Crisis

This from zerohedge.com:

Guest Post: Hyperinflation, Part II: What It Will Look Like
Submitted by Gonzalo Lira

Hyperinflation, Part II: What It Will Look Like

I usually don’t do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the United States, clearly struck a nerve.

It was a long, boring, snowy piece of macro-economic policy speculation, discussing Treasury yields, Federal Reserve Board monetary reaction, and the difference between inflation and hyperinflation—but considering the traffic it generated, I might as well been discussing relative breast size in the porn industry. With pictures.

Essentially, I argued that Treasury bonds are the New and Improved Toxic Assets. I argued that, if there was a run on Treasuries, the Federal Reserve—in its anti-deflationary zeal, and its efforts to prop up bond market prices—would over-react, and set off a run on commodities. This, I argued, would trigger hyperinflation.
 
The disproportionate attention my post garnered is indicative of people’s current fears. As I’ve said before, people aren’t blind or stupid, even if they often act that way. People are worried—they’re worried about the current state of affairs:

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Victor Davis Hanson thinks it’s a "maybe," and makes a few simple suggestions. It all depends upon the emerging Republican majority in Washington, DC, and whether they have the cojones to proceed…or will crumple and flee, as they usually have in the past. This from Pajamas Media:

We Are Not Greece
Posted By Victor Davis Hanson On August 26, 2010

Decline is a Choice.

As the summer winds down, there is more and more talk of decline in the air. Some of it comes from the left, as a sort of giddy notion that we are now, at best, devolving into what the Greeks called prôtos metaksu isôn, first among equals, enjoying traditional prestige but otherwise nothing much special in comparison to the Europeans, India, and China.

In the age of Obama, the notion of not being exceptional or preeminent comes as a relief to millions on the left who pretty much are in sync with the protocols of the United Nations. On the right, there is a sense that Obama is the ultimate expression of downfall; given the wild spending, the iconic efforts abroad at apology, and the rampant entitlements we simply aren’t what we once were. In between, most aren’t quite sure—but sure are worried that we may never climb out of our self-created indebtedness crater, and that the culture’s education, the nation’s borders, and the civilization’s values are eroding.

I agree with the latter take, but see decline in history as largely psychological. After all, a Rome that was little more than 4 million and half of Italy almost simultaneously fought both Hannibal and Philip V and ploughed on after losing over 100,000 dead between 219-216 BC to victory, while by AD 450-80 an empire of 70 million, with a million square miles of territory, could not thwart thuggish tribes across the Rhine and Danube.

A very poor United States in 1941 defeated imperial Japan and helped to defeat Nazi Germany in less than four years. A few hundred thousand immigrants between 1870 and 1960 took a godforsaken desert in California’s central valley and turned it into an oasis of agriculture, for nearly half a century with no more than muscle and mule power.

And in the Plus Side….

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