Tuesday, March 31, 2009

America is under hyperinflation

Ok, I am going to stick my neck on the economic scenario after a looong time.

In 1998, Russia had 8 billion US bucks in reserves. Now it has something like 500 billion.

A decade ago, China's reserves were a minute fraction of the what, 2 Trillion, they hold now? Nobody knows what the Arabs really hold. China and Brazil are at all time records of USD reserves.

Instead of thinking about a "housing bubble", why not think about a "manifestation of hyperinflation in house prices"?

There is scarce talk of hyperinflation in the econblogosphere, but to me it is the real basic phenomenon going on here. The USD has become a ponzi scheme, and by definition a ponzi scheme is NOT a ponzi scheme, until it is one.

Of course, the inflation indexes are all fine and dandy. But that's because of other forces. That's because (i) global supply chains have become leaner and meaner; (ii) wal-mart and china and india et al have brought prices and wages down over the last decade.

Needless to mention, while the deficits are gargantuan, the US keeps printing money like there's no tomorrow.

Does anyone expect China to hold 10 Trillion? Or Brazil to hold 1 Trillion?

Hopefully I'm missing something. But if these are all signs of hyperinflation going on right now, a global panic is about to set in.

For your entertainment pleasures after this very cheering post, here's a new iPhone app for you to enjoy the DOW jones. Have a nice day.