Macro Analytics 03-09-13 - Hyperinflation w/ Ty Andros

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HYPERINFLATION: A Currency Event

Macro AnalyticsMarch 9th, 2013

http://www.gordontlong.com/Macro_Analytics



Gordon T Long GordonTLong.com




http://gordontlong.com/



Ty AndrosTedbits.com

Traderview.com




http://www.tedbits.com/

http://www.traderview.com/



NOT UNCOMMON – Always Stems from Poor Public Policy

NO FIAT CURRENCY HAS EVER SURVIVED


56 Episodes of Hyperinflation




A CURRENCY EVENTS: Historically Stem from Currency Debasement

CURRENCY WARS are about Currency Debasement May be an Old Game, but it is a New World:

Fiat Currency Regimes

Sovereign Debt Levels

Total Global Debt Levels (Public & Private)

“Unlimited’ / “Uncapped” Monetary Policies

World Trade Organization (WTO)

Universal Problem due to Globalization






HYPERINFLATIONIn 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, generally regarded as the first serious study of hyperinflation and its effects. In it, he defined a hyperinflationary as starting in the month that the monthly inflation rate exceeds 50%, and it ending when the monthly inflation rate drops below 50% and stays that way for at least a year.[3] Economists usually follow Cagan’s description that hyperinflation occurs when the monthly inflation rate exceeds 50%.[4]

The International Accounting Standards Board does not establish an absolute rate at which hyperinflation is deemed to arise. Instead, it lists factors that indicate the existence of hyperinflation:[5]

The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency; Sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short; Interest rates, wages, and prices are linked to a price index; and The cumulative inflation rate over three years approaches, or exceeds, 100%.




http://en.wikipedia.org/wiki/Phillip_D._Cagan



http://en.wikipedia.org/wiki/International_Accounting_Standards_Board



“This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.”

- Ludwig Von Mises

Why hasn’t Hyperinflation already arrived?








Lack of CONFIDENCE A Degree of Fear



ARGENTINA1. Nationalized Private Pensions, plundering the retirement savings of her people.

2. Increased Tax Rates across the board-- income, VAT, import duties, etc. as well as imposed a new wealth tax.

3. Inflated Argentina's Money Supply, printing currency with wanton abandon; M2 money supply has increased 215% in the past three years.

4. Currency Devaluation - Driven the value and purchasing power of the currency down by 50%. Street-level inflation is now 30%+ per year.

5. Economic Reporting - Made a mockery of official statistics, comically understating the level of Argentine inflation and unemployment. She even began punishing economists for publishing private estimates of inflation that didn't jive with the government figures.

6. Nationalization - Taken over control of one industry after another, most notably the nationalization of Spanish oil firm YPF's Argentine assets.




ARGENTINA7. Imposed Export Controls of agriculture products from beef to grains, forcing growers to sell at artificially

lower domestic prices.

8. Imposed Capital Controls, reducing her citizens' capability to dump their poorly performing currency and hold gold, dollars, Euros, or anything else.

9. Price Controls - Imposed a two month 'price freeze' on items in the supermarket, and encouraged retail consumers to rat out any grocer that doesn't abide by the government order.

10. Media Controls - Imposed controls over the media, most recently ordered an advertising ban in Argentine newspapers (weakening their financial position).

Currency Wars Lead to Price Controls Which Leads to CONTROLS





For High inflation to transition to hyperinflation REAL wealth creation must collapse as you saw in Zimbabwe, Weimar

Germany and as you see in Argentina and Venezuela TODAY!

The DEVELOPED world is just a step or two behind them but rapidly following the SAME PATH!






Why hasn’t hyperinflation already arrived?



- FEAR- LACK OF CONFIDENCE- PROFIT / EBITDA CONCERNS

Money Velocity Explodes HIGHER During Hyperinflation





Currency Wars are in full BLOOM around the GLOBE!

Thirty Eight countries are trying to “Beggar thy Neighbor” their way to devalue their currencies to gather what little economic activity is being created worldwide.

Currencies don’t FLOAT, They just SINK at different rates!





What is real Money? Bretton Woods II a semi sound monetary system was converted to a FIAT currency and

credit based currency and monetary system




The greatest transfer of wealth from those that hold/store it in paper to those that don’t is underway!

UNSOUND MONEY: Master thread of economic, societal and currency/financial system destruction!

Throughout history Fiat currency and credit systems have failed upon the greed and avarice of those who controlled them and this episode will be no different.

The currency and bomb…er…bond markets are GROUND ZERO of the unfolding Societal and financial system destruction. The money printed to date will be dwarfed by what is to come.

This is the greatest OPPORTUNITY in HISTORY for applied Austrian investing and the demise of the KEYNESIAN PONZI model.

What causes Hyperinflation?






Ty AndrosTedbits.com

Traderview.com




http://www.tedbits.com/

http://www.traderview.com/


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Macro Analytics 03-09-13 - Hyperinflation w/ Ty Andros

Economy & Finance

Transcript of Macro Analytics 03-09-13 - Hyperinflation w/ Ty Andros