Hyperinflation is Necessary?

Economics Professor: We Will Be Told 

Hyperinflation is 

Necessary, Proper, Patriotic and Ethical

January 14, 2014 by Patrick Barron, The Ludwig von Mises Institute 

Hyperinflation leads to the complete breakdown in the demand for a currency, which means simply that no one wishes to hold it. Everyone wants to get rid of that kind of money as fast as possible. Prices, denominated in the hyper-inflated currency, suddenly and dramatically go through the roof. The most famous examples, although there are many others, are Germany in the early 1920's and Zimbabwe just a few years ago. German Reichsmarks and Zim dollars were printed in million and even trillion unit denominations.

WHEN this happens,

 it will be a disaster for the US, and 
the entire world!

We may scoff at such insanity and assume that America could never suffer from such an event. "We are modern. We know too much. Our monetary leaders are wise and have unprecedented power to prevent such an awful outcome."

Think again!

Our monetary leaders do not understand the true nature of money and banking; thus, they advocate monetary expansion as the cure for every economic ill. The multiple quantitative easing programs perfectly illustrate this mindset. Furthermore, our monetary leaders actually advocate a steady increase in the price level, what is popularly known as inflation.
If you or the government knew 
how bad even a little inflation is for the country, 
they would stop it 
RIGHT NOW IF 
they knew how, which is not likely!

IT IS A HUGE HIDDEN TAX, THAT 
OBAMA DOES NOT 
WANT US TO KNOW ABOUT!


Any perceived reduction in the inflation rate is seen as a potentially dangerous deflationary trend, which must be countered by an increase in the money supply, a reduction in interest rates, and/or quantitative easing. So an increase in inflation will be viewed as success, which must be built upon to ensure that it continues. This mindset will prevail even when inflation runs at extremely high rates.

This WILL NOT BE SUCCESS!

It will be a disaster for all!

Like previous hyper-inflation throughout time, the actions that produce an American hyper-inflation will be seen as necessary, proper, patriotic, and ethical; just as they were seen by the monetary authorities in Weimar Germany and modern Zimbabwe. Neither the German nor the Zimbabwean monetary authorities were willing to admit that there was any alternative to their inflationist policies. 

The same will happen in America!

The most likely trigger to hyperinflation is an increase in prices following a loss of confidence in the dollar overseas and its repatriation to our shores. Committed to a low interest rate policy, our monetary authorities will dismiss the only legitimate option to printing more money — allowing interest rates to rise. Only the non-inflationary investment by the public in government bonds would prevent a rise in the price level, but such an action would trigger a recession. This necessary and inevitable event will be vehemently opposed by our government, just as it has been for several years to this date.

In other words, we are in a trap with no way out?

THERE IS A WAY; I WILL TELL YOU HOW!
This entire scenario is the fault of big spending government 

like our current one. 

Governments always want to grow! 

They take on new tasks. 

This causes big new spending and 

RESTRICTIONS ON LIBERTY! 

Instead of printing dollars to cover their cost, 

they should cut spending drastically!

Most of what government does now in the USA is illegal!

They have taken over all sorts of organizations, 
they should not have done. 
Examples are 

education, health, banking, and auto industry!
THINK OBAMA'S STIMULUS MONEY WHICH 
WE PAY FOR for example!

Instead, the government will demand and the Fed will acquiesce in even further expansions to the money supply via direct purchases of these government bonds, formerly held by our overseas trading partners. This will produce even higher levels of inflation, of course. Then, in order to prevent the loss of purchasing power by politically connected groups, the government will print even more money to fund special payouts to these groups. 

You see what, I mean; inflation is cyclic! It goes around and around in ever tightening circles!

For example, government will demand that Social Security beneficiaries get their automatic increases; likewise for the quarter of the population getting disability benefits. Military and government employee pay will be increased. Funding for government cost-plus contracts will ratchet up. As the dollar drops in value overseas, local purchases by our overextended military will cost more in dollar terms (as the dollar buys fewer units of the local currencies), necessitating an emergency increase in funding. Of course, such action is necessary, proper, patriotic, and ethical.

Another reason that inflation is very bad is that 

it is a high hidden tax, 

so  people will not know it; 

all they know is that everything costs more, and 

their wages are are not increasing enough to pay their bills!

Listen carefully now!

If you had a dollar in 1926, you would need $10,000 

to buy the same goods today! 

One more example:

Gas was 10 cents per gallon in 1930;

Obama's printing counterfeit money has done a LOT of this!

Prior presidents and congressmen have done the same thing, just not to the same extent!

Other Federal employee sectors like air traffic controllers and the TSA workers will likely threaten to go on strike and block access to air terminal gates unless they get a pay increase to restore the purchasing power of their now meager salaries.

Naturally the unions must find a way to support the problem of their members, so they will 

go on strike for higher wages and benefits.

Some of the unions are 

led by thugs who dictate what 

you must do. 

You may not want to strike, but 

they say you MUST!

You can be sure the union bosses WILL get paid top wages!

BTY: Most "good" unions have 
what is known as a closed shop; 

this means you can NOT work at this company unless,

 you pay the stated dues.

The company HAS TO pay the requested new wages and benefits or risk a strike! 

When a contract runs out, 

there is usually a long period of time,

 until the new one can go into effect

Strikes are simply harming the business that hired you, and 

you are going to loose more, 

than you can ever earn back during the term of the contract. 

It isn't all about money either; 

contracts are about 

benefits, length of time worked, duties to do, and many others!

I've been there, so I can see both sides. 

I have picketed for the union; 

it certainly was not for me!

Strikes many times cause the company to go bankrupt,  or possibly go out of business altogether!

I've seen this happen too, 
in the airlines I have worked for!

Eastern Airlines was one of the first to strike; 

they shut down completely within a few months!

At that time they were the largest airline in the industry!

ALL of the airlines have been in bankruptcy once, and 

some as many as three times. 

It hurts the worker, as much as, 

it hurts the company!

The stockholders take a beating too!

State and local governments will also be under stress to increase the pay of their public safety workers or suffer strikes which would threaten social chaos. Not having the ability to increase taxes or print their own money, the Federal government will be asked to step in and print more money to placate the police and firemen.

If we were still on the gold standard 

there would be no  inflation! 

Gold other precious metals hold their value while counterfeit dollars do not!
Did you know that gold goes up, 
in the same proportion as the dollar comes down

In order to have a growing economy,

we would also have to have small government,

 that spends only what is necessary; 

that means a constitutional government 

doing only a very few duties allowed by law!

The Federal constitution does NOT ALLOW most things, it now controls, so 

the state can do them! 

This allows the states 

the flexibility to govern according to their needs!

One of the few things the federal government can do, 
is to regulate interstate commerce!

One other of the Feds duty is to protect the nation, 

against invasion 

both foreign and domestic!

Each round of money printing eventually feeds back into the price system, creating demand for another round of money … and another … and another, with each successive increase larger than the previous one, as is the nature of foolishly trying to restore money’s purchasing power with even more money. The law of diminishing marginal utility applies to money as it does to all goods and services. The political and social pressure to print more money to prevent a loss of purchasing power by the politically connected and government workers will be seen as absolutely necessary, proper, patriotic, and ethical.

Surely you can see how this harms the non-union non-government person!

Many will not survive. Just as in Weimar Germany, the elderly who are retired on the fruits of a lifetime of savings will find themselves impoverished to the point of despair. Suicides among the elderly will be common. Prostitution will increase, as one’s body becomes the only saleable resource for many. Guns will disappear from gun shops, if not through panic buying, then by outright theft by armed gangs, many of whom may be your previously law-abiding neighbors. 

These facts are not just made up; 
they are the direct result of, 
what has already happened in the past. 

Read your history to 
prevent making the same mistakes 
over and over again!

Businesses will be vilified for raising prices. Goods will disappear from the market as producer revenue lags behind the increase in the cost of replacement resources. Government’s knee-jerk solution is to impose wage and price controls, which simply drive the remaining goods and services from the white market to the gangster-controlled black market. Some will sit out the insanity. Better to build inventory than sell it at a loss. Better still to close up shop and wait out the insanity, more money, and prices increase still more!

How would you like to not be able to buy groceries or gas, and at the same time see your neighbor, 

who is a union person or 

a government employee, 

live high on the hog, while you are starving. 

No wonder there are riots along with stagflation!

The money you have become accustomed to using and saving eventually becomes worthless; it no longer serves as a medium of exchange. No one will accept it. Yet the government continues to print it in ever greater quantities and attempts to force the citizens to accept it. Our military forces overseas cannot purchase food or electrical power with their now worthless dollars. They become a real danger to the local inhabitants, most of whom are unarmed. The US takes emergency steps to evacuate dependents back to the States. It even considers abandoning our bases and equipment and evacuating our uniformed troops when previously friendly allies turn hostile.
                                The troops overseas 

WILL become dangerous to the locals and each other if 

they can not get necessary supplies!

IF the government were to pull our troops out of all the other countries and bring them home,

it would be the right thing to do! 
They could be used to protect our borders!

We are an empire! 

It is costing us way too much to be a police force for the  world. 

We do no good; 
we are not wanted!

And yet the central bank continues to print money. Politically-connected constituents demand that it do so, and it is seen as the absolutely necessary, proper, patriotic, and ethical thing to do.

I hope you can all see that stagflation is destroying the USA! Right now our current administration and congressmen are flaming the fires of inflation.

WE THE PEOPLE MUST STOP THEM 
BEFORE IT IS TOO LATE! 

+++++++++++++++++++++++++

Patrick Barron is a private consultant in the banking industry. He teaches in the Graduate School of Banking at the University of Wisconsin, Madison, and teaches Austrian economics at the University of Iowa, in Iowa City, where he lives with his wife of 40 years.