The debt hawks are to economics as the creationists are to biology.
Today, September 13, 2010, a debt-hawk named Vincent (I withhold his last name to spare him embarrassment) told me his prediction: Because of “excessive” deficit spending, the U.S. will have hyperinflation next year, 2011. While there is no specific definition of hyperinflation, his definition is 3% a month (which means prices would have to be 43% higher at the end of December 2011, than they will have been next January).
Debt hawks love apocalyptic statements about how America is headed for disaster. They have been predicting massive inflation since 1980, by publishing “debt clocks” and such, and their assurance that China soon will stop buying T-bonds has them in a tizzy.
I’m posting this now as a reminder, which we can revisit at the end of 2011. Vincent, if you read this post, be sure to remind me at the end of next year.
If any readers see any other sky-is-falling, debt hawk predictions, send them to me for posting and later review.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
No nation can tax itself into prosperity
Hyperinflation only occurs IF and only IF the the masses demand higher wages. Also, the Fed will need to proactively involved to avoid it. However, if these happen then I think by 2013 we’ll have hyperinflation. But more likely it will occur in 2015 due to rising oil prices – as oil starts to peak properly and scarcity forces rationing.
The masses always demand higher wages.
Hyperinflation occurs when a government responds to inflation by printing more money, rather than by raising interest rates — the proper response.
So now we have predictions of hyperinflation for 2011, 2013 and 2015. I’ll save all these predictions, and remind the forecasters when these dates come and go without hyperinflation.
Rodger Malcolm Mitchell
I don’t think raising interest rates are the proper response to inflation as it penalizes people with variable rate mortgages and credit cards,just as too low interest rates penalizes savers and pensioners with bonds.A variable sales tax,and taxing interest income and dividends over 10,000 a year at normal rates rather than at a reduced rate would be better.The variable rate could be as low as .25% to stimulate sales and as high as 10-25% to reduce demand.As long as politicians could be taught taxes are NOT for revenue but to reduce income spread and and control inflation.
Or by raising taxes which has the same fiscal effect – put the excess currency out of use. In the case of taxes permanently.
There will be no hyperinflation in the US, UK or Japan. Taxes are too high for that.
Tax increases reduce the money supply, which historically leads to recessions and depressions. Interest rate increases have not had this adverse effect.
Rodger Malcolm Mitchell
Rodger,
Today is December 6, 2011. According to Vincent, US by now should be experiencing hyperinflation, Has it happening yet? I am still waiting for it!