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John - inflation/deflation - probably one after the other
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John Burns
Posted 1/30/2015 13:21 (#4349928 - in reply to #4349897)
Subject: RE: John - inflation/deflation - probably one after the other



Pittsburg, Kansas

"The hyperinflation alarmists have, from what I've read, been talking very short term. (I do not include you in this category, John.) What we've been hearing is how the dollar *must go* to zero - and do it now. The dollar *has to* lose its world reserve currency status - and lose it now."

The people I follow that believe hyperinflation is one of two possible end games do not have that urgency. That may be why we see things differently. One thing I do believe, when confidence is lost it can happen quickly. Most hyperinflation examples happen over a fairly short time period. They are not over night, but often measured in months.

Maybe just the fact that some of us do not take a hyperinflation outcome off the table as a possibility, you assume it must be an urgent or inevitable outcome.

Like OldMcdonald pointed out and explained very well. There are two paths to unwinding malinvestments. Through defaults which brings on severe deflation, or destruction of the currency (hyperinflation) which is also deflationary (measured in any other metric other than the currency in question). History shows excessive, unsustainable sovereign debt gets resolved in one of those two fashions (or possibly a combination of some of both).

I don't how he or I can explain it any further than that. A lot of what I say and believe falls in line with Armstrong's thoughts. Armstrong simply does not believe there is any way confidence could be lost in the US dollar. Or at least he will not say the "H" word in the same sentence with it, which is what a loss of confidence in a currency is. When no one wants to hold it or will accept it as payment, that is what hyperinflation is. It becomes worthless or near worthless. Then something replaces it.

John



Edited by John Burns 1/30/2015 13:22
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