Precious metal investments: news, consultancy, trends, reports & more!
HomeMarket WatchHard AssetsInvestor's GuideDownloads
 

Hyperinflation




Hyperinflation means an extreme high level of currency inflation. It's generally a process that occurs when a central bank has already lost control over its official currency. In other words, currency hyperinflation usually happens as an inflation that has gotten out of control.



How High Inflation is Hyperinflation?


According to economist Philip Cagan, hyperinflation is inflation with a rate exceeding 50 % a month. So, anything above this level per month can be considered hyperinflation.
Yearly inflation could be 200 %, that's still not hyperinflation until monthly rates don't surpass the mentioend 50 %.

During hyperinflation, the currency's loss of value can rapidly obscure its purchase power up to several trillion times!

Notable famous cases of hyperinflation were: the recent case of Zimbabwe in 2008, the 1940s post World War II hyperinflation in Hungary (the worst ever!), the case of Weimar Germany in the early 1920s (when the highest denomination reached 100.000.000.000.000 Marks).

A few years ago in Zimbabwe hyperinflation had destroyed the value of the currency so much that people had to hoard bags of cash only to be able to buy a single loaf of bread.

The people you see below on the photo aren't rich. They look happy, but it's more likely that it's for other reasons that the huge stock of banknotes all around them. That money is almost worthless!
If your country gets hit by hyperinflation, your lifetime bank account savings could get you peanunts!



It Could Happen Again!


Experts are warning us about a coming hyperinflation that could affect the USA, the European Union, even Japan and other countries. The shock can arrive as early as 2014 (but many were predicting it for 2012 already), although it can be delayed by government policies for several years.

The crises in the eurozone, the USA and now in Japan are so severe that a drastical currency devaluation is very likely. We don't know when this could happen. It could happen in 2020, it could happen in 2014.

Of course, hyperinflation doesn't happen over night and it also depends on where it breaks out. Still, one could tell in the early phases (in a matter of weeks), whether hyperinflation is unfolding. Although, if the process has already started, it will already be too late to get prepared!

Hyperinflation threatens the US dollar, the euro and many other fiat currencies, which are prone to lose their value not only because of the current economic crisis, but because of the nature of these currencies (fiat money). The backing of these currencies is questionable, many are even saying that their current value is already artificially "too high".

Some people mistakenly believe that the US dollar is backed by gold. It's not! Nor the US dollar, nor the euro are backed by gold.
The US dollar was backed by gold until 1971, but President Nixon took it off the gold standard, ending the direct convertibility of the US currency into gold.
The Swiss franc used to have partial gold backing (as Switzerland's laws required the currency to have at least 40 % gold reserves behind it). But, this obligation was terminated on May 1st, 2000 through a referendum.

Fiat currencies are extremely vulnerable to hyperinflation.

One thing is an economic crisis, another type of crisis is a financial crisis and a currency crisis is another story.
If a currency crisis breaks out, then not the economy, nor the financial system (like financial institutions), but your currency will be directly threatened.

The solution? Consider investing in precious metals before it's too late. If currency devaluation ignites, the prices of precious metals will increase drammatically.
Check out the free educational guide by PrimeValues.org.





comments powered by Disqus

 
Prime Values on FacebookPrime Values on Twitter

about us    terms of use    privacy policy    disclaimer    partners    advertising    contact us