What is Hyperinflation? It doesn’t really have an exact definition, so it’s easy to disagree on what hyperinflation means. To some, inflation that has gotten pretty high (let’s say above 10%) is hyperinflation. To others, the money in your hands must become absolutely worthless to be considered hyperinflation.
We don’t have a particular definition either. We’ve heard stories of people experiencing it first hand though, so let’s give an example. Let’s say every month, the value of your money is only half of what it was the month before. After one month, you might go from comfortable to poor. After two months of this, you better hope you have enough in savings because there’s probably no way that your income can support your basic living expenses. Three months or more? You’re a caveman.
It seems to us that when this has typically happened throughout the world, salaried people were mostly dependent on the government for income. Of course, if you’re a farmer, or otherwise produce something that people absolutely need, then you simply raise prices. But in many of the stories we’ve heard, people simply got raises in the amount of money they earned.
If you worked for the government, then they paid you more. They could easily do this because they printed the money. If you worked for a private citizen, you probably couldn’t get a raise nearly as easily. But even if you did work somewhere where you could get raises, you quickly became extremely poor because the raises only brought you up to that day’s standard of living and then you were immediately in the hole.
It seems doubtful to us that the US government would print endless amounts of US Dollars once the Greenbacks were obviously and drastically losing value. The people would be outraged and a fairly small percentage actually work for the government.
But that doesn’t mean, the coming hyperinflation won’t be devastating to your family’s finances…
We’ve certainly seen inflation in the system when you examine the cost of raw goods and food over the last few years. However, inflation hasn’t been bad in other areas in part because the Federal Reserve has been keeping interest rates artificially low. If the Fed was not stepping in and buying massive quantities of US Treasury Debt, interest rates would be much higher and we would have already seen much higher inflation. Because of this, the Fed is never going to voluntarily stop buying Treasury Bonds. Hence, we will have QE to infinity as Jim Sinclair says.
The question becomes, “At what point does the rest of the world begin to dump their Treasury Bonds?”
This would certainly lead to hyperinflation as we define it (The rapid loss in value of the currency). Or, as we’ve previously written in this series, the Fed could purposely decide to drastically reduce the value of the currency so that the government’s debt was more sustainable (in the name of increasing exports.)
Of course, this second option would probably lead back to more of the first option which could begin to get really ugly and out of hand.
The reality is, things will get ugly and out of hand, and that time is almost upon us. To think otherwise means that you’ve never really studied the practicalities of the massive debt and deficits that the US runs. When you add the interconnectedness of all the world’s banks which have these same problems, and add in the stupendously large avalanche of derivative problems sitting on top of this, you begin to understand that it’s a giant ponzi scheme that is coming to a very rapid end.
The wonderful news is that the Lord has prepared this day and is pouring out His spirit in amazing ways. This is all part of the greatest blessing we could have ever hoped for!
I stand in an interesting place. I spend a lot of my time keeping aware of what others are saying who have a good understanding of what’s going on economically. They are mostly all terrified of the horrible consequences of Man’s actions. These things will change our worldly lives in drastic ways and those who can see it coming economically are horrified at what it all means.
I spend another section of my time keeping up with what those who are hearing from the Lord today are saying. These are men and women who the Lord has called out of the church system of Man who are being fed by the Word Himself. Some do have understanding of great worldly catastrophe. Others seem oblivious to this in their writings. But what they have in common is that they are all ecstatic about the amazing move of God that we are enjoying. Yes, He has brought us through hard (sometimes excruciating) times. Yes, He will bring us through more. But all this is towards the end of knowing Him more. Of being made more like Him. Of being filled with His Glory. These people are so excited to live in such a time as this!
What an incredible dichotomy in the ways of thinking between two different groups who are both experiencing what is happening today in its early stages. None of us are fully ready for what is happening, and yet there is but one Way to receive the best of it. We pray blessings on you as you prepare yourself. What a special time to be alive!
This is the 28th post in a series. You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here. Here are the rest of the posts: 3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & 
European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, 25) US Recession., 26) Currency War, & 27) Deflationary Crash.