Currency Devaluation and its Impact On Real Estate

I am bringing up this topic because as we all know, the Federal Government right now is in the process of intentionally devaluing the dollar and we must all know as investors where we need to put our money. History repeats itself. Being in the right place in the right time is not luck. Those who study history and predict the future based on historical events will be those who seem to always be the ones who get the lucky breaks.

The Federal Reserve is printing money like it is going out of style. Bailout after bailout, all for “the good of the people” since we are in “the worst recession since the Great Depression”. Well, those of us who are not economically challenged know that this is not true.

Carters recession was significantly worse than what we have today. 15% unemployment compared to 8.6% today. Interest rates from 16% for a home to 26% for every day loans. No comparison to today.

The average recession lasts 4 months max. A real bad one lasts 2yrs (1973 oil crisis). That is with NO bailout. Carters recession officially lasted from January 1980 to July 1980. Again, NO bailout.

Obama predicts our deeper than ever recession to last another year. Well, lets say this was one of the worst in history. With NO bailout it should have already been over. This is not about a recession. It is about ruining the economy to create hyperinflation.

So why are they doing this? It is common knowledge that when a country prints money that they don’t have in this manor that the direct result is currency devaluation and hyperinflation.

Take a look at Germany after being devistated from World War 1. We did not go back and help rebuild as we do these days. Germany was a wreck and they had to make the country habitable, so they printed money like it’s going out of style to rebuild. It takes 4-5 years for hyperinflation to show it’s ugly head from this irresponsible behavior.

The war started in 1914 and ended in 1918. In 1922 the effects were felt to a massive degree. 1 year prior to the currency inflation was price inflation. By July 1922 prices had risen by 700%… By 1923 inflation rates were 100% per month. Experts say that the United States inflation will closely match that of Zimbabwes hyperinflation which was 50% per month.

1923 Germany had 2000 printing presses out of 300 paper mills printing money 24hrs a day to try to keep up with inflation. Unions fought for frequent pay increases and couldn’t keep up. Various white collar worker groups and farm workers fared the worst as they had no unions to fight for pay increases for them so they were reduced to hunger. (Another incentive for the Obama administration to show the value of unions)

People were being paid 3 times a day. Their wives picked up the cash so they could spend the money quickly on goods as the prices rose by the hour. A wheelbarrow of cash bought a loaf of bread.

This set the stage for the Nazi party and Hitler to take over the country, and kill the corrupt politicians and the Jews who they felt were the culprits of their oppression when in reality it was directly caused by the mass printing of money by the government. The population was desperate for action to be taken so Hitler was well receipted.

So why hammer our economy? Why are our corrupt politicians doing this? There are countless examples in the past that show the consequences of these actions.
Angola in 1991, Argentina in 1975, Austria in 1921, Belarus in 1994, Bolivia in 1984, Bosnia in 1993, Brazil in 1986, Bulgaria in 1996, Chile in 1971, China in 1948, Danzig in 1923, Georgia in 1994, Germany in 1923, Greece in 1944, Hungary in 1946, Isreal in 1970, Japan in 1943, Krajina in 1993, Madagascar in 2004, Mozambique in 1976, Nicaragua in 1987…. And the list goes on and on and on!!!

The reason is when they tank the dollar; the debt to China and other countries will greatly diminish. It will quickly become worthless. This is why China is angry with us right now and the reason for their attempts to hedge against the US government’s plan of action by creating a new international reserve currency to replace the US dollar.

Now how do we benefit and who will be the losers? Inflation hurts some and helps others by redistributing wealth and income. The consumer is hurt by high prices of goods and the manufacturer benefits from the high cost of goods. People on fixed incomes and creditors will suffer while debtors will be rewarded greatly.

Business will boom and unemployment will vanish until the final stages of inflation. Those who have access to credit borrow heavily and inflation will wipe out their debt.

Although most businesses are booming there will be a severe depression in consumer goods such as textiles, meat, beer, etc. The consumer is who gets hit the worst and they no longer can afford new clothing or anything that may be considered a luxury item, like meat. Everyone is on the rice and beans or Kraft mac and cheese diet that Dave Ramsey talks so much about.

The most successful will be those who borrow to the hilt and buy up goods and non-luxury item companies at severe discount prices.

The final stages on hyperinflation will be a complete collapse of the economy and soaring unemployment.

At this point the German government issues a new currency that will supposedly be stable in value. The people are willing to take on this new currency because it is better than what they presently have and they will put their faith in it at least until it is proven to be false. Ladies and Gentlemen, let me introduce the Amero, step number one in the New World Order.

How investments hedged the inflation:
First of all, white collar workers and skilled blue collar workers used to living well found that their salaries significantly dropped when hyperinflation hit due to the fact that their 100K a year buys 5-10K of goods.

Those who depended on their savings (worthless) pensions (worthless money) or investment income like dividends starved. The elderly will suffer.

-Savings deposits interest becomes worthless.

-Stocks stop paying dividends because the company needs money for working capital and speculation as companies at this point are buying raw materials, equipment, etc like crazy.

-Cash, of all investment forms, this was the worst investment.

-Bonds and Mortgages (notes) – They will drop faster than cash

-Real Estate - Owners of rental property fare no better if the government freezes rents as they did in the last period of hyper-inflation in the US. They requested nationwide to all investors to not raise rents for the next few months and promised government compensation to make up for it. They then reneged on their promise. Germany froze rents for the entire period. Large cities in the last period of hyperinflation in the US like New York imposed rent freezes and landlords sued the city. Over time they won but were still out of cash.

Those with mortgaged property benefit. The inflation wipes out the mortgage debt however rent freezes mean no income as the rent paid is now worthless. Those who hold real estate throughout will manage to save the capital thus invested. Those who sell during the inflation via a desperate need for cash will fare poorly. Since it is not an income producing property it will sell extremely low.

Foreign exchange – The government will quickly put restrictions on exchanging currency to buy gold, or other stable international currencies. Those who exchange their money prior to the laws will be able to save and maintain their capital but not necessarily gain much capital.

Personal property – will fare better than cash when bought at the onset of hyperinflation. This includes things like rare coins, stamps, jewelry, works of art, antiques, etc. Just a hedge, not necessarily a lucrative investment.

Common stocks – will fare pretty well for those who have a well diversified portfolio in solid well established companies and the purchase would need to be at the onset of inflation. Most in this category will retain a great deal of their money as we come out of the inflation.

So, where is the money? The money is in real estate IF there are no rent freezes. The money is with those who are able to maintain real estate and were heavily mortgaged. The money is in non luxury item businesses and manufacturers.

Anyone wants to add to this via historical research please do so. This is a great group of intellectuals. We must fully understand what is coming our way so we can not only hedge against hyperinflation but take advantage of it.

Everyone’s looking for HYPER INFLATION…But the reality is two fold…

  1. Very RARELY does the EXPECTED occur and BIG TIME INFLATION is exactly what EVERYONE is expecting. If this WAS NOT true there would NEVER have been a housing bust, a stock market collapse, or any other UNFORESEEN event. Sure some of people saw the housing bust coming, some saw the stock market crash approaching, but the VAST MAJORITY didn’t expect it. They WATCHED IT HAPPEN. The PROOF is in the numbers.

  2. The reality of our current situation is much more aligned with the Great Depression and a DEFLATIONARY EVENT. Think about it…EVERY ASSET CLASS IS FALLING in value. From classic cars to stocks to antiques. If history is a guide we WILL see inflation and rising interest rates…BUT…The countries you mentioned in your example WERE NOT the largest economies on THE PLANET. Also Germany was FORCED to pay reparations for WWI that scholars NOW know destroyed an economy already on the brink and ravaged by war. Most hyper inflationary events follow some type of war or hostile Goverment take over. Could it happen here??? ANYTHING could happen.

You bring up some very interesting points and I actually agree with a lot of your ideas…But my GUT tells me we’re in UNCHARTED waters and I DO NOT expect this event to follow ANY previous road maps, so who knows???

But…I do applaud you for PREPARING for the unknown and starting this topic!!! :beer

Angola in 1991
Argentina in 1975
Austria in 1921
Belarus in 1994
Bolivia in 1984
Bosnia in 1993
Brazil in 1986
Bulgaria in 1996
Chile in 1971
China in 1948
Danzig in 1923
Georgia in 1994
Germany in 1923
Greece in 1944
Hungary in 1946
Isreal in 1970
Japan in 1943
Krajina in 1993
Madagascar in 2004
Mozambique in 1976
Nicaragua in 1987
Peru in 1988
Philippines in 1944
Poland in 1989
Republika Srpska in 1993
Romania in 1998
Russian Federation in 1921, 1993
Turkey in 2005
Ukraine in 1993
USA during the Revolutionary War and Civil War
Yugoslavia in 1989
Zaire now the Republic of the Congo in 1989
Zimbabwe in 2004

“”“The countries you mentioned in your example WERE NOT the largest economies on THE PLANET.”“”

Which countries do you wish to see on there?

“”“Very RARELY does the EXPECTED occur and BIG TIME INFLATION is exactly what EVERYONE is expecting”“”

I think you misunderstood my point. I didn’t say that hyperinflation is what is EXPECTED to happen. I said hyperinflation is what is INTENTIONALLY BEING MADE to happen and your HERO THE MESSIAH WILL pull it off.

“I think you misunderstood my point. I didn’t say that hyperinflation is what is EXPECTED to happen. I said hyperinflation is what is INTENTIONALLY BEING MADE to happen and your HERO THE MESSIAH WILL pull it off.”

Hooch, while I believe you are right about hyperinflaction, I am curious as to why you think it is being intentionally made to happen by Obama…

positive,
Not to overstep hooch,just my view here.I think tax cheat geithner let it slip in an interview,“world currency”.This way when the dollar falls the only thing left the govt would’nt own is our personal dollars and they can give you say .30cents on the dollar to “bailout” all.Then the next day,welcome to communism.Thats my view anyway.Again all appologies to hooch,this is your post and this is my opinion.

That’s an impressive list…

OF THIRD WORLD ECONOMIES!!!

But I do have to admit…I’m losing sleep at night WORRYING about a repeat of the hyper inflation that occured in

THE REPUBLIC OF SRPSKA!!!

The Serbian and Bosnian examples were great too…If the Italians and the Irish ever start a campaign of ETHNIC CLEANSING in South Boston I’ll REALLY worry about hyper inflation HERE.

I HOPE you realize the LIST you just posted outlines almost every WAR these regions have ever seen. You’ve got the USA during OUR war years, China and Japan immediately following WWII.
So unless the USA decides to attack ENGLAND or the South actually decides to “DO IT AGAIN!!” The odds of seeing ANYTHING even REMOTELY CLOSE to what your predicting is a LONG SHOT. But who knows…maybe YOU could start a new revolution against all those nasty NORTHERN UNIONS that are ruining this country!!! Confederates VS The UNION II…The RIGHT TO WORK REMATCH!!

Stick with what you crazy right wingers know best…

FEMA CONCENTRATION CAMP PHOTOS,
Trickle down economic theory,
United Nations world domination plots, and
CRYING about getting your @sses handed to you in the recent elections!!!

Here’s what a Nobel prize winning economist thinks…

http://www.businessinsider.com/krugman-all-this-inflation-fear-mongering-is-a-right-wing-plot-2009-5

You’ll LOVE this Hooch!!!

So, where is the money? The money is in real estate IF there are no rent freezes.

And we know that is IMPOSSIBLE with our new socialist government wanting to control everything!

Well, that added completely nothing to the conversation FDjake…

If you would use your intellect and spend half the time you spend insulting people with your adolescent tripe, you might add something worthy to the discussion… you are certainly capable of much more…

And let me save you and everyone else some time from the obvious over-used diatribe directed at me from you, which was sure to be next… Positiveoutlook is a “one-flip wonder” , “one deal”, “termite infested”, etc… :rolleyes

Let’s move on to the discussion… if you are going to argue against hyperinflation, which I personally don’t see the evidence for, but rather the opposite, then stick with that…

The Chinese will not continue to finance our debt without a return… they already are pulling back and we need ANOTHER 2 TRILLION from them and other sources for this year ALONE… Then when they watch how the government is BREAKING CONTRACT LAW, and the investors are getting screwed, it does nothing but add RISK to the equation, which they will want to be compensated for in the form of higher rates…

http://www.usatoday.com/news/washington/2009-05-28-debt_N.htm

One of the GLARING facts from the above article, is that we would need to put aside an additional 18.7 TRILLION TODAY in an interest-bearing account along WITH collecting the current Social Security taxes at the current rate…

So even though Social Security, since it’s inception, has ALWAYS taken in MORE than it outlays every year (hence, the hidden tax), they are TRILLIONS in the hole, just on this ONE social program run by the government…

All that misery so that the average person can enjoy a 1.2% ROI for their money, and a whopping average payout of $12K per year, amounting to no more than a part-time job… :banghead

Call me an idiot, but I would rather KEEP the money being extracted from my gross, and what my employer pays GIVEN to me or direct it into an IRA, which couldn’t be touched, and even if it only average 2.5% would DOUBLE what I am getting with the current PONZI scheme, HiddenTax known as Social Security…

If I have a problem with a point HOOCH is making…Maybe you could just STAY OUT OF IT!!! As far as adding NOTHING to the conversation I couldn’t DISAGREE MORE. I think pointing out that almost EVERY SINGLE EXAMPLE he used was of a Country at WAR or POST WAR might be considered IMPORTANT to OUR current situation and HIS THEORY!!!

As for the rest of your post…POSTIVEOUTLOOK…

I AGREE WITH YOU 100%

I would MUCH rather have the THOUSANDS and THOUSANDS of dollars the Goverment has taken from me over my working life. I KNOW i could do a much better job investing that money than they did. BUT…I will say this…MOST people WOULDN’T SAVE A DIME OF IT!!! You know that, and I know that. And guess what??? You and I would be SUPPORTING these people EITHER way. Personally…I’d rather see them get $12,000/ year than the both of us having to spend $40,000/year to keep them in prisons. I’m sure you’d agree that if these idiots got NOTHING they’d be attempting to TAKE what they needed. Thus ending up in prisons.

I also completely agree with you that Social security is EXACTLY a ponzi scheme. It is LITERALLY the definition of the term.

I’m not in agreement with what our Goverment is doing here and WE WILL PAY FOR IT in the long run.

From what I can see NEITHER party is REALLY making the hard decision that must be made. Having said that…We ARE in COMPLETELY UNCHARTED WATERS here. It turned my stomach to see the bankers and car companies get bailed out for the stupid business decisions they made. But the alternative was what??? Do nothing and UNEMPLOYMENT would explode…You could see what was coming…There was NO WAY any sitting President of ANY party would simply let that happen. Unfortunately…That’s EXACTLY what NEEDED to happen. A complete WIPE OUT…A RESET…But I base my investment decisions on what WILL happen…Not what SHOULD…It forces you to PLAY THE HAND YOUR DEALT, NOT THE ONE YOU WANT!!

I also completely understand your frustration with this. You sound like someone who has LIVED WITHIN HIS MEANS, saved some money, didn’t run up credit cards to 5 figures or bought a home he couldn’t afford…I’m right there with you…We did it right…NOW WE GET THE BILL!!! Have you ever seen me write a SENTENCE here saying I LOVE WHAT’S HAPPENING TO OUR COUNTRY??? NOPE…Never have…I UNDERSTAND what’s happening…It’s the CLASSIC knee jerk reaction…No one in this Country likes PAIN…But with NO PAIN, there is NO GAIN!!!

Having said all that…It DOES NOT mean we are going to see inflation rates at levels other Countries see only when WAR erupts.

That’s my point…We’ll see inflation, NO DOUBT ABOUT THAT…But at NO WHERE NEAR the levels outlined in HOOCH’s example.

““Hooch, while I believe you are right about hyperinflation, I am curious as to why you think it is being intentionally made to happen by Obama…””"

I don’t think the Obama crowd is as economically ignorant as they seem. The Bush administration either (they started the bailout and the FED started printing significantly more money during his administration) I am confident they understand the ramifications of their actions. As I pointed out there are countless examples of hyperinflation and what it is caused by. The printing of money with nothing to back it. For any purpose, war, to catch up with inflation, etc.

It is my feeling that this is intentionally being done to make paying back our national debt easy and quick. Remember, note holders get screwed royally during hyperinflation. China’s debt will become worthless. This is why China right now is taking counteraction against the US.

The bailout is only a very small portion of the damage that has been caused. The Federal Reserve has printed trillions upon trillions of dollars that was not borrowed from China. It was printed out of thin air. A couple of months ago congress was questioning Ben Bernanke about this astronomical amount of money the Federal Reserve is printing and demanded that he tell them where it has gone and who are the recipients. His firm answer was NO.

We all know printing money out of thin air beyond what is already in circulation causes inflation. Doing this to a massive degree causes hyperinflation. Now lets say that you printed the money, refused to tell where the trillions upon trillions went to and held it. In all actuality it went nowhere. You intentionally create hyperinflation which has a temporary uplift to the economy by eliminating unemployment and creating a massive boost to business and the borrowing of money for speculation. The value of all notes drop like a rock and 1 Trillion of debt becomes equivalent to 1 billion of debt. You then take the printed money that you set aside, pay the notes and you are in the clear.

“”“Again all appologies to hooch,this is your post and this is my opinion.”“”

Sellnbama, this is why I posed it. I want to hear peoples opinions. If we figure this stuff out we will be able to position in a way that we all will walk out of hyperinflation as extremely wealthy people. Those like fdjake who don’t look for the signs will loose their buts in a massive way. It is an undeniable fact that printing money you don’t have causes inflation. This clown thinks printing money you don’t have causes deflation. Whether or not it will create hyperinflation is the ultimate question. It is my opinion that the Federal Government is intentionally creating hyperinflation to get rid of our national debt. I mentioned Obama as being the culprit just because I don’t like him but in reality both him and Bush and whoever the puppet masters are (Bidelberg Group), who is responsible.

“”“But I do have to admit…I’m losing sleep at night WORRYING about a repeat of the hyper inflation that occured inTHE REPUBLIC OF SRPSKA!!!”“”

I don’t worry about hyperinflation here or anywhere. I am just educating myself and having a discussion with others about how to prepare for hyperinflation and become wealthy from it if and when it comes. Look FD, I am not a reactive businessman. I am proactive and stay ahead of the curve.

And in your comment why didn’t you say that you don’t loose sleep from China, Russia or the United States going into hyperinflation and that all of these countries are small 3rd worlders?

“”“I HOPE you realize the LIST you just posted outlines almost every WAR these regions have ever seen.”“”

Yes, I am perfectly aware of that. Countries print money from thin air during war!!! War boosts an economy because of the inflation that happens afterward!!! Liberals really need to be required to get a little economic education prior to giving economic advice. It’s like arguing with a kid that says 2+2 doesn’t = 4.

Wars are started to prevent deflation and you tell me that we are going to slip into deflation. Go do a little research first and then come back here and try to debunk my theory.

“”“http://www.businessinsider.com/krugman-all-this-inflation-fear-mongering-is-a-right-wing-plot-2009-5
You’ll LOVE this Hooch!!!”“”

I love hearing economic theories from the radical left. They are quite commical. Very similar to Nobel Peace Prize Winner Al Gore and his man made Global Warming HOAX.

A quote from your radical leftist economist.
“”“But these aren’t ordinary times. Banks aren’t lending out their extra reserves”“”

I can’t tell you how many times I have heard the left say “this is different this time”. This is different because it is “banks that we are talking about”. Give me a break!!!

The recession supposedly started in December 2007. Since then 61 banks have failed.
http://www.fdic.gov/bank/individual/failed/banklist.html

Tell me how that even closely compares to the S&L crisis where over 500 banks failed.

The hyperinflation I am referring to will be on the lines of the Jimmy Carter days…

This, in of itself, will do more damage to people than letting GM / Chrysler fold… the kicker about that whole situation is that they could have don’t the same thing they are telling us now they have to do last September, and literally saved us 10’s of BILLIONS of dollars.

The argument was we couldn’t let them go to bankruptcy, and now we are…

But we KNOW why they didn’t do it back then… if they had gone into bankruptcy BEFORE Obama gave the unions their unequitable ownership, their exisitng deals would have had to be re-written… Now, the government will own 72% of GM, instead of the forecasted 50%, and we know where Obama will place the weight of the government on… the unions… add to that the unions new ownership, and it was one HUGE political payback… BREAKING CONTRACT LAW, and unraveling almost two centuries of precedant…

If the breaking of these contracts are allowed to stand… NOTHING will be safe, RISK will be upturned for EVERYTHING, and EVERYTHING as a result will cost MORE…

And guess who gets to pay for all this… yep, the same people they say they were trying to help…

ADD to this… a national sales tax

ADD to this… nationalized healthcare, with a TAX for everyone

ADD to this… Social Security

ADD to this… TRILLION dollar deficits

ADD to this… CAP and TRADE TAX (costing everyone THOUSANDS per year)

ADD to this… ADDED Tax to cars, making people not only pay a tax, but FINANCE it…

ADD to this… Obama has spent more in the time he has been in office, than ALL OTHER PRESIDENTS, INCLUDING BUSH… Combined! :banghead :banghead

The Dem’s have been in CONTROL of the checkbook and ALL MAJOR LEGISLATION since 2006, and we have seen NOTHING but SPEND, SPEND, SPEND… and then Obama gets in office, and they spend even more… dramatically more!

The INCREASED deficits since Dem’s took over in 2006, TARP, “Stimulus”, Omnibus, AIG Bonuses, BILLIONS lost on the car industry, the new 3.5 TRILLION budget based on receipts that are falling WAY SHORT… This is ALL Democrat/Obama programs…

And according to Obama - “we ain’t seen nothing yet”

So, how exactly with all that considered, do you see us escaping not only inflation, but hyperinflation?

FDJAKE says:
“”“The reality of our current situation is much more aligned with the Great Depression and a DEFLATIONARY EVENT. Think about it…EVERY ASSET CLASS IS FALLING in value. “””

Then FDJAKE says:
“”“That’s my point…We’ll see inflation, NO DOUBT ABOUT THAT…But at NO WHERE NEAR the levels outlined in HOOCH’s example.”“”

Which one is it our economic genius??? You speak out of both sides of your mouth just like Obama does!

Sorry for the hard smack down but someone has to smack you back into reality and I though I would be a good candidate for it this time.

You mean a hard “smack down” like YOU comparing the USA to ANGOLA or SERBIA. :shocked

Another BRILLIANT “set up” by HOOCH :biggrin

If you had ACTUALLY studied what happened during the depression you’d know we INTIALLY went through a period of DEFLATION…That event was followed by INFLATION.

Believe it or not GENIUS, this is how markets actually WORK…Markets react to OVERSUPPLY by DEFLATING…Just like our HOUSING MARKET is deflating RIGHT NOW. Once a certain point has been reached, the market will start to INFLATE as people scamble to buy homes (or what ever asset has deflated) as prices for those things begin to INCREASE. This lights off the next phase of the cycle. OVER DEMAND for LIMITED assets.

It doesn’t mean we’ll be living in ANGOLA or SERBIA like economic enviroments like YOU mentioned.

I can’t believe I actually have to EXPLAIN this stuff.

My smack-down speaks for itself. Words directly out of the horses mouth.

FDjake,

Referring to Reply #10

“So, how exactly with all that considered, do you see us escaping not only inflation, but hyperinflation?”

I don’t think I said we WOULDN’T have inflation… I believe I said we WILL have it, but it will follow a DEFLATIONARY period. We could absolutley see the type of inflation that was around during the Carter days as you mentioned.
But…That level of inflation is a FAR CRY from what Hooch was using as examples. I don’t remember my father getting paid “3 TIMES A DAY” during the 70’s as Hooch mentioned is his post. (I know he was using Germany as an example) Those events ALL took place around OUT RIGHT WAR or a COMPLETE COLLAPSE of central Goverment.

Another point to remember about a DEFLATIONARY event being followed by INFLATION is this…If you own a home that you paid $300,000 for in 2006 and in 2009 that home is worth $200,000…Is it REALLY Inflation if the price of that home RISES to $250,000 at some point a few years out??? If you looked at this example on PAPER and used 2009 to 2011 as your bench mark it COULD look like housing INFLATED by a HUGE margin. The REALITY of it is…The DEFLATIONARY event was so powerful that the ensuing inflation had almost no effect. A ZERO sum game.

As we said the other day…I don’t see the THIEVES we have running the Goverment (on BOTH sides) letting this gravy train slip out of their hands. And WATCH…If it gets to the point where it even LOOKS like it could…THEN and ONLY then…will you see these clowns come together to save their own @sses. Not OURS…THEIRS and the MACHINES!!!
This in my opinion is THE ONLY reason TARP got passed. They were sat down and TOLD in no uncertain terms…IF YOU DON’T APPROVE THIS…EVERY SINGLE ONE OF YOU WON’T BE HERE NEXT ELECTION!!

That’s MY theory…We WON’T get TRUE HYPER-INFLATION because that would be the complete undoing of the political system in this country. It worked out that way for almost EVERY example in Hooch’s post. That level of inflation CRUSHES Goverments.

I’m not saying it COULD NOT happen…But my money says it won’t.

If you’re interested, there’s a REALLY eye opening book written about this very subject by Robert R. Prechter Jr. called “Conquer the Crash”
It was written in 2003 so everything that he expected to happen HAS happened. He’s not a political person and the book takes no sides on that issue. This guy is considered an EXPERT in Elliot Wave Theory with regards to Stock price cycles.
I think you’d find the book fascinating.

Prechter calls for a DEFLATIONARY event, but on a very large scale. Once this is completed he does mention inflation at higher levels.

This is NO JOKE folks…I heard a great quote the other day…

2009 to 2010 will be the year that either MAKES YOU or BREAKS YOU!!!

I agree.

“”“But…That level of inflation is a FAR CRY from what Hooch was using as examples.”“”

My example was based on Germany’s hyperinflation which is a worst case scenario and a great demonstration of what investments failed and what profited tremendously. Experts predict our hyperinflation to be equivalent to that of Zimbabwe’s which was around 50% inflation per month! Germany’s was double that but Zimbabwe’s is considered almost catastrophic.

“”“I don’t remember my father getting paid “3 TIMES A DAY” during the 70’s as Hooch mentioned is his post. (I know he was using Germany as an example) Those events ALL took place around OUT RIGHT WAR or a COMPLETE COLLAPSE of central Goverment.”“”

As I said, my case study was Germany, not the US, and they lost the war and had to rebuild themselves. It would be interesting to study Zimbabwe. We are in OUT RIGHT WAR and our Government WILL completely collapse if they continue to act against the WILL of the people. The difference is that our infrastructure is not being attacked.

“”“Another point to rememebr about a DEFLATIONARY event being followed by INFLATION is this…If you own a home that you paid $300,000 for in 2006 and in 2009 that home is worth $200,000…Is it REALLY Inflation if the price of that home RISES to $250,000 at some point a few years out??? If you looked at this example on PAPER and used 2009 to 2011 as your bench mark it COULD look like housing INFLATED by a HUGE margin. The REALITY of it is…The DEFLATIONARY event was so powerful that the ensuing inflation had almost no effect. A ZERO sum game.”“”

Nice, an inflation isn’t real statement. Only from a liberal. How about the cost of goods and raw materials that will go through the roof in times of hyperinflation. Is that a Zero sum too? I don’t think you understand hyperinflation clearly if you make a statement like this. This is what we are talking about, hyperinflation, not inflation. We are not talking about normal ebb and flow of the economy.

“”“As we said the other day…I don’t see the THIEVES we have running the Goverment (on BOTH sides) letting this gravy train slip out of their hands. “””

Paying off China’s debt with worthless dollars during a period of hyperinflation is a perfect example of what these “THIEVES” would do. And those who are on the inside and know for a fact that they are creating hyperinflation will become more wealthy than you can imagine. Just pretend that you are one of them and know for a fact that hyperinflation is the game plan. HOW could you NOT win?

“”“And WATCH…If it gets to the point where it even LOOKS like it could…THEN and ONLY then…will you see these clowns come together to save their own @sses. Not OURS…THEIRS and the MACHINES!!!”“”

You keep missing the point, it is intentionally planned. As I said time and time again, everyone knows what happens when you print boatloads of money out of thin air which is exactly what they are doing. Do you actually think they are that STUPID?

“”“That’s MY theory…We WON’T get TRUE HYPER-INFLATION because that would be the complete undoing of the political system in this country. It worked out that way for almost EVERY example in Hooch’s post. That level of inflation CRUSHES Goverments.”“”

I disagree. I think their plans are for “managed” hyperinflation to eliminate our debt. I am not saying it can be “managed”. I am saying that the Federal Government thinks they are capable of doing so. China apparently thinks that is what they are doing as well.

One thing I do know is that they do not care what happens to the average Joe. Creating hyperinflation will be creating a new “gravy train” for themselves. Whenever one profits, another must fail. For those to profit significantly, others must fail miserably. Originally the entire bailout was to help the people, from the bottom up. I would love to hear examples of people you know that have been helped. Those who kept their house from foreclosure with bailout money. Actually, I would be interested in hearing about even one person.

The focus is in their pockets. They speak to the public and do a completely different thing. They position their thievery in a way that makes the “sheep” feel that they are screwing them in their best interest.

As long as they don’t suffer, it doesn’t matter. The “sheep” say, that’s my guy, he’s going to help me. My local congressman is the good guy. He is looking out for me. It’s the other clowns that are running things into the ground. Not My Guy!

The Politician says to his constituents, “gosh darnet!, things are going to “change”! We need this and we need that and I am going to fight for you. It’s about time we clean up Washington.”

The Sheep say I Baaaa leeeeeve you while his pockets fatten and nothing ever happens. When it does happen, the big wonderful new plan ends up benefiting those who paid for their election and screwing the people. It all looks great on the surface though

“”“I’m not saying it COULD NOT happen…But my money says it won’t.”“”

I stopped putting my money on the dirty bastards a long time ago.

“”“Prechter calls for a DEFLATIONARY event… He’s a BIG GOLD and CASH guy.”“”

Gold will preserve your wealth through hyperinflation as well but you are out of luck on the cash and you will loose every thing you have worked for.

“”“Getting this RIGHT is very important…If you make the wrong bet here it can CRUSH you.”“”

I agree that getting it right is very important but those who are aware of what could be coming and prepared to make changes upon the drop of a hat with all of the right signs will succeed. I am not telling people to go borrow up to their eyeballs right now unless they have a good loan to value ratio. On real estate it is wise to borrow no more than 60% loan to value ratio. I also researched the Great Depression a while back and it’s impact on real estate and found that only 1-2% of the people lost their homes and the average loan to value ratio was 60%. I was unable to find specific information on real estate investors but the assumption is that 60% is pretty safe even within the worst economic conditions. I am also assuming that the 1-2% did not consist primarily of investors and I think that is a pretty safe assumption.

Those who are able to borrow massive amounts of money now but still maintain a good loan to value ratio on each property will benefit the most. If you have a good LTV you will be safe from whatever happens. I don’t expect houses to deflate much more as fdjake does. We’re pretty close to the bottom and if not the mass printing of money will force us off the bottom via inflation.

During the initial stages of hyperinflation is when it’s a good time to borrow to your eyeballs,but I would not suggest doing it prior to hyperinflation because if I’m wrong, you’re screwed. I am just pointing out all of the signs that I see and there are MANY. We are still in a minor deflationary period and it takes a few short years for inflation to kick in after the mass printing of cash. The printing presses are still running at maximum speed. I’m looking down the road guys and those of you who keep your eyes open will know what to do when it gets here instead of missing the boat.