tag:blogger.com,1999:blog-11110174.post8921655003602836008..comments2024-02-26T23:17:11.132+13:00Comments on Blessed Economist: Household DeleveragingRon McKhttp://www.blogger.com/profile/03989126812730583009noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-11110174.post-42704475392370943862010-06-14T18:14:50.462+12:002010-06-14T18:14:50.462+12:00jg
You could be right about 1918 in the German exp...jg<br />You could be right about 1918 in the German experience. Just remember that hyperinflation did not destroy the German economy. It opened the way for a Caesar, but the economy continued to be strong for much longer. Twenty years later, Germany was able to take on all comers in a world war. They were strong enough to go five rounds against several of the strongest contenders all at once, before their economy finally collapsed.<br /><br />Hyperinflation will not destroy the American economic and political power. America loves war, but it has the sense to only fight against rats and mice. As long it does not take on serious contenders, it could go on much longer than the Germans did, despite hyperinflation.Ron McKhttps://www.blogger.com/profile/03989126812730583009noreply@blogger.comtag:blogger.com,1999:blog-11110174.post-75925989948673109442010-06-14T06:57:24.333+12:002010-06-14T06:57:24.333+12:00"...The American economy could trundle along ..."...The American economy could trundle along at a bit above mediocrity for quite some time..."<br /><br />You could be right. I made my nest egg by short selling the stock market 18 months before the Oct./Nov. '08 crash. But, no way did I foresee The Fed doubling its balance sheet; I thought 'the game' was up once The Fed had bought $900B of government securities.<br /><br />Yes, you are right, it took 500 years for Rome to fall.<br /><br />But, the Soviet Union -- of similar vintage to our Federal Reserve system, and of similar unsustainability -- fell overnight.<br /><br />Our Chinese creditors are taking action to protect themselves, by slowly exchanging some of their 'reserve assets' for real assets. Two months ago, the Chinese asked for ironclad guarantees against debasement of their 'reserve assets.' They did not receive such guarantee. The Chinese are watching things closely, and they will find U.S. developments this fall -- whether it is tumbling tax revenue or another round of 'quantitative easing' in an effort to prevent such -- to be truly disconcerting. Thereafter, I presume they will begin faster liquidation of their 'reserve assets.'<br /><br />I think we are at 1918 in the timeline of Germany's 1919-'23 hyperinflation episode.jgnoreply@blogger.com