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.
I enjoyed the discussion. We need our “leaders” to listen to him. I too am amazed at how long we’ve been teetering on the edge. There must be some secret avenues of income that’s used to keep those stupid wars going. Maybe the central banks collude amongst themselves to do this.
I agree with some of what he is saying. But, I disagree about the welfare. It is not helping, it’s crushing our economy. Because people are allowed to get rewarded more money than I make and NOT HAVE TO WORK!
I know many in my area that won’t work because they can make more and not have to. This practice has been going on for past 20 years! My generation has started it and their kids, then their kids. I believe in helping anyone willing to try to help themselves, first. But the way you get help now is you have to do nothing at all to get it. Those of us who take pride in ourselves to get the American dream, work hard and don’t live above our income, get screwed
Also, more people are on social security at a way to early of age than ever, because of their so called disabilities. I know people with disabilities that still works in restaurants, our local paper mill, etc. It can be done.
Most of all the people who never pay any taxes include non-Americans that receive social security. The prison system is full of illegal criminals that we have to feed and give medical and dental. They have it better than my grandparents on social security
Spending as a whole in Washington is way to much. I am sorry we cut back when times are hard. Why can’t they cut back? Everyone of them can learn to live on less, too. Why is anyone better than anyone else in that capacity? Too many chiefs, not enough Indians! (so to speak) LOL. By the way, the price of a dollar is already worth less than the paper it is printed on!
Welfare is maybe a necessary evil – for people who are really disabled or too sick to function in a way they can make money. I can’t understand people who can do it on themselves, would opt for social security – just thinking about being able and idle, sucks. Social security should be very strictly reserved, for people that can’t possible make it in society…
Generally, government should have very strict budgets, and people should vote directly when it comes to the use of their tax-money.
FAQs on Hyperinflation that people may find interesting:
Unfortunately, one must temper the valuation of ANY commentary by Mr. Roberts by the fact that he is a 9/11 “truther”. Yes, I know it is hard to believe that about this man, but yes, he seriously believes that there were secret explosives planted in the World Trade Center and that we have been lied to about what happened on 9/11/01, as part of a conspiracy (and given his anti-semitism as well, one can only suspect he blames the Jews.) Don’t believe me? Just take a look at his own blog! See http://www.paulcraigroberts.org/, and read his post of Jan 2, 2013, entitled “Does truth have a future in America?” Now, regarding the subject at hand, hyperinflation may indeed be coming, and nuts like Mr. Roberts can sometimes speak the truth (and a stopped clock is right twice per day), but that doesn’t change the fact that this man is, in all seriousness, nuts! Paul, I encourage you to limit yourself to interviewing only *sane* people in the future. I have no doubt that there is no shortage of sane people with valuable perspectives out there on subjects such as hyperinflation. Worrying about hyperinflation isn’t nuts. Conspiracy theories about 9/11/01 are. Steer clear of the people who belong in rubber rooms, please!!
Yes, hyperinflation can happen at any time through loss of confidence in the US dollar, but this would force other nations to ask “which currency would become the next dollar?” Ultimately, physical gold bullion would be too cumbersome to meet the transactional standards of modern societies and there are pros and cons to the greenback being the world’s reserve currency. Obviously, there are conveniences in dealing with one currency as opposed to a cluster bomb of several different bank notes of various valuations. Also, the United States is a unique geo-political superpower that can technically handle the pressures of a reserve currency, although the moral aspect is a different topic. Finally, no one spends money like the American consumer and this allows some of our so-called “enemies” like China to benefit: after all, who buys cheap Chinese crap besides Americans? And if something were to disrupt that spending, almost every other nation would experience a dramatic turn for the worst in standards of living.
Therefore, I see a situation where other nations scramble to come to America’s aid to keep the fiat ponzi scheme going for everyone.