Get your Wheelbarrow ready: Hyperinflation is a possibility, say Morgan Stanley

Run_to_da_hills

We are currently going through a phase of negative inflation but God knows what could be just in store for us around the corner. :eek:

Morgan Stanley’s Jocahcim Fels and Spyros Andreopoulos look at the possibility of hyperinflation hitting the western shores of the UK, Europe and the US in their latest note. Their conclusion is a little scary :eek:

One stark lesson from the ongoing financial and economic crisis is that so-called black swans large-impact, hard-to-predict and seemingly rare events can occur more frequently than generally believed.

So hyperinflation is a black-swan event that, given all the other black-swan events of late, should not be dismissed.

As they remind, the classification of hyperinflation is: an episode where the inflation rate exceeds 50 per cent per month. In history this has occurred in the 1920s in Austria, Germany, Hungary, Poland and Russia. Germany in 1923, for example, experienced a 3.25m per cent inflation rate in a single month (see picture left). Since the 1950s hyperinflation have been experienced in Argentina, Bolivia, Brazil, Peru, Ukraine and Zimbabwe - so confined largely to developing and transitioning economies.

The root cause of hyperinflation is: ‘excessive money supply growth, usually caused by governments instructing their central banks to help finance expenditures through rapid money creation.’

Back to whether it could happen to Europe or the US? Morgan Stanley says possibly yes, under certain conditions.

[IMG]http://upload.wikimedia.org/wikipedia/commons/thumb/0/0e/Inflació_utan_1946.jpg/250px-Inflació_utan_1946.jpg[/IMG]

Firstly, the rapid expansion of the monetary base by the Fed, ECB and BoE would have to continue and feed into a more rapid and sustained expansion of money in the hands of the general public.

With all the fiat money created around the world Hyperinflation is inevitable.

http://ftalphaville.ft.com/blog/2009/01/30/51876/hyperinflation-is-a-possibility-say-morgan-stanley/

Below depicts the possible future of bank notes just before the introduction of the Global EFT cashless system. :eek:

luckat

Oh, thank goodness I have a nice light wheelbarrow with an inflatable wheel. I knew I was making the right investment there. Whew!

Run_to_da_hills

luckat wrote: »

Oh, thank goodness I have a nice light wheelbarrow with an inflatable wheel. I knew I was making the right investment there. Whew!

Heaps of them abandoned since the collapse of the building trade and I believe Chadwicks have them on offer at 1/2 price.

uncle_sam_ie

I've got $8,000 worth of these, bring it on. http://store.nwtmint.com/product_details/2117/Tube_of_20_Silver_Eagles/

bonkey

Run_to_da_hills wrote: »

Morgan Stanley’s Jocahcim Fels and Spyros Andreopoulos look at the possibility of hyperinflation hitting the western shores of the UK, Europe and the US in their latest note. Their conclusion is a little scary :eek:

One stark lesson from the ongoing financial and economic crisis is that so-called black swans large-impact, hard-to-predict and seemingly rare events can occur more frequently than generally believed.

So hyperinflation is a black-swan event that, given all the other black-swan events of late, should not be dismissed.

Its not a black swan event.

According to Taleb, Black Swan events appear by complete surprise and are explained only in hindsight.

That someone is looking at the current situation and predicting that this event is a possibility effectively precludes it from being a black swan.

Mahatma coat

Thanks Bonkey

the term Black swan is bandied about a bit too much this weather.

to paraphrase a famous Neo Con

its the Unknown Unknowns we have to worry about

Run_to_da_hills

bonkey wrote: »

According to Taleb, Black Swan events appear by complete surprise and are explained only in hindsight.

Maybe a complete surprise to the populations, media and economists but I believe behind the sceens all these events are carefully planned and calculated by wicked people who have a fixed ajenda.

bonkey

Run_to_da_hills wrote: »

I believe behind the sceens all these events are carefully planned and calculated by wicked people who have a fixed ajenda.

Then you categoricall reject the notion that they are black swans....or you're redefining the term to mean something entirely of your own devising.