Many economists are scoffing at the potential for hyperinflation here in the United States as housing price declines, unemployment and auto sector weakness dominate the headlines.
I don’t know if scoffing is the best idea right about now.
I have frequently been discussing the possibility of hyperinflation both with clients and here on TRB. Earlier this month, I featured an op-ed by Dr. Allan Meltzer on inflation fighting.
This morning, Bloomberg Television in Hong Kong did an interview with Marc Faber, the author of the Gloom, Boom & Doom Report.
FT Alphaville picked out some choice quotes to give you a flavor of how serious of an issue Faber predicts inflation will be for us:
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
And this nugget:
The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe …Zimbabwe’s inflation rate reached 231 million percent in July
Other notable Fed watchers have repeated the refrain that Bernanke may not be politically able to raise rates while employment data continues to be ugly.
This growing fear of inflation may be a good reason for why the hedgies are back to the commodities trough of late.
Something to keep an eye out for.