Is the economy heading towards hyperinflation?

A lot of our core foodstuffs are traded on the CME and are just as prone to speculation as oil (remember spring/summer '08, the huge price run-up just before the economy fell off a cliff? Speculation.) - wheat, corn, oats, soybeans, all of them have been on a parabolic increase in recent months. This is the food we eat, and the food our food eats. Other basic commodities like cotton are going up - the clothes we wear. On top of that, oil is inching up as well which is how our food gets from one place to another, how we heat many homes, how we get to work.
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We've experienced hyperinflation already in a way since the 70s, when we completely disengaged from the gold standard. Look at wages compared to one of our most basic needs: housing. Housing and other necessities increased dramatically in cost while wages failed to keep up. According to the numbers I pulled from various government publications (take those for what they're worth, but ya work with what ya got), by 2005 median home prices had ballooned to approximately 4.5 times the median income; the standard acceptable ratio for housing to income is 1:3. I'm sure we've all heard that your rent or mortgage should be no more than one-third your salary, right? That's been the "safe" number for many years for a reason: it's what works. When median housing prices shot past that point, to nearly half the median income, there was absolutely zero wiggle room for increases anywhere else and it's how we wound up with a negative savings rate (people spent more than they made - i.e. increased their personal debt to unsustainable levels). We reached a Rubicon at a point where housing was just too expensive and there was no more credit available and that's when everything fell apart, which drove speculators from mortgage-related investments into other areas like oil.

Right now we're looking at stagflation of the worst sort.
Big screen TVs and computers and other luxury items are getting cheaper every year. Food and energy are going up and up and up. Wages are stagnant or decreasing. Unemployment keeps going up.

The stuff we need is getting more expensive. The stuff we don't need is falling in price. With unemployment high and wages in the crapper, it's harder and harder to buy the stuff we need.

Couple that with what is now a mathematically unsustainable national debt. At the same time the consumer is eschewing debt (by choice or by force), the government is piling hundreds and hundreds of billions of dollars of debt onto their balance sheet. Someone's gotta pay that debt back and that someone is *us* and our future generations. The problem is that, quite bluntly, we can't afford to pay it back. Remember, wages are stuck and unemployment is super high, and we've got higher prices on our life necessities.

Where does the money come from to pay our government's credit card bills?

I use the following analogy to explain the national debt issue:
Say you make $25k per year, and you've racked up $5 million in credit card debt. Can you pay this debt off? If not, how do you get yourself out of this mess? Invariably people tell me they'd file bankruptcy and start fresh.
Based on the numbers, that's pretty much where we stand in regard to our national debt.

So what do we, as a whole, do? That debt has to be paid.
We could increase tax collection, but who can afford to pay more in taxes?
We could print more money, but that's about as effective as photocopying your last $10 bill. See the Weimar Republic and Zimbabwe for how that plan works in the end.
We could make incredibly massive cuts in national spending. Medicare and Social Security would have to go. Defense would have to go. Education would have to go. Welfare would have to go.

Or, well, we could file bankruptcy.Argentina did it eight years ago.

There's all sorts of other bits and pieces involved as well - zombie banks, margin compression, bond yields....

This mess is not over and current economic measures will not fix the underlying problems. Those lost jobs aren't coming back any time soon. As the bulk of the boomer population enters retirement, we'll have a lot of people with busted 401(k)s who'll collect a lot more Social Security than we're paying out now

Look at it in a simple way - a 12 pack of Bounty Towels used to be sold for $9.99 (on sale for $6.99) - they are now $18.99 - double the price they used to be - and they have downsized them as well - that is inflation. It began quite a few years ago - but unless you were a bulk shopper - you might not have noticed things such as this.

A can of Green Giant Shoepeg corn used to cost .69cents, it now costs $1.39 for a can that has less in it.

Again, unless you are a bulk shopper you would have never noticed this, nor the dramatic price increase.

Those are two examples I can give you.

We have higher costing commodities on the shelves every day, yet the income levels are not increasing - at least not like they began to back in the late 70's when the oil embargo happened.

There is virtually no chance of hyperinflation or even the kind of inflation the US experienced from around 1973-1982 because factory capacity utilization is way too low and unemployment way too high.
Deflation is a much more serious risk, but you won't hear that from gold fanatics.

Good financial and economic commentaries: PBS Consuelo Mack program [consuelomack.com] (all episodes online). This is far better than the crap usually aired on CNBC and Fox News.

Quote from Piccaboo : Look at it in a simple way - a 12 pack of Bounty Towels used to be sold for $9.99 (on sale for $6.99) - they are now $18.99 - double the price they used to be - and they have downsized them as well - that is inflation.

Regular rolls, double rolls, or mega rolls? IOW how many square feet, because paper companies intentionally make pricing confusing. Are you saying the general inflation rate in the US is 100% annually? If not, what is it?

Also Bounty is owned by the notorious Koch Industries, whose founders started the Cato Institute and are intentionally trying to ruin the US economy by making spills too expensive to be absorbed.

Quote from larrymoencurly : There is virtually no chance of hyperinflation or even the kind of inflation the US experienced from around 1973-1982 because factory capacity utilization is way too low and unemployment way too high.

Inflation has nothing to do with what the economy is doing. It has to do with what the government + fed is doing to our currency. The economy could be in the dumps and they could keep printing/inflating to sustain their debts. We have seen this time and time again in other countries.

Quote from Libertarian : Inflation has nothing to do with what the economy is doing. It has to do with what the government + fed is doing to our currency. The economy could be in the dumps and they could keep printing/inflating to sustain their debts. We have seen this time and time again in other countries.

The point is, despite all the money being pumped into the economy, there's no inflation, nor will there be.

Explain why Japan hasn't had inflation in the 20 years it's been keeping interest rates very, very low, practically zero. It's related to their economy being sluggish and underutilized, the same problem we've been having more recently, only we've acted much more quickly and decisively to remedy our economy, within the limits imposed by the Americans who hate America.

Great analysis mothernature. I don't see much to debate except this ridiculous statement which you did not offer; "...only we've acted much more quickly and decisively to remedy our economy, within the limits imposed by the Americans who hate America".

I can't think of anything that can be done except for what you have already offered, which all seem to point to a slow decline in real wealth.

With them starting to buy our own debt while gold keeps rising Yes hyperinflation is very possible.

Quote from redpoint5 : Great analysis mothernature. I don't see much to debate except this ridiculous statement which you did not offer; "...only we've acted much more quickly and decisively to remedy our economy, within the limits imposed by the Americans who hate America".

You've dismissed the truth as ridiculous but embrace an "analysis" that lacks evidence, such as the claimed hyperinflation that actually didn't occur in the 1970s.

Quote from larrymoencurly : You've dismissed the truth as ridiculous but embrace an "analysis" that lacks evidence, such as the claimed hyperinflation that actually didn't occur in the 1970s.

I have identified falsehood for what it is; absurdly ridiculous. Allow me to rephrase the 2 ridiculous elements of your comment:

1. People who are opposed to deficit spending are ill intentioned haters of America.

2. If the economy continues to decline long-term, the reason behind it will be that the government did not spend enough money that it did not have.

Both implied thesis statements are absurd on their face, and require no further explanation as to why they are false.

Quote from redpoint5 : I have identified falsehood for what it is; absurdly ridiculous. Allow me to rephrase the 2 ridiculous elements of your comment: 1. People who are opposed to deficit spending are ill intentioned haters of America. 2. If the economy continues to decline long-term, the reason behind it will be that the government did not spend enough money that it did not have. Both implied thesis statements are absurd on their face, and require no further explanation as to why they are false.

1. Most politicians who say they oppose deficit spending are liars and are actually responsible for most of it, not only through excessive tax cuts and opposition to necessary financial regulation but their own pet spending programs as well. They also pander to idiots who think the president wasn't born in the US. Furthermore, because they oppose economic stimulus programs, that is, deficits in the short term, they're keeping the economy weak and are making national debt bigger.

2. The long-term decline was initiated by GW Bush and his radical Republicans, including Alan Greenspan, who finally showed his true colors after Clinton left office.

Sorry LMC is trying to trash your important topic with partisan hackery, mothernature.

Hyperinflation is a possibility, though they're exporting so much of our money it hasn't gone "hyper". Rather odd, but such exporting does have a benefit, at least in the short term with all other things remaining constant. Long term is far less predictable. Since the money is being exported by a bank rather than our own treasury the wealth its building in exchange is only feeding the bankster monster rather than our own economy whilst we still hand over our own wealth in exchange for their printing press management and economic manipulation (which I'm sure we all agree with LMC that's proving to be quite the valuable service).

As for the beyond absurd comment that there is "no inflation", indeed our essential items have become inflated at a pace well beyond the pace of our wealth. Not only have essentials inflated but quality essentials have inflated in cost even more so. Sure I like a cheap plamsa TV, but I think affordable quality essentials are far more important and they do not balance the tables.

In 1913 a gallon of milk was ~ $0.13 (two cents in 1909 before the banksters started their big game)

Milk then was not mass produced and thus did not suffer the insanity present in today's "market" milk so I think it only fair to compare it to the same quality of milk, without puss, without hormones, without antibiotics, etc.

A gallon of that milk today will cost you about $6 (on sale, or at a budget grocery store, $7-8 elsewhere). No other adjustments that's a conservative straight inflation rate of ~1875%. One could correct it for other factors, such as average income, but that's like saying the banking scheme isn't taking as much wealth from us as it should.

Granted some level of food inflation should eventually occur when population size gets out of balance with our resource capabilities. Whether that's currently a factor is up for debate.

Quote from SiliconJon : Sorry LMC is trying to trash your important topic with partisan hackery, mothernature. Hyperinflation is a possibility, though they're exporting so much of our money it hasn't gone "hyper". Rather odd, but such exporting does have a benefit, at least in the short term with all other things remaining constant. Long term is far less predictable. Since the money is being exported by a bank rather than our own treasury the wealth its building in exchange is only feeding the bankster monster rather than our own economy whilst we still hand over our own wealth in exchange for their printing press management and economic manipulation (which I'm sure we all agree with LMC that's proving to be quite the valuable service). As for the beyond absurd comment that there is "no inflation", indeed our essential items have become inflated at a pace well beyond the pace of our wealth. Not only have essentials inflated but quality essentials have inflated in cost even more so. Sure I like a cheap plamsa TV, but I think affordable quality essentials are far more important and they do not balance the tables. In 1913 a gallon of milk was ~ $0.13 (two cents in 1909 before the banksters started their big game) Milk then was not mass produced and thus did not suffer the insanity present in today's "market" milk so I think it only fair to compare it to the same quality of milk, without puss, without hormones, without antibiotics, etc. A gallon of that milk today will cost you about $6 (on sale, or at a budget grocery store, $7-8 elsewhere). No other adjustments that's a conservative straight inflation rate of ~1875%. One could correct it for other factors, such as average income, but that's like saying the banking scheme isn't taking as much wealth from us as it should. Granted some level of food inflation should eventually occur when population size gets out of balance with our resource capabilities. Whether that's currently a factor is up for debate.

Unless you live in Alaska or Hawaii, you just shot down your credibility by saying milk is $6 a gallon. It was $1.59 when I bought some a few days ago, $1.79 before that, and I've never paid over $2.29 in the past 3 years. The average non-sale price in Phoenix is around $2.79-$3.49.

Quote from larrymoencurly : Unless you live in Alaska or Hawaii, you just shot down your credibility by saying milk is $6 a gallon. It was $1.59 when I bought some a few days ago, $1.79 before that, and I've never paid over $2.29 in the past 3 years. The average non-sale price in Phoenix is around $2.79-$3.49.

Way to pay no attention or fail to comprehend what I said, or maybe you did but just insist on distorting the argument to fit your predefined disposition. Do you want to try again, or do I have to spoon feed you?

EDIT: Ah, i deleted the more descriptive line and forgot to re-add it, though I think anyone who stops and thinks could understand what I was saying. I'm using milk that is free of hormones & antibiotics, properly fed, and minus the other major shortcuts industry has taken that have greatly reduced the quality and health of our milk. Clean healthy milk to clean healthy milk is the price comparison being made. Puss & drugs in the milk is definitely a disqualifier. To compare puss milk to clean milk prices is not a fair comparison. A gallon of puss milk is $3-4 in my neck of the woods.