Every hyperinflation looked the same. “Hyperinflations are always caused by public budget deficits which are largely financed by money creation.” But even more interestingly, Bernholz identified the level at which hyperinflations can start. He concluded that “the figures demonstrate clearly that deficits amounting to 40 percent or more of expenditu

As an aside, both your humble authors are believers in owning gold, and in some countries and currencies, owning more than a small insurance portfolio is well recommended. For us, gold is not so much an inflation hedge as a currency hedge.

Why not tell anyone who starts a business within the next three years that if he sells his business after five years, and has created some minimum number of new jobs, that he can sell his business when he wants for zero capital gains? That seems to us an incentive we can believe in.

The classic definition of deflation is a period of actual decline in the general price level and an economic environment that is characterized by inadequate or deficient aggregate demand.

If you believe in deflation, U.S. Treasuries offer great value. Unsurprisingly, the biggest proponents of deflation are David Rosenberg and Lacy Hunt. Both work at firms that manage a lot of money in bond funds.

Looking from this perspective at the U.S. deficit, by far not all of the credits borrowed by the government were financed by the Fed. According to preliminary and rough estimates, not 40 percent but “only” about 13 percent of U.S. expenditures are presently financed this way. Moreover, in discussing this problem it has to be taken into account that

Where do we stand on the issue of deflation versus inflation? We think we’ll have both. Deflation first, and then inflation. It will probably take further downturns and a greater collapse of borrowing and lending to induce even more extreme responses from governments. In the endgame, we see a very low likelihood that the Federal Reserve and other c

If we go into a downturn, we hope central banks will be wise enough not to monetize government debt in any fiscal crisis. Sadly, they probably will.

But you know the fact is that when you run these big debts, the problem is not with your children or your grandchildren, it’s in your lifetime. If you get to really high debt levels, you don’t make it. The market eventually gets concerned.