Hyperinflation Is Highly Unlikely In Either The US Or UK – Here’s Why

The claims of hyperinflation awaiting the U.S. or the U.K. seem hyperbole at best, misinformation and deception at worst. Hyper-inflation has very specific pre-conditions in foreign currency obligations and a loss of tax revenue and productive resources. ‘Printing money’ alone doesn’t get you there. [Let me explain more fully.]

By Edward Harrison (CreditWriteDowns.com)

What is Hyperinflation
Hyperinflation is the economic apocalypse many doomsayers pose as the logical end to the world’s experiment with fiat money…

Rob Parenteau of the Richebacher Letter wrote to clients about Weimar, one of the worst episodes of hyperinflation:

“Hyperinflation episodes are characterized by rapidly accelerating inflation, a collapsing foreign exchange rate and, eventually, a widespread disorientation and disruption of productive activity. Keynes, writing in 1919, well before the terminal stages of the Weimar hyperinflation had been revealed, characterized the nature of the mayhem involved in such episodes as follows:

“As the inflation proceeds, and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

Is this what awaits the U.S. or the U.K.?…Let’s attack the question using Zimbabwe and Weimar Germany as examples. These are the two most extreme cases of hyperinflation that economic historians have ever witnessed. They are instructive in regards to what causes hyperinflation and what does not.

Weimar Germany 1919-1923
After World War I, every nation which fought was broke because of the war’s cost. No country had enough gold assets to repay the billions of dollars they owed and this was a multilateral problem. For example, Britain could not repay its debts to the U.S. until the other Allies repaid their debts to Britain. The Americans were not sympathetic. The prevailing desire was recovering the over $25.5 billion the U.S. had loaned to other nations during the war.