Regarding Jobs & Inflation

[rapidacid]

I listen to a few financial podcasts and one of them in particular talks a lot about all the Bad Things that the U.S. is heading for in relation to the value of the dollar and the impending inflation that will come ... hyperinflation actually I think is one of the terms they use ... my question is, what happens to wages if there is hyperinflation ... ie. if a gallon of milk goes from $2 to $4, do companies just keep wages the same ( ie. if you made $50K yesterday, you'll still be making $50K tomorrow ) ... has anyone had experience in this type of issue, or have any thoughts on it?

[ahnuld]

there will not be hyperinflation in the US. Hyperinflation is caused by the central bank printing huge amounts of money and putting it into circulation. This is generally to pay down debts which they cant afford, such as germany between world war one and two, and in many latin american countries. SO despite a weak dollar, unless the fed goes batshit crazy, hyperinflation will not happen.

[maxtower]

But if the dollar falls out of favor as the world's international reserve currency, you could see much higher inflation on the dollar until we get out imports vs. exports back in line.

[Brainwalter]

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there will not be hyperinflation in the US. Hyperinflation is caused by the central bank printing huge amounts of money and putting it into circulation. This is generally to pay down debts which they cant afford, such as germany between world war one and two, and in many latin american countries. SO despite a weak dollar, unless the fed goes batshit crazy, hyperinflation will not happen.

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Ever heard of Helicopter Ben bernanke?

You feel that on-the-books national debt of 0.75xGDP with several times that figure in unfunded future entitlement spending is a manageable debt?

[rapidacid]

[ QUOTE ]
there will not be hyperinflation in the US. Hyperinflation is caused by the central bank printing huge amounts of money and putting it into circulation. This is generally to pay down debts which they cant afford, such as germany between world war one and two, and in many latin american countries. SO despite a weak dollar, unless the fed goes batshit crazy, hyperinflation will not happen.

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This is exactly the opposite of what they're saying is happening, and it's what you don't hear about in the news / big media

That's one of the reasons they got rid of M3

[rapidacid]

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But if the dollar falls out of favor as the world's international reserve currency, you could see much higher inflation on the dollar until we get out imports vs. exports back in line.

[/ QUOTE ]

Isn't the primary reason China & Japan hold like 3 Trillion USD because they need to buy Oil ( from New York or London ) in USD? And if the Iranian Oil Bourse comes on line the world will be able to buy in the Euro and have a lot less demand for USD? So therefore all the dollars would come flooding back into the market and throwing the USD supply vs demand numbers completely out of whack and sending the US down a very bad road with hyperinflation

[scott1]

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[ QUOTE ]
there will not be hyperinflation in the US. Hyperinflation is caused by the central bank printing huge amounts of money and putting it into circulation. This is generally to pay down debts which they cant afford, such as germany between world war one and two, and in many latin american countries. SO despite a weak dollar, unless the fed goes batshit crazy, hyperinflation will not happen.

[/ QUOTE ]

This is exactly the opposite of what they're saying is happening, and it's what you don't hear about in the news / big media

That's one of the reasons they got rid of M3

[/ QUOTE ]

Take a look at definitions for hyperinflation and chronic inflation. I think often times the media uses hyper when they mean chronic (like the late 70s). I think it's very reasonable to predict chronic inflation in the next few years. Hyperinflation isn't very likely.

[rapidacid]

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there will not be hyperinflation in the US. Hyperinflation is caused by the central bank printing huge amounts of money and putting it into circulation. This is generally to pay down debts which they cant afford, such as germany between world war one and two, and in many latin american countries. SO despite a weak dollar, unless the fed goes batshit crazy, hyperinflation will not happen.

[/ QUOTE ]

This is exactly the opposite of what they're saying is happening, and it's what you don't hear about in the news / big media

That's one of the reasons they got rid of M3

[/ QUOTE ]

Take a look at definitions for hyperinflation and chronic inflation. I think often times the media uses hyper when they mean chronic (like the late 70s). I think it's very reasonable to predict chronic inflation in the next few years. Hyperinflation isn't very likely.

[/ QUOTE ]

Just read them now ... I was mostly referencing the fact that the US *is* printing money, and is trying to make it harder to discover that by removing M3 ... "cover up" and "hide" are the wrong words to use here because it makes me sound like a nut

Anyway, regarding wages ... chronic inflation suggests 10-30% price increases ... what happens to a 50K a year salary? All businesses would have to increase their prices 10-30% in order to pay the increased wages?

[scott1]

There are, no doubt, much more qualified people on this board to answer this question, but I'll take a stab at it with a very basic perspective.

I did spend some time in Argentina in 2002-2003 soon after the government abandoned a link which tied the peso to the US dollar. This caused a sudden jump in inflation. After the immediate aftermath - banks closing and refusing to give customers their money, riots, 3 presidents in a matter of days - things settled down in downtown Buenos Aires, the wealthiset part of the city. Things were back to normal though with noticeably higher prices. In the outskirts, there was dramatic unemployment, continuted rioting and looting.

In general, salaries don't rise to match the new cost of goods. What this means -
For the rich - they won't hardly notice.

For the middle class - at 30% price increases, the difference in a monthly budget would be noticeable. As basic good become more expensive, there's less money for non-essentials. Might not go on that cruise this year or buy a new mountian bike. Might eat out less. Or, might go into debt to keep the same lifestyle.

For the poor - they're screwed. For someone living paycheck to paycheck significantly increasing the price of food and household goods has a huge effect. An inability to pay a mortgage/rent might be part of the fallout. Jobs will be cut, more on the lower end of the market.

[ahnuld]

yes I meant hyperinflation as being like 100% a year +, which wont happen. I can recommend some decent papers on inflation if you guys want.

Basically inflation isnt bad in itself if it is steady, stable, and expected. Problem is high inflation is almost always unstable and unpredictable, thus the problems with it.