Morgan Stanley: Hyperinflation is possible

[*T*]

via FT Alphaville

One stark lesson from the ongoing financial and economic crisis is that so-called black swans — large-impact, hard-to-predict and seemingly rare events — can occur more frequently than generally believed.
With policymakers around the world throwing massive conventional and unconventional monetary and fiscal stimuli at their economies, we think that it is worth exploring the black swan event of very high inflation or even hyperinflation.

While such an outcome is clearly not our main case, the risk of hyperinflation cannot be dismissed very easily any longer, in our view. We discuss the historical evidence, the conditions that can lead to very high or hyperinflation, and whether and how it might happen again.

[due_indigence]

Re: Morgan Stanley: Hyperinflation is possible

Another of Taleb's points is that never has so much incompetence sat astride such bewildering complexity. He doesn't use 'incompetence' in a necessarily perjorative sense, only that no human being can possible know the consequences of his or her actions when complexity exceeds the ability of human beings to comprehend it.

This echoes Mark Faber's assertion that the best governments can do is to do nothing at this point. Instead politicians must look as though they are doing something. There will be unintended consequences from the non-stop barrage of 'prescriptive measures' that we've been subjected to. Of course to identify these would strip them of their black swan status. They are unknown. Thus anything is possible.

[Slimprofits]

Re: Morgan Stanley: Hyperinflation is possible

Could Hyperinflation Happen Again?
January 29, 2009

By Joachim Fels & Spyros Andreopoulos

a couple of weeks ago these two called the start of a new global liquidity cycle, based on, I think something similar to Bart's velocity measures.

[D-Mack]

Re: Morgan Stanley: Hyperinflation is possible

What is the itulip position ? I'm not sure but I think I saw something like 40 %, just short of hyperinflation.

[jiimbergin]

Re: Morgan Stanley: Hyperinflation is possible

What is the itulip position ? I'm not sure but I think I saw something like 40 %, just short of hyperinflation.

If I remember correctly, it was a total of 100% (not compounded), 10,20,40,20,10 over a 5 year period.

Jim

[GRG55]

Re: Morgan Stanley: Hyperinflation is possible

Another of Taleb's points is that never has so much incompetence sat astride such bewildering complexity. He doesn't use 'incompetence' in a necessarily perjorative sense, only that no human being can possible know the consequences of his or her actions when complexity exceeds the ability of human beings to comprehend it.

This echoes Mark Faber's assertion that the best governments can do is to do nothing at this point. Instead politicians must look as though they are doing something. There will be unintended consequences from the non-stop barrage of 'prescriptive measures' that we've been subjected to. Of course to identify these would strip them of their black swan status. They are unknown. Thus anything is possible.

And the one thing we can count on is that no matter how disasterous the results, the perpetrators will maintain that if they had not acted as they did, the outcome would have been worse, unacceptably worse. The thing is, we'll never really know.