Hyperinflation could happen overnight is how Paul Craig Roberts, former Assistant Secretary of the Treasury in the Reagan administration, describes a future when the rest of the world no longer sees the dollar as a viable store of value. “All of a sudden, people walk into Walmart, as usual, and they think they’ve walked into Neiman Marcus,” says Roberts.
Hyperinflations throughout history, Roberts says, are not triggered by the printing of money but rather the loss of confidence by foreign holders of a currency. One of the great benefits of having the world’s reserve currency is that it has allowed the United States to export much of its inflation over the years. Instead of a world flooded with dollars, much of the excess has been sopped up by our trading partners and recycled into Treasuries. A situation, he notes, that is often counter to their own interests as it’s used to support an increasingly aggressive US foreign policy.
According to Roberts, that confidence will eventually be lost as the US has backed itself into a corner. Decades of jobs offshoring has irrevocably damaged the tax base and exploded the ranks of those now dependent on the welfare state. The combination of the two has created a rising budget deficit that cannot be dealt with politically. The only policy response is to kick the can down the road with greater and greater amounts of debt monetization. Such willful destruction of the purchasing power of the dollar will only be endured by foreign holders for so long before they dump their dollar denominated assets en masse.
The full interview with Greg Hunter of USAWatchdog is below.