Hyperinflation - Germany 1923

This explains how Germany entered hyperinflation. Just found it...don't know if this has been posted before..if so..i apologize.

Looking at where the United States is right now....where the rest of the world is dumping our treasuries...calling for another world backed currency...what is going to happen to our dollar?

Hopefully this will help anyone who doesn't know much on how hyperinflation works.




[edit on 19-3-2009 by David9176]

This is something I don't understand. So say you have a 30k loan for something. And hyperinflation occurs. So you work for a week and earn '40 million dollars' Can you pay off your loan like it's chump change, or does the load adjust to fit the inflation?

reply to post by Avarus


in most cases that i'm aware of when dealing with inflation. Your loan is pro-rated and adjusted to the state your curency is in. So yeah if hyper inflation ever actually occured you 30k loan would become 30 trillion :p

Originally posted by David9176


Looking at where the United States is right now....where the rest of the world is dumping our treasuries...calling for another world backed currency...what is going to happen to our dollar?

Are you aware of the relation between the price or treasuries and the interest rate? It is an inverse relationship. If a whole ton of people start to sell treasuries then the price will be driven down and the rate of return will rise. Eventually a point will be reached where the rate of return is high enough to attract new buyers. No worries. It is a self-correcting market.

Current rates are 2 or 3 percent. That is really low, dude. If you had a million dollars earning 3 percent you would only have an income of $30,000 per year, and you would still have to pay the income tax on that. What I'm saying is that a million ain't what it used to be due to the low interest rate. You need four million today to get a $120,000 pre-tax income off of your horde of treasury notes.

The funny thing is.... people.... and other countries... STILL buy them!!!
Can you believe that? For wealthy people, that is super safe money.
If I had ten million I would stick it all in Treasuries and never worry about the recession or depression or the shmuck down the street or anything.

So let China go ahead and dump every last treasury they own.
That could drive interest rates sky high and really benefit a lot of wealthy people.
You know the interest rate used to be in the high teens?
People used to buy houses with 15% mortgages.
You could really live well with a million dollars earning 15%.

So don't worry. Calm down. This is America. The Greatest Republic on Earth. We rule. I don't know about you, but WE RULE!