The Parameters of the Coming U.S. Dollar Collapse
By: Dr Jeff Lewis
Market Oracle
Jan 10, 2014
Hyperinflation is a dynamic process – much like a positive feedback loop that, once entered, is almost impossible to exit. The process can go on for years. In the feedback cycle, the more central banks print money and buy bonds, the less other entities want to hold bonds.
Simultaneously, the less others choose to hold bonds, the more the central bank is forced to buy so that the government has enough money to spend.
Deficit Spending
In Bernholz’s “Monetary Regimes and Inflation”, it was found that in a study of 29 cases of hyperinflation, the best predictor of hyperinflation in a country that prints its own money is government debt over 80% of GNP and a deficit over 40% of government spending.
Note that 50% deficit spending would mean spending twice what was collected in taxes.
We are edging closer to this number but not quite there yet. A major war or natural disaster could potentially put us over this mark.
The U.S. is over the debt number and not far from the deficit number, so the danger of hyperinflation is real.
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