Inflation/Deflation

It now looks that inflationary pressures are starting in earnest...In the last two years, inflation has gone from 0% to 2.5% which is a 5-year high...and could easily reach 10% in the next couple of years and ultimately a lot higher as inflation turns into hyperinflation. That will have an explosive effect on metal prices.

The debate over deflation/inflation continues as some of our most astute economic observers take sides. Frankly, I think that both sides are missing part of the picture. The debate concentrates on the after shocks of inflation/deflation: prices instead of the money supply and the demand for it. Words: 721

James Turk believes hyperinflation is ahead. Bob Prechter believes massive deflation is coming. An interesting discussion between the two takes place in this audio. Ultimately, both lead to Depression. Only the route taken differs, but that is important.

The pendulum towards deflation has swung too far, and investors should at least consider, and be prepared for the opposite outcome, which is the rise of inflation.

There is a general pattern for the stages of hyperinflation - the stages of the "death of a fiat currency". Here they are.

I have been reading a lot lately about the coming hyperinflation in America... [and while] I respect many of the writers [who express that opinion] I think they are jumping the gun. At this point none of the economic or political factors required to set off hyperinflation are present - and a careful analysis of theory, fact, and history leads me to conclude that inflation/stagflation is our future. It is quite a leap of fancy to say we are certain to have hyperinflation. Words: 2780

Timing the U.S. debt implosion in advance is virtually impossible. Thus far, we've managed to [avoid such an event], however, this will not always be the case. If the U.S. does not deal with its debt problems now, we're guaranteed to go the way of the PIIGS, along with an episode of hyperinflation. That is THE issue for the U.S., as this situation would affect every man woman and child living in this country. [Let me explain further.] Words: 495

Our monetary system is guaranteed to collapse. The central banks prints money like there is no tomorrow. The governments spends like a drunken sailor and yet inflation is benign and interest rates sit at generational lows. Banks are gaining in profitability while their bad debts are being erased by rising asset prices. What’s not to like? Plenty! This article goes into the details of the money creation process to understand how and why this is happening, what the future implications will be and how to best invest to protect oneself from these eventualities.

The Great War ended on November 11th, 1918, when the signed armistice came into effect, but the peace agreement lead to additional destruction - the destruction of wealth and savings - in the form of an hyperinflation event in Germany from 1921 and 1924 that caused millions of people to have their savings erased.

There are two problems with understanding deflation: it is ill defined, and it has a bad name. This article puts deflation into its proper context.