What are the Chances of Hyperinflation—A Common-Sense Viewpoint?

Disclaimer: This content does not constitute financial advice. All investing and trading activities are undertaken at your own risk.

If you are wondering whether the U.S. dollar, the world’s reserve currency, could experience hyperinflation, then I would say yes, it is certainly possible and likely unless things change. Just because the United States has been the world’s superpower for a long time doesn’t mean it will remain that way. 

American Exceptionalism without God is a myth, whereas American Exceptionalism under God is true. I do believe that the nation became what it is today solely because of God and His followers. However, like other empires, it too can fall, and we may already be witnessing that decline.

Even before the outbreak of COVID-19, the signs were there. Today, they are more apparent than ever. There is a Great Resignation in the job market—Click Here to read the article—and the Federal Reserve is printing seemingly unlimited amounts of money, as depicted in the money supply chart. Click Here to view the chart (Davidson; M2 (M2SL)). Inflation is becoming increasingly apparent, and there really seems to be no way out other than continuing to print money, which only makes the dollar worth less and less.

On top of that, there is clear moral decay in society, a lack of leadership, political turmoil, a supply chain crisis, ongoing COVID-19 variants, and an overall feeling that all is not well in America. The news headlines these days are, well, crazy compared to those of even a decade ago, and it seems that people are turning against one another at an increasing rate.

As the Federal Reserve continues to print money because raising interest rates could cause the house of cards to collapse due to a surge in debt and a lack of affordable borrowing, it seems that we are living in a “skeleton” economy.

Quite frankly, the Fed is cornered, as previously alluded to. It cannot raise interest rates much further without crashing the entire economy, and it has little room to lower rates because the Federal Funds Rate is already near zero. Even if the Fed simply keeps interest rates low, demand could become too strong, resulting in increased inflation. Ultimately, inflation comes down to the basic principles of supply and demand.

Ultimately, they have two choices: either suppress demand by intentionally crashing the economy and causing the debt to balloon, or keep interest rates low, which could lead to higher demand and, consequently, inflation that could trigger a currency crisis. It’s a lose-lose scenario.

In essence, if they raise interest rates, the debt will balloon, and people won’t be able to borrow as easily to avoid drowning in debt. If they lower interest rates, they have little room to do so before rates potentially turn negative, and doing so may not do much to stimulate an already fragile economy. If interest rates do turn negative—which is largely hypothetical—why would anyone want to keep their money in a bank account? There could even be a run on the banks if that were ever to happen.

As you can see, the Fed is running out of options, and this is how the system is really designed to work anyway. Those at the top control the money printers, profit from a rising stock market, and become richer and richer, while those at the bottom end up working longer hours to make up for the effects of inflation. The credit-based system goes deeper and deeper into debt because that is how it is designed to operate. It’s basically a rigged game.

As Voltaire said, “Paper money always eventually returns to its intrinsic value—zero” (“Voltaire Quote: ‘Paper Money Eventually Returns to Its Intrinsic Value – Zero’”). With regard to the U.S. dollar, it is the world’s reserve currency, which makes the possibility of a collapse in its value all the more interesting. Many, if not most, other currencies around the world are tied to the U.S. dollar, and their economies are therefore tied to it as well.

While the saying that money is the root of all evil may not always be true (it’s the love of money), money certainly affects many aspects of one’s life and is clearly important to the livelihoods of many.

The United States of America is not exempt from Voltaire’s famous quote, and there is essentially a perfect storm brewing that could lead to hyperinflation unless things change drastically—but it may already be too late.