Few people would count the 1970s inflation as "hyperinflation", just "high inflation".John wrote: Sat Nov 13, 2021 10:28 pm This has led to new rounds of hysteria, as some people are claiming
that we're returning to the hyperinflation of the 1970s, something
that I've said many times is impossible, based on the level of debt.
High levels of government debt and deficits is the cause of out of control inflation. They get to where they have to print.
The US seems to have reached the levels that usually result in hyperinflation.
The only time the US government debt was close to the current levels was after WWII but after the war they were able to drastically cut the military spending so there was no deficit. Today they could not do any such drastic cuts in spending. It seems to need both high debt and high deficit to get out of control.
If the CPI did not use the bogus "owner's equivalent rent", just real rents and house prices like in the 1970s, our current CPI would be over 8%.
There was a huge amount of money creation in the last few years but the velocity of money got so low that we did not get inflation.John wrote: Sat Nov 13, 2021 10:28 pm So there's every reason to believe that the CPI will fall sharply in
2022, and there's no reason to believe that the CPI increases will
continue as they did in the 1970s.
Now all it takes is for the velocity of money to go up and we can get inflation.
With higher inflation levels, the velocity of money goes up.
With inflation much higher than bond interest, people may sell bonds that the Fed may end up buying with new money.
It is not for sure yet, but there is some reason to worry.
Do you think if we get a CPI to 8% or 9% that the market will crash?
I really believe the next CPI will be higher than the 6.2% we just got and keep going up in coming months.
I will keep watching with interest.