Main Menu

I will show you now where the hyperinflation has actually already happened in America, and it is not in consumer prices.  The following is all based on a detailed knowledge of the Kondratieff wave. 

One of the features of the plateau phase of the Kondratieff wave, which comes after the stagnation phase, is that the stock market wants to go up a lot, even more so than during the growth phase, which comes before the stagnation phase.  A difference between the stagnation phase and the plateau phase (as just noted, the second of these two phases comes right after the first one - we had the transition between the two in the early 1980's) is that during the stagnation phase, new money tends to go into consumer prices, whereas during the plateau phase, new money tends to go into the stock market.  (Consumer prices tend to be disinflationary throughout the plateau period.)  Greenspan (just) put this on steroids this time by continuing to pump money into the system for years after the stock market crash of October 1987, when we were well into the plateau phase in the meantime - thus saving the economy by driving the stock market higher and higher over the course of time, at a faster and faster rate.  By the end of the 1990's, the stock market went exponential in a big way - the stock market hyperinflated, not consumer prices. 

But then, as noted above, the authorities decided to keep going even after the law against recessions expired in the summer of 2000 (interestingly enough, just months after the stock market finished going exponential).  The result, both because it is impossible to have another big boom right after a big exponential and because the Kondratieff wave entered its depression phase when the stock market started coming down in a big way in 2000 (the explanation for why Greenspan let it happen is on this website, he explained it at the time and it is not complicated, but I do not want to distract from my main point here), which meant that the authorities were now also increasingly fighting the depression phase of the Kondratieff wave as time went on (which they do not know because they do not believe in the Kondratieff wave, it does not match their version of economics, see elsewhere on this website), was that they had a decade of slower economic growth during the 2000's with increasing problems (slowly at first, faster later) as time went on. 

They tried to fight the situation with ever-larger record annual government deficits, so far culminating in the trillion-dollar-plus deficits of Obama (not his fault, see below) to combat the downturn of 2008, deficits which are much higher than George W. Bush's and have clearly put us on the vertical of a very large debt exponential.  So we have our second exponential (another hyperinflation), this time in debt, which is even worse than a stock market exponential because it does not stop when it runs out of buyers, like a stock market exponential does, it keeps on going because what drives it higher is more and more interest owed over the course of time, which gets financed with more debt, thus eventually driving the debt to infinity and bankruptcy. 

But Obama is not to blame for it (as explained on this website).  I have known since the 1980's that we were eventually headed for trillion-plus annual deficits and national bankruptcy - just did not know exactly when.  And I predicted, the instant I found out about the law against recessions in the summer of 2001, on the basis of everything that I had learned through the end of the 1990's (all of which contradicted what I had learned about economics in college, but I found to be more accurate), that if the authorities managed to save the economy in the early 2000's, which they did, then the economy would hold up at least until 2007, there would be a huge initial crash in the economy (and the stock market) sometime in 2007-2010 (unlike in the early 2000's, when the stock market came way down, but the economy did not), followed by a major partial recovery (bear markets that operate normally go down-up-down), followed by a new downturn that will be much worse than the first one that, as it turned out, happened in the fall of 2008.  As noted, I predicted all of this in the summer of 2001.  Only the last part of the prediction has not happened yet - and it is impossible to tell, ahead of time, exactly when it will happen because the Fed has been fighting the downturn of 2008 (which I predicted more than 7 years in advance because the Fed could not stop it, I just did not predict the exact timing of it) ever since it happened, but the Fed has been fighting it particularly ferociously ever since the Dow got back above 10,000 after the downturn and people (therefore) got real hope that "things can get back to the way they were before" (see the link "the power of round numbers" on this website), which can't happen.  

The real problem is the perspective of most economists that the economy can be kept going forever.  The Kondratieff wave has not been eliminated.  On the basis of the timing of the growth and stagnation phases (the first two phases) of the current Kondratieff wave, people who espoused the theory in the 1980's already were predicting a depression in the 1990's - the plateau phase in the 1980's and depression in the 1990's.  But they did not know that a law against recessions had been passed in the meantime.  As noted above, if money continually gets pumped into the system when one is in the plateau phase after the system wants to go down already (i.e., one has reached the end of the natural, self-generating part of the plateau phase), the plateau phase will be extended because the stock market will go up even more.  (Frankly, there is no way the stock market could have gotten as high as it did by the end of the 1990's with the amount of money that was in the system in the late 1980's/at the beginning of the 1990's).  The result was a huge economic boom by the end of the 1990's and a blow-off stock market.  And the authorities continued pumping in the 2000's - but the result was much less spectacular than in the 1990's because they were fighting a system that wanted to go down in no uncertain terms in the meantime. 

And, as noted above, I knew when I found out about the law against recessions in 2001 that they would run out of steam sometime between 2007-2010, the imbalances that had built up by then would simply overwhelm them, then there would be a partial recovery (it is impossible for it to turn into a full recovery, the imbalances are still too great, and I knew years ago that they would be), followed by a massive new downturn much worse than the first one when the central banks become completely overwhelmed. 

In other words, we had one hyperinflation in the late 1990's when the stock market went exponential in a huge exponential. 

We are in the midst of a second one (it has not gone completely exponential yet), a debt exponential that went past the knee of the exponential sometime between about March and October 2008 (before Obama was even elected - which is why Obama is not responsible for it), this exponential is so huge that it is hard to tell exactly when, but look at any long-term graph of the national debt and you can readily verify it.  George W. Bush's record deficits were responsible for putting us past the knee of the exponential, and the big economic downturn also kicked in before Obama even became president (actually, even before election day in November 2008) and so Obama was not responsible for that, either.  For that matter, you will recall from above that I predicted that downturn more than 7 years in advance (independent of any political or political party considerations) - and it hit just about in the middle of my projected time-frame. 

The final phase of the Kondratieff wave is a deflationary depression.  The conventional economists think they have overcome it by producing a boom in the 1990's, which is the opposite of what the Kondratieff wave nominally predicted for that time, but the reality is that the Kondratieff wave is a process, the timing of the individual events and phases within it is secondary.  I might add that monetary (and subsequently price) hyperinflation is actually a separate phenomenon, completely independent, that happens less frequently than the Kondratieff wave does (the Kondratieff wave takes 50-80 years to run its course and then repeats itself as long as the capitalist society remains viable at all).  What is going on these days is perfectly consistent with the transition between the plateau phase and the depression phase of the Kondratieff wave (an extended plateau phase this time around because of the enforcement of the law against recessions and even, because of that, an extended transition into the depression phase).  But one would only know that if one knows all the details (which I do not even present on this website - I think it would overwhelm the reader to present them all at once).  But I will say that the transition basically happens when the stock market can't stay up anymore at all (for an extended period of time) and economic growth (currently heavily supported by deficit spending, which is why we are not in a depression yet) goes below zero and then keeps going down and wages for the average worker stagnate more and more (happening in recent years), with wage growth eventually going below zero and then well below zero (mostly through layoffs - fewer and fewer people making any money at all). 

The conditions for a traditional hyperinflation are quite different, wages go up at a higher and higher rate as the economy is flooded with money and prices across-the-board skyrocket (unlike in our case) and workers demand and get higher and higher pay to compensate.  It can be done electronically, too - in this case, it is most likely to happen by adding zeros behind the amounts in people's bank accounts - but I do not think any first-world central bank will do that because they all have a mandate for low inflation.  In fact, during the crisis of 2008, when the government wanted to provide people with some extra spending money, they explicitly did so by depositing a few hundred dollars in each person's bank account, a specific amount rather than a percentage of total, to keep the additional amount small in absolute terms relative to the economy.  The stated reason for doing so was that they wanted to avoid too much of an inflationary effect.  The irony is that the people getting the money were running so scared, with the first big economic downturn in years, that most of them chose to pad their bank accounts with it (save it), rather than spend it, so the government did not actually get the desired effect out of it. 

As noted, the final phase of the Kondratieff wave is a deflationary depression.  It has not been eliminated, just postponed - and the longer it gets held off, the worse it will be.  I think that we will, indeed, have a deflation, in fact a hyperdeflation, because by the time the economists finally figure out what is really happening, it will be too late, the economy will already be so bad (in terms of negative economic growth) that they will realize that if they try to hyperinflate out of it at that point, they will simply make things much worse, not better.  That does not mean there is no chance they won't do so, but I think it is unlikely.