Quote:
Originally Posted by truesword
I sense a lot of cynicism on this thread. OK! next week when you go do your shopping.... keep the bill! Then the week after compare it with this week's shopping bill!
You're going to find a difference. Now work out the percentage between the two...mmmmnnn! Then maybe you will not need a crystal ball. IT WILL be in your face! It is called inflation but this is just the beginning of it.  Think about this one. If you are diabetic and the medical service breaks down... where will you get your insulin from?? Hyperinflation is going to destroy the world as we know it! The bomb has been dropped.... we act now or we are done for and I mean the World not just The USA. I wish you well but get real!!! |
We will not experience hyperinflation any time soon. We have experienced a strong inflation over the last year or so, mostly due to excess credit created in the shadow banking system (investment banks, hedge funds, etc.), and very low interest rates in the US, Japan, and Switzerland. However that is over. We are in a severe credit crunch right now. This is causing the rapid destruction of credit, and onset of disinflation. Soon disinflation will be followed by deflation. This is already apparent in the crashing or deflating of several markets: real estate, equities, commodities, ... Gold was just under $750 two days ago. Tightly coupled global economies will dramatically worsen, further deflating currencies with respect to real goods and services.
Restriction of the money supply (which causes deflation) is an excellent technique for turning a recession into a depression. Many believe the fed's constriction in the money supply was the root cause of the length and severity of the great depression. And though the Fed may not be actively restricting the money supply now, the money supply is shrinking dramatically, due to the failures of banks, tightening of lending standards, the destruction of so much paper "value" in the form of derivatives that are now being marked at a small fraction of the value they were assumed to have a year or so ago, and general risk aversion.
Money is the blood that courses through the arteries and veins of an economy. In the body, if the blood supply becomes restricted, tissues and organs become malnourished and die. In the economy, businesses will reduce their activities and many will eventually cease to function.