Because the government is falsely reporting the true rate of inflation hyperinflation will arrive without an announcement from the government. As the price of fuel and food accelerates while being ignored as an ingredient in the inflation calculation the reality of hyperinflation will be reflected in the actual prices you pay, not some ginned up report from the government. So what will life be like when the reality of hyperinflation sets in as a way of life? The Fed chairman insists he will have a tool to tame inflation if it appears but how can it appear if the way to determine it ignores the main ingredients. The reality is you will be faced with ever increasing prices and your money will deteriorate in value. If every time you go to the grocery store or the gas station the price is higher than the last visit you will eventually decide to stock up and avoid the next price increase which you will be convinced is surely going to come.
When this begins to happen ( and it will happen) the competition for purchases of rising priced items will increase. More and more people will see they will either need to buy now at lower prices or they will surely pay a higher price when they do buy. This of course will spill over in to business owners, landlords, and everyone who buys on a regular basis. As this competition accelerates the producers will have to reevaluate their prices and boost them knowing as more is required it will be more expensive to produce. As the prices climb and the competition increases among buyers shortages will begin to occur. Shortages in themselves will increase prices. Of course any money you have in your purse or in the bank will not buy tomorrow what it could buy today so people will rush to buy with their higher value dollars as soon as they acquire them fearing the loss they know they will inevitably experience later.
This pattern has always happened when hyperinflation sets in. Regardless what the Fed chairman says hyperinflation cannot be easily tamed. Trying to stop the snowball of hyperinflation leads only to a recession or a depression. The trick of course to avoid this is to avoid inflation in the first case but most of the politicized economists of today think a little inflation is the way to have a healthy economy. The fallacy with this thinking is a little inflation always accelerates into its big brother hyperinflation.
We all know what the money value is in Zimbabwe which is experiencing hyperinflation. Daily the people of Zimbabwe are reverting to a barter system in order to survive. The money not only loses value but eventually becomes worthless. This is what we have looming on the horizon as the politicians ignore the incoming storm. Have you heard any candidate express any concern about hyperinflation? If they don’t mention it maybe it won’t happen is the theory I guess but it is happening, it will happen and the consequences will be just as tragic as all other experiences throughout history will attest.
One day you will wake up and realize your standard of living is deteriorating. As the prices go up and the incomes become smaller crowds will begin to gather and protest. Politicians unwilling to recognize their role in this disaster will clamor for price controls and when these set in the rationing and shortages will grow. More crowds will gather and protest and riots will emerge with property destruction, loss of life and chaos will be the norm.
It is not a pretty picture but there is no escaping the reality of it. What would be required to prevent it would demand more than anyone is willing to accept? You see this in Europe and you will see it in America. Bailouts from countries without any surplus to offer will not magically appear. The United States must borrow to keep its head afloat and certainly cannot assist others on the same deteriorating path.
Descriptions of what has happened with hyperinflation evidently doesn’t reach the minds of those who keep pushing it off and ignoring it. The reality of hyperinflation doesn’t respond to evasion. It hits like the inevitable storm and then there is nothing to do but struggle to recover. The other problem with hyperinflation is it inevitably creates a police state. Why? Because politicians constantly think a political solution is possible if only they have enough power. The most power hungry seek to rule using the distress as a problem only they can solve. But they need the power to do so ( so they claim) and people are willing to grant them the power if only they will make their lives livable. We have seen this time and time again and history is replete with identical instances and results. As freedom disappears the conditions deteriorate even farther and soon we are looking at a reincarnation of the dark ages. Wealth disappears, technology evaporates, ignorance returns and life becomes daily drudgery.
Thirty years ago no one imagined we would have deteriorated to the state of today yet here we are and the trend is not optimistic. We have evolved into a state of overwhelming government even though we knew what too much government would do. Now that we see what we feared was coming are we going to wait patiently for the next phase to appear or are we going to recognize how big the stakes are and work toward stopping this train wreak? I fear as we sift through the rubble we will simply resign ourselves to struggle to rebuild without knowing or caring that we could repeat the same crash using the same method we are not willing to revise. For those who knew better their response will be, “ It was all so unnecessary “.