Hyperinflation: Doomsday?

Posted by ECOKID on Jun 30th, 2009 | no comments home title

Warning: What you are about to read may not be suitable for the faint at heart.

The press is smokin’ hot and that precious paper keeps on comin’! The U.S. government has printed over a trillion dollars worth of cash in recent months and it seems like everything is going to be okay right? The worst is over right? If your answer to either question is “yes”, Ooh boy! Although the government seems to have avoided a complete meltdown, there is a greater sense of fear in the air for what is to come and what some might consider an inflationary tsunami.

Inflation itself is the erosion of a particular currency. If There are only 3 Michael Jordan basketball cards left in the entire world, then the odds are that the one I own is worth a whole lot of moolah! However, if there are more and more MJ cards printed everyday then my card could not possibly be worth as much as it was in the former scenario.

The same applies to the American dollar. If the government keeps printing money, they are literally diluting the dollar’s worth. So guess what the end result is? We start to see prices rise ridiculously. Now, you might be saying, “I haven’t really seen prices go up all that much” but let me tell you something interesting that I’ve observed.

For those who remember the oh-so-wonderful six hundred dollars that came into your banking account due to the stimulus package Bush set in place during his last year in office, might also remember how the price in groceries shot up like crazy during that time too! So what’s different this time? The difference is that Obama’s administration is spending billions of dollar internally, through the infrastructure spending, instead of just handing money to its citizens outright like the former administration! The consequences of such actions, however, are still the same. We will eventually start to see things rise in prices but just at a slower rate. Before you know it, you’ll be asking yourself “How is it that I’m paying six bucks for a gallon of milk now?” The affect of such actions will come gradually. Its not a question of if inflation or hyperinflation occurs, but rather a question of when. We will find ourselves slowly being cooked in what could be a far more frightening meltdown than we had predicted. Think about it, the stimulus was a hundred and some odd million and now we are seeing a greater stimulus that is reaching into the trillions of dollars. Yikes!

Now, I’m not going to leave you with that message alone without first giving you some advice. If it is expected that inflation will continue to rise then your best bet is to make sure ever dollar you own is working for you today! The time to act on this is now! In the following post I’ll cover different methods by which you could potentially end up with your head above water even after the tidal wave has hit.