Jim Rickards: ‘Like a Virus With No Cure’

‘Hyperinflation,’ our own Jim Rickards writes, ‘acts like a virus with no cure.
‘It may be contained for long periods of time, but once it breaks out into a general population, there may be no stopping it without enormous losses.’
Since 2008, as you may well know, many worthy and intelligent U. S, market examiners have been pounding the table for hyperinflation.
‘Perhaps you’ve been following their advice and wondering why the scenario hasn’t materialized yet,’ says Jim.
Well, as Rickards reveals today, there’s a clear reason it hasn’t happened yet. And it has everything to do with the Fed. But it’s not what the Fed is doing: Actually, contrary to popular thought, it’s what they’re not doing that’s keeping hyperinflation at bay.
Before we get too ahead of ourselves. Here’s a quick rundown of what you’ll find in today’s episode…
In a moment, you’ll read a first-hand account of what really happens when hyperinflation hits a country.
At the age of 15, Martin Malchev lived through Bulgaria’s bout of hyperinflation in 1996-97. We’ve decided to share his story with you, courtesy of the Kung Fu Finance blog.
And after that, Rickards will take the mic to explain why… despite all the well-informed prognosticators beating the hyperinflation drums for years… hyperinflation hasn’t happened yet in the U. S.
And, more importantly, why it’s still more than possible (possibly even inevitable)… and how to prepare.
First, Malchev’s story illustrates perfectly just how rapidly a steady stream of low inflation can accelerate into a gusher of hyperinflation.
Case in point:
‘If in 1989,’ Malchev wrote, ‘somebody had said to a Bulgarian banker that he would be an eyewitness of a hyperinflation – that somebody would probably have been laughed at.
‘Alas, most people were doing the opposite of laughing seven years later.’
In 1989, Malchev explains, the Bulgarian lev could’ve been exchanged one-for-one with the dollar.
By March 1997, 3,000 levs were exchanged for every dollar.
‘But what was more shocking was that in December 1996,’ says Malchev, ‘the exchange rate was $1 equals around 300 levs. The jump from 300-3,000 happened in less than three months.’

This post was published at Laissez Faire on Dec 22, 2014.