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alstry (35.36)

HYPERINFLATION is a 100% TAX on Income

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June 08, 2009 – Comments (14)

I have been reading a bunch of nonsense by Fools about Obama "inflating" his way out of this problem.  When you are running a deficit that is about 50% of your budget against a backdrop of a contracting private economy.....inflation is not an option.....ONLY HYPERINFLATION is the end.... because you must print so much money to gap the exponentially growing deficits that money effectively becomes worthless.

The problem with a hyperinflationary cycle is that money is worthless......wages NEVER keep up with rising costs until income and savings are effectively taxed 100% due to practically no buying power of the cash in one's hand at any given time. 

Further, owning assets is NOT a solution because the costs to maintain the assets exceed the person's ability to pay......heating your house for a month costs one year of income....etc....

So you if think a 100% tax on your income or assets is an unthinkable solution.....what do you think about the consequences of hyperinflation???????

Welcome to Alstrynomics and Zombulation.....where the reality of the practical fuse with economics.

Prepare......

14 Comments – Post Your Own

#1) On June 08, 2009 at 2:23 PM, alstry (35.36) wrote:

YOU BETTER WAKE UP SOON!!!!!!!!!!!!!!!!!!!!

More than 600,000 seniors are delinquent in their mortgage payments or already in foreclosure, USA Today reports.

Unlike younger people, many are on fixed incomes and lack the money or job opportunities to catch up on payments when they fall behind.

"I've got a lot of seniors who have just been nailed," mortgage specialist Dean Wegner told the newspaper.

"They're upside down (owing more on their mortgage than their homes are worth), they can't refinance and they're on a fixed income."

http://moneynews.com/economy/senior_foreclosures/2009/06/08/222669.html?s=al&promo_code=811A-1

IMAGINE HOW BAD THINGS WILL BE IN A HYPERINFLATIONARY ENVIRONMENT

A recent report from AARP showed that 25.5 million seniors ages 50 and older have a mortgage —

Senior mortgage woes are creating challenges for retirement communities and assisted-living centers, which are finding that new members can't move in because they are saddled with homes they can't sell because people usually sell their homes to finance the entry fees.

 

Worse yet, a study done by the Employee Benefit Research Institute found that 36 percent of workers ages 55 and over have less that $25,000 in savings and investments aside from the values of their homes.

HOW FAR WILL THAT GO IN A HYPERINFLATIONARY ENVIRONMENT????

MAYBE WE CAN BRING SOME BRAINS TO THIS DISCUSSION??????

 

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#2) On June 08, 2009 at 2:32 PM, FreundInvesting (29.39) wrote:

I don't understand why you're talking about inflation... Significant inflation (and, particularly hyperinflation) cannot possibly happen without demand. While jobs keep being lost and real-estate keeps losing value, deflation is the only option.

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#3) On June 08, 2009 at 2:35 PM, Jro81 (< 20) wrote:

Hyperinflation is good for the markets .... Hence good for me ....

Jared

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#4) On June 08, 2009 at 2:40 PM, alstry (35.36) wrote:

Sure it can....as a matter of fact it practically always occurs out of lack of demand.....

Let me explain....since we don't have much money or demand....tax receipts to the government are evaporating....

Unlike you or I, the government can "print" or borrow unlimited amounts of money...but there are consquences to that.....namely higher interest rates and/or devaluation of the currency.

As the interest rates rise and/or the cost of everything rises, the government must print more to meet ever growing obligations....when the amount is as large as we have now, it becomes a postive feedback loop forcing the government to start printing unlimited amounts of money just to keep up with expenses.....

As we don't have our own printing press or borrowing capacity.....our savings and incomes become worthless and very nasty things result.

Why do you think Alstry is blogging ten times a day????

Prepare.....knowledge is the first step.....many of you don't have a clue.

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#5) On June 08, 2009 at 2:44 PM, alstry (35.36) wrote:

Jro,

It it rarely good for the markets, save commodity based businesses such as those in Zimbabwe.

Since most business in the service sector or value added of one sort or another, like most companies in the U.S. Stock Market, those enterprises cannot pass on the rising cost of inputs to the end user in time to make profits.

If hyperinflation hits America.....95% of U.S. companies will likely go bankrupt.....maybe more.

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#6) On June 08, 2009 at 2:48 PM, BradAllenton (31.40) wrote:

 Alstry- So I guess you have finally jumped off the deflation train. Good for you, I'm glad to see that you get it now..... a little late, but you got it.

Jro81- Seriously? Inflation is a disaster and only causes continued inflation. What does it matter if the market goes up when your buying power goes down? You need to rethink your financial theories.

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#7) On June 08, 2009 at 2:51 PM, jddubya (43.65) wrote:

"Why do you think Alstry is blogging ten times a day????"

Excellent question!!!!! 

My answer:  I don't know.  I'm already prepared - but Alstry keeps calling me a clueless sheeple zombie who doesn't understand what's going on. 

My guess: Alstry means well, despite how he doesn't seem to be aware that the audience for the blogs is VERY LIMITED.  Kinda like demonstrating a breakthrough in cold fusion to your lab partner over and over and over and over.  The poor world will never benefit from that kind of exposure.

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#8) On June 08, 2009 at 3:04 PM, alstry (35.36) wrote:

jd,

It is obvious you are getting a bit nervous....you KNOW hyperinflation starves practically everybody in America and results in total breakdown of social order.

As far as a very limited audience......you have little clue;)

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#9) On June 08, 2009 at 3:10 PM, jesusfreakinco (28.88) wrote:

Al - are you blogging about hyperinflation tongue in cheek?  Where are your bets?

I have publicly stated my bets are gold, foreign currencies, and some hard assets in my home.  What are your bets?

JFC

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#10) On June 08, 2009 at 3:17 PM, alstry (35.36) wrote:

I never concluded inflation or deflation....but if it is inflation....due to the nature of the magnitude of the deficit against a shinking private economy.....mathematically it is HYPERINFLATION!!!!

With hyperinflation....the consequences will be extremely destructive to the American population and society.

With deflation....there will be pain....but the consequences are far less severe and positive behavior is rewarded.

Your elected officials are aware of both.

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#11) On June 08, 2009 at 3:22 PM, rd80 (98.45) wrote:

Check your math.

High inflation is very problematic, but it can't get you to a 100% tax.

100% inflation would be a 50% tax on income and cash assets.  200% inflation would be a 67% tax, 300% would be a 75% tax.

10,000% inflation gets you to a 99% tax (and is probably well past the point of societal breakdown).

The inflation tax calcs above assume no change in income or cash interest rates with inflation. 

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#12) On June 08, 2009 at 3:51 PM, alstry (35.36) wrote:

It gets you close enough to 100% that trying to explain it only confuses the issue for most.

If you are a physicist or mathematician....different story but you reach the same practical results......

But that is not the audience here.

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#13) On June 08, 2009 at 4:03 PM, jesusfreakinco (28.88) wrote:

With hyperinflation....the consequences will be extremely destructive to the American population and society.

On this we agree.  

Find me an example of a country that has gone into Quantative Easing at the rate we are and with the amount of debt we have that has made it through it.

Now, I know things are different in the US, right - because we are the world's reserve currency, right?  Except for the fact that Russia, China and others are moving towards another world currency as fast as they can.  It is a race to the bottom - US leaders keep saying we have to print money and everyone knows the only want to save our banking is to inflate assets.  It also provides a steepening of the yield curve so the banks can make money lending again...

JFC

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#14) On June 12, 2009 at 5:57 PM, alexxlea (60.14) wrote:

M0 exploded we're on a bullet-train to painsville. You have got to be kidding me when you say that inflation of the coming magnitudes is a good thing. Unless you live in a fantasy world where your job matches real inflation (it's been double digits for a while) you would be the exception to the norm. Real people can't enjoy life while squeezed by so many factors.

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