John wrote:
If you like, there may be hyperinflation if the war devastates the
United States, completely destroying the financial infrastructure in
New York and Washington, causing loss of civil control across the
country. However, that bears no resemblance to the Weimer
hyperinflation, in a peace time unraveling era. Once again, a
Weimar-like hyperinflation is absolutely impossible.
Most people think that if Germany had not lost the war they would not have ended up with hyperinflation.
In the Revolutionary war America won and still had hyperinflation.
Do you think the hyperinflation in the Revolutionary War was or was not "Weimar-like"? There are 100 other examples
of hyperinflation and the key thing seems to be debt over 80%
of GNP and deficit over 40%
of spending. Sometimes war gets government into such a condition but I think like 1/3 to almost 1/2 the time there was no war involved. I don't understand how you would count these other 100 cases as Weimar-like or not. To me hyperinflation is hyperinflation.
War is one way to get the debt and deficit levels that lead to hyperinflation, but the USA is already at these levels. So it does not take a really bad war to get it into position for hyperinflation. Something as simple as the price
of oil doubling would probably do it.
John wrote:
As for your statement about the 1930s, it proves that you're wrong, as
it shows how the government will take whatever political steps it can
to avoid hyperinflation. In today's political climate, there are
numerous steps that will be taken before there will be any risk
of hyperinflation. So there are many reasons why you're wrong.
If inflation starts going up and interest rates start going up the value
of bonds will start dropping. People will not want to hold bonds. I think the Fed will buy more and more and you will get hyperinflation. Historically governments that can print money and have debt over 80%
of GNP and who spend about twice what they get in taxes get hyperinflation. What steps do you think they could take that would prevent hyperinflation? If they raise interest rates the economy will die and people will be pissed. I don't see budget cuts or tax increases happening that are nearly enough to help. What can they do to not end up like all the historical examples?
John wrote:
And if I don't always answer your questions, it's because I've
answered the same questions dozens of times already, and have
nothing new to add.
I keep pushing because it is the one area that I disagree with you on and I think it is a really important thing to get right.
I really think there is more to talk about. Think about it like Higgie said, what would have to happen to get hyperinflation or what would have to be done to avoid hyperinflation? What can really happen? If they keep trying to kick the can down the road, then by your can kicking theory, they won't take the decisive action to prevent hyperinflation till it is too late to prevent.