What about a massive repatriation of dollars back to the US causing hyperinflation? It's slow now because countries like China are seeking to avoid devaluing their dollar assets, but the policy of buying up physical assets (including Gold) with dollars is firmly in place. Then there is the emergence of trading blocs using their own currencies as a substitute for dollars. There is yet no rush for the exits, but, as the relative amount of dollars in the global system declines, so does the incentive to protect the value of the remaining dollar holdings, particularly if they are declining in value. Another source might be social instability in the US leading to a decline in credibility of government.
These actual or potential trends might be offset by a desire abroad to hold more dollars as a reserve currency as a substitute for a failing Euro. Also, if domestic markets were flooded with repatriated dollars, could not the Fed respond by raising reserve requirements? Peter -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of nathan tankus Sent: Friday, April 13, 2012 3:16 PM To: pen-l Subject: Re: [Pen-l] hyperinflation @Julio, yes it's possible. Now we have to move more concretely: do we have evidence? exponential growth in deficit spending with no reference to economic conditions to generate hyperinflation? seems impossible given current political conditions. inability to collect sufficient taxes to generate a demand for means of payment? no evidence currently. large amounts of foreign denominated debt that is unserviceable? no evidence. we should always watch for these markers. there is no evidence currently -- -Nathan Tankus ---------------------------------------------------------------------------- ------------------------------------------------------------------- _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
