Originally Posted by
relmor2003
Hopeful. The only thing globally keeping it under wraps is the fact we are still the global reserve currency. Im not saying hyperinflation happens overnight. But that bond money isnt going to sit in bonds at 1% interest forever. Its SITTING there, not cemented there. It will flow into dollar backed assets eventually. If the dollar losses reserve status, all dollars will find a home at that point, causing hyperinflation. Tons of overseas dollars that will come home. When they arrive, it will be too many dollars chasing an ever decreasing supply of goods. Inflation. Hyperinflation comes when things like this happen...
1. No one but your own FED buys your treasuries.
2. Interest rates stay low for a long period of time.
3. Government goes into huge spending deficits.
4. You have a trade inbalance.
5. Your currency losses "sentimental favor" to other currencies, or asset backed classes in other currencies, for instance a new gold exchange where you cash out in Euros, or a global currency, etc...
6. You lose reserve currency status.
7. You keep adding credit to the system. Constantly.
8. You grow M3.(fake money on a computer screen leveraged with real assets(remember most real assets are rebounding again.)
FED balance sheet 10 years ago was made up of mostly short medium term treasuries. Now its filled with unsellable assets, purchased for a lot more than a private investor is willing to pay. When the private investor is willing to pay more, then begins a CHANCE to begin decreasing the money supply. The FED buys assets to incease the money supply(look at the FED balance sheet the last two years), and sells them to decrease the money supply. Problem is, when the FED buys something, no one else wants it.