In layman’s terms, the definition of hyper-inflation occurs when you expand a monetary supply to the point where it crosses over from an arithmetic rate of growth to an exponential one in relation to a nation’s GDP. This eventually is followed by price hyper-inflation, which eventually leads to destruction in confidence and a death event for a particular currency.
Over the past five years the U.S. central bank has attempted to do its best to survive a hyper-inflation of the dollar by keeping it contained outside the general economy, and at the level of banks and Wall Street. However, for anyone who has had to pay rent, buy food, or suffer through budget expenses such as those of education or medical, then they know that price inflation has indeed trickled down in a meaningful manner to the public contrary to the constant lies from the Federal Reserve of less than 2% inflation.
Yet even as hundreds of PHD economists lounging in the Eccles building know that they have put the dollar into hyper-inflation with their quantitative easing programs and zero interest rate schemes, the sad truth for central bankers in Japan, Europe, and even the U.S. is that they also realize that they have crossed over the Rubicon, and it is now too late to ever to go back.
Ie… all one has to do is look at Treasury Secretary Jack Lew’s statements preceding the passing of the new budget bill to realize that there is no intention of ever paying back on the debt because it is now impossible for them to ever stop borrowing.
“At that point, we expect Treasury would be left with less than $30 billion to meet all of the nation’s commitments—an amount far short of net expenditures on certain days, which can be as high as $60 billion.
Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible. As I wrote previously, we anticipate that a remaining cash balance of less than $30 billion would be depleted quickly.” – Jack Lew in a letter to Congress, Fortune
The United States, the dollar, and the state of the reserve currency are all in ‘Zombie bank’ status, simply waiting until the world rejects this Walking Dead, or the paper thin floor keeping tens of trillions of dollars from the general economy comes crashing down. And while no one can predict exactly when this event will occur, the truth is no nation that has hyper-inflated their currency has ever survived for long, and no nation that has controlled the reserve currency of the global economy has ever had the foolishness to try it.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.