*Hyperinflation is here* *by Alasdair McLeod* *Oct. 15, 2020* https://www.goldmoney.com/research/goldmoney-insights/hyperinflation-is-here
Definition: Hyperinflation is the condition whereby monetary authorities accelerate the expansion of the quantity of money to the point where it proves impossible for them to regain control. It ends when the state’s fiat currency is finally worthless. It is an evolving crisis, not just a climactic event. Summary This article defines hyperinflation in simple terms, making it clear that most, if not all governments have already committed their unbacked currencies to destruction by hyperinflation. The evidence is now becoming plain to see. The phenomenon is driven by the excess of government spending over tax receipts, which has already spiralled out of control in the US and elsewhere. The first round of the coronavirus has only served to make the problem more obvious to those who had already understood that the expansionary phase of the bank credit cycle was coming to an end, and by combining with the economic consequences of the trade tariff war between China and America we are condemned to a repeat of the conditions that led to the Wall Street crash of 1929—32. For economic historians these should be statements of the obvious. The fact is that the tax base, which is quantified by GDP, when measured by the true rate of the dollar’s loss of purchasing power and confirmed by the accelerated rate of increase in broad money over the last ten years has been declining sharply in real terms while government spending commitments continue to rise. In this article it is documented for the dollar,but the same hyperinflationary dynamics affect nearly all other fiat currencies. Introduction In the last ten years I have waged two crusades to bring attention to issues I believe to be in the public interest. From 2011, I wrote a series of articles about China’s gold policy, which had been accumulating physical gold from as long ago as 1983. The meme that gold was moving from west to east became broadly understood and almost a cliché. The second crusade was to inform the public that the business or trade cycle was only the symptom of a cycle of bank credit, which inevitably ends in a crisis of credit contraction. It is now time for a new campaign, on a subject which I have been writing about in recent months, and that is to inform the wider public that their governments and their fiat currencies are now in a state of hyperinflation. It is not a development on the far horizon as many might think; it is already here. What is hyperinflation? To understand why hyperinflation is already with us is to know what constitutes hyperinflation. It is not rising prices, or a condition that exists when prices increase above a predetermined rate: rising prices are the consequence of both inflation and hyperinflation. As Milton Friedman put it, inflation is always and everywhere a monetary phenomenon, though he spoiled it by continuing, “…in the sense it is and can be produced only by a more rapid increase in the quantity of money than in output.”[i] <https://www.goldmoney.com/research/goldmoney-insights/hyperinflation-is-here#_edn1> He was wrong on that last bit, conflating the price effect with the increase in the quantity of money. When even so-called monetarists are imprecise about inflation, let alone hyperinflation, it is hardly surprising public confusion is widespread. There can only be one definition of hyperinflation, and that is the one headlined above, which you won’t find in any textbook. There is even no definition of it in von Mises’s Human Action, only of inflation, and that is more a description than a definition. And since it is a relatively recent phenomenon of unbacked fiat currencies, hyperinflation was never defined separately from inflation by classical economists. The difference between inflation and hyperinflation cannot be distinguished by degree either. Have a look at US M1, the quantity of narrow money in the American economy, shown in Figure 1. [image: Graphic 25] The progression of annualised monetary inflation from under 6% before the Lehman crisis, to 9.6% subsequently until March this year, and 65% in the thirty weeks since is clear from the chart. If the monetary authorities have the knowledge, the mandate, the authority, the ability and the desire to stop inflating the currency, we would not describe it as hyperinflation, instead deeming it to be no more than a brief period of exceptional inflation before a return to sound money policies. *Click on the link for the rest.* --- Support News from Underground: http://bit.ly/NFUSupport Visit News from Underground: https://markcrispinmiller.com You received this email because you are subscribed to News from Underground. To unsubscribe from this email list, please go to: http://www.simplelists.com/confirm.php?u=pIdjNUgiG2h8yxbhC54SSy4SEskAoEMs For archives, please go to: http://archives.simplelists.com/nfu
