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The Hyperinflation Risk

Friday, March 4, 2011, 2:04 PM
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Despite the weak and increasingly ignored protestations of the Fed to the contrary, the world is in the grips of a pretty significant inflationary event. A little bit of inflation is a containable event. A hyperinflationary event is not.

In our most recent podcast, John Williams told us that he considers hyperinflation to be a serious risk for the US by the end of 2011. In order to understand this risk, we need to understand just a few terms and then link them to a couple of ideas.

The first set of terms was brought up in a recent question by a member:

I'm having trouble connecting the dots regarding the US dollars as reserve currency and related issues. The part that I'm having trouble understanding is around repatriation of the dollar by foreign countries. How does this actually happen?

~ jnlyons55

Good question. There are many ways, but the mechanisms are roughly the same, so here's one.

 

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