The death of paper money

[Mega]

http://www.telegraph.co.uk/finance/c...per-Money.html
Mike

[DRumsfeld2000]

Re: The death of paper money

I like AEP. I know that some people criticise him because of some articles he wrote years ago but we all make mistakes of judgement.

I think that he is right concerning deflation. I think that we will get deflation followed by massive money printing and then the inflation.

PS: does anyone know how to get rid of these 'smilies' at the side of the message page as I write a comment?

[Mn_Mark]

Re: The death of paper money

The article has interesting insights into the realities of hyperinflation:

* hyperinflation may not appear for even a couple of years after the money supply was significantly increased.
* the trigger is public loss of confidence in the government's financial doings and the mood can change in just weeks, seemingly coming from nowhere and catching most by surprise
* hungry city people fight an ongoing war with countryside people who have stores of food
* a bag of potatoes and a side of bacon can get you a grand piano
* people with hard currency live opulently and are hated for it
* people have to sell off their furniture and other possessions for food
* the government might "pass a law linking old contracts to the gold price", thus negating the strategy of borrowing a lot of money in order to buy hard assets
* people become cynical and see everyone else as an enemy

Very interesting - especially that hyperinflation can seemingly come out of nowhere in the space of a few weeks.

[WildspitzE]

Re: The death of paper money

I think that it will work the other way around... that we'll get mass inflation and then, once the Fed has to choose b/w itself and everybody else, deflation.