencies are themselves fiat currencies..i.e. they are basically paper and not backed by gold or anythingThere is massive buying power in the dollar..this is why all the other major currencies want to be able to have an "exchange" with it thus giving these currencies buying power in turn and inturn reinforcing dollar power.
Its a bit like the U.S. military.. some country has to be the top dog.
Why are oil rich middle east countries like saudi arabia selling oil only in dollars and maybe using these dollars to buy american weapons systems.....well clearly there is a security deal in place wherby the u.s. looks after the country or at least its ruling class in return for being able to buy the oil for printed dollars.
What about china which holds billions of U.S. dollars,whose workers make a few dollars a day making goods for american consumers. You may wonder whats in it for them.The chinese realise that even a low paid job is better than nothing and the chinese gov. can spend this money buying mineral rights around the world etc
The fact is because the dollar is used and accepted so much around the world ,the dollar can be printed more because the inflation you think it might cause is spread around the entire globe.If the dollar was only used within the U.S. inflation would show up much faster.
 
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