Hyperinflation Horizon
Or what happens when the money loses value faster than wages can keep up?
When US money becomes hyperinflated making sense of what happened? There are warnings of a period of hyperinflation within the next 12 months. Meaning we will have too many dollars to spend chasing too few goods. So prices for everything will rise at alarming and frightening rates.
The late Milton Friedman nobel prize economist 30 years ago noted that inflation and recessions are caused by a "floating money supply". Meaning the number
dollars can be increased or decreased at the whim of decision makers. And
not tied to a physical asset like gold or silver. These rare metals have a defined
production rate that is rather constant and are used in every sector of our world economies. Gas and oil likewise has been used like precious metals tying the value of the US dollar to the cost of oil. Every nation needs oil for energy. Oil unlike the rare metals have booms and busts as new sources are found. In 1971 the US dollar exchange rate for gold and silver was tied to just $35 per ounce of gold conversion rate. This gave a base line of value for US dollars but was draining US of gold to support it. So the US dollar was taken off the gold standard rate and oil was then used as the conversion standard. OPEC nations which have abundance of oil and little else banned together to fix the cost of oil. Forcing every nation to convert their money into US dollars to buy oil. The US dollar money supply was then used by all nations to buy oil.
June 30 2023 OPEC announced they would take any currency in exchange for oil. So what happens to all those dollars printed to buy oil? They will remain in the US. Our money supply based on credit cards and actual cash in circulation is about 1.5 billion US dollars. Why so low it exchanges hands about 8 times a year. There has been 80 to 100 times that amount printed to support the conversions using US dollars to oil.
World currencies have had and do have currently hyperinflation. Example was Germany that printed wild amounts of cash to fund a post war recovery in 1920-1924. Let me explain what it was like for the normal citizens during the last year of that hyperinflation period. Everyone including those in unions would spend the 1st hour of each work day negotiating wages and demanding incremental payments made during the day. Their hourly wages rose during the day but a much slower rate than the prices for food and energy rose during the day. Wages lagged behind by 15% or so per day. Thus each morning the wages were pegged to catch up the next morning. Stories of bushel baskets of money to buy one loaf of bread were not uncommon. The retirement of many wealthy citizens were drained in months. In fact they got a bank check for their savings saying it cost more to write the check and manage the account than what they had in the account. Everyone at every age was forced to return to the workforce to just buy food for the next day.
Here is a modern example. Let us say we go into McDonalds for a happy meal. This morning at $5.95 at the order window. McDonalds says the meal will cost $7.95 by the time they get it prepared. If you agree you will pay $7.95. You return at lunch time for another happy meal and the price is $11.95 but will cost $13.95 by time you get the meal. You return that evening the same happy meal is now $17.95 and will cost $21.95 by the time they get it to you. This seems laughable but that is how quickly things changed because of the abundance of money. This happens every day! NO wonder the next morning at work you agreed to work for $20+ per hour for the first 2 hours, and $25 per hour for the next two hours and so on. And got paid at lunch time and at the end of the shift. But at the end of the day to feed a family of four your wages for the entire day just barely covered the cost of the evening meal. Oh did I mention the same was going on for rent and oil to heat the place? Let alone the cost for the transportation to get you to that high paying job.
SO how did Germany get out of it? They did a "money reset". They did not let the money supply to "float". They tied it to gold and silver and declared there was only 1 billion dollars period. All prices for everything and wages stabilized in just 72 hours.
The Federal Reserve is talking about the same thing as a "Great Reset" for the very same reason. The money already printed for world oil purchase will flood the cash system causing a hyperinflation rate similar to what Germany experienced.
If the US money supply is pegged to gold and silver that will become safe havens for keeping wealth. This is what many of the economists believe is why the Federal Reserve has been buying up gold and silver faster than ever before. But it is unclear if that is what is going to happen. Note also that confiscation of gold and silver was done previously in US history (WWII). However Russia and China are likely to announce their currencies will be pegged to gold and silver in August 2023. Thus a war between money systems will be going on. With those two economies trying to destroy the US economy.
SO what can each of us do living "hand to mouth" so to speak? 1-Have a food storage to help when food is scarce or not affordable. Or be able to grow your own food. Sprouts and veggies homegrown. If you have space, a few chickens. 2- Have on hand those other items of everyday life like a way to heat your home in cold weather. If you use propane, have those tanks filled. Have on hand a small heater like Mr. Buddy and fuel or wood burning stove. 3-Have a few gold coins and silver coins on hand or "Gold Back" dollars just in case. (Gold Backs are local currency with $5 of gold wire inserted in the plastic dollar on the date of build. Actual value is computed on the daily rate for gold versus US dollar value).
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