Hyperinflationists Come Out of the Woodwork Again


CoinDesk asked me to share my opinions on the chance of hyperinflation. My thoughts are below.

From CoinDesk

Hi Mish,

I am working on an article for CoinDesk about recent fiscal and monetary splurge by governments and central banks across the globe and the impact on gold and bitcoin. As I see, a majority of analysts and economists are calling for hyperinflation and rally in gold.

Could you please share your take?



Matter of Definitions

Before there can be a rational debate on anything, people must agree on definitions.

I believe most people would accept this definition: Hyperinflation is the complete collapse in currency against every other asset.

Pick a currency, say the US dollar. To bet on hyperinflation and be correct, the dollar would have to go nearly worthless vs the Euro, the Pound, the Yen.

Alternatively, 50% in a single month would quality. Professor Hanke defines Hyperinflation as a 50% Currency Collapser in a Month.

Q: How likely is that?

A: Close to zero.

Replay Discussion

Curiously, this is a replay of my 2010 article Williams Calls for “Great Hyperinflationary Great Depression”.

Williams is John Williams of Shadowstats. He was not alone. Here is a snip changing the name Williams to "Hyperinflationsists" in the first word of these four points.

  1. Hyperinflationists focus on money supply, ignoring credit although credit is far more important.
  2. Hyperinflationists ignore numerous global interconnections. Calling for hyperinflation in the US alone ignores happenings in Europe, Japan, and China. I remain amazed at how US-centric hyperinflationists in general are.
  3. Hyperinflationists ignore US gold holdings, the largest in the world.
  4. Hyperinflationists ignore the massive influence of consumer attitudes and bank attitudes towards lending.

To expect the US dollar to go to zero vs the Euro, Yen, Food, gold, Yuan, etc., was then and is now pure silliness.

Hyperinflation, a Political Event

Hyperinflation is primarily a political event, not a monetary one. More accurately, the first leads to the second.


  • Weimar Germany: Demands for war reparations following WWI set in motion finances that could not be repaid. Germany turned to the printing press.
  • Zimbabwe: Prime Minister, Robert Mugabe confiscated land to give to the people. The result was white flight and capital flight. The country collapsed as did the currency.
  • Venezuela: To fight poverty, presidents Hugo Chávez and Nicolás Maduro took over the oil industry and gave cheap gasoline to the people. In US dollar terms, gasoline is now a penny a liter. But you will not find any at that price.

Wake me up when AOC is president and Congress authorizes free money to the tune of $50,000 per year per person, indexed to prices.

US hyperinflation would take an event like that. And it would be a political event leading the way.

Such a setup is not impossible but it is not likely.

Trillions of dollars in Repos as available credit does does not suffice. Moreover, central banks are beholden to the subsidiary banks. Hyperinflation would destroy banks and that is the last thing the Fed wants.

So toss hyperinflation away as nonsensical until a genuine political event sufficient in nature is on the horizon.

What About High Inflation?

Once again definitions come into play and this time the definitions are more important because there are so many of them.

  1. Inflation is an increase in prices or a decrease in the purchasing power of a currency
  2. Inflation is an increase in money supply
  3. Inflation is an increase in money supply and credit
  4. Inflation is an increase in money supply and credit with credit marked to market.

Everyone is correct under their own prefered definition.

But what is really important in the fiat-credit world we have been in since Nixon closed the gold window?

It's Credit that Matters

Definition number 4 is mine. Yet despite my use of that definition I get mocked all the time. "Look at that fool, the prices I pay all the time keep rising," I hear all the time.

Yep prices generally rise. I never said otherwise. And they rise more in places where government touches the most: Education, medical care, and housing are three prime examples.

Housing is not even in the CPI. It should be. And if it was the charlatans at the Fed would have seen that inflation was not below 2% but rather above 5%.

Home Prices vs Wages and CPI

Image placeholder title

That chart is proof of massive asset inflation as well as price inflation. Take your pick, but the Fed does not see it.

For the third time in 20 years, loose monetary policy at the Fed blew huge bubbles.

Demand Destruction

One of the most important thing inflationists miss is demand destruction accompanied with or followed by credit destruction.

  • Corporations will allow more people to work from home on a continual basis. That means reduced need for gasoline and fewer people eating out for lunch.
  • Corporate travel will give way to more teleconferencing. That also means less travel, fewer hotels, less dining out.
  • Due to loss in wages, demand for cars will plummet.
  • Mortgages are harder to get and more boomers will seek to downsize their homes. That means more supply and falling prices.
  • States will raise property taxes to meet revenue needs. That will further reduce demand for houses.
  • Some people cutting their own hair will keep doing so.
  • The same lifestyles of eating out, buying expensive coffee, etc, etc. will pressure prices at restaurants, bars and coffee houses.

Credit Destruction

  • Many small businesses will go bankrupt as a result of the above demand destruction.
  • $15 minimum wages will be icing in on the bankruptcy cake given falling demand.
  • Some people will lose their houses in default.
  • Malls were already in trouble but now even more people are tuned into buying things online. Those people will not go back to mall shopping. Expect more store closures and more bankruptcies as well.

Only economic illiterates believe the Fed's balance sheet expansion outweighs those things. This is why I stress: pay attention to what matters.

Nothing is Working Now: What's Next for America?

For more along the above lines, please see Nothing is Working Now: What's Next for America?

I discuss 20 things. At the top of the list is a change in attitudes.

Very Deflationary Outcome Has Begun: Blame the Fed

On March 5, I wrote a Very Deflationary Outcome Has Begun: Blame the Fed

Deflation is not really about prices. It's about the value of debt on the books of banks that cannot be paid back by zombie corporations and individuals.

That is what the Fed fears. It takes lower and lower yields to prevent a debt crash. But it is entirely counterproductive and it does not help the consumer, only the asset holders. Fed (global central bank) policy is to blame.

Those expecting a massive surge of inflation missed the boat. We HAD a massive surge of inflation primarily reflected in asset prices, not consumer prices.

Bubbles are inherently deflationary.

It’s asset asset bubble deflation that is damaging, not routine price deflation.

When asset bubbles burst, debt deflation results. People cannot pay back the loans they have taken out. Bank loans go sour and banks are reluctant to lend. Credit dries up.

BIS Deflation Study

The BIS did a historical study and found routine deflation was not any problem at all.

“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the BIS study.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Definition Review

  • Inflation is best thought of as an increase in money supply and credit with credit marked to market.
  • Deflation is best thought of as a decrease in money supply and credit with credit marked to market.

My definitions reflect what is important. And debt deflation following asset bubble bursts is at the top of the list.

In 2009, we had deflation as measured by my definition and even by the CPI. Deflation was massive if one properly included housing prices.

In 2007 I made this call: "Expect the US to go in and out of deflation a number of times."

People thought I was nuts, and they still do because they do not read what I am saying, nor do most remotely understand the role of credit and debt deflation in these bubbles. Instead they hear the word "deflation" and react to the word.

In 2009, regulators suspended mark-to-mark accounting effectively masking a portion of my definition.

Mark-to-mark accounting is still best thought of as mark-to-fantasy. Mark-to-market rules never returned.

Junk Bond Bubble in Pictures

On July 17, 2019 I wrote Junk Bond Bubble in Pictures: Deflation Up Next

What happened?

There Are No Temporary Measures, Just Permanent Lies

On April 9 I noted There Are No Temporary Measures, Just Permanent Lies

Under guise of virus support, the Fed Will Buy Junk Bonds, Lend to States to the tune of an additional $2.3 trillion in additional aid.

Here we go again. Another deflationary credit bust is upon us. Lower prices will follow, especially in assets.

The Fed brought this upon themselves, fighting inflation when they should have been worried about asset bubbles.

These scars will last a generation. A huge change in attitudes is underway.

The Fed can offer cheap money, but it cannot forces businesses to expand or hire. Due to demand destruction there will not be a quick rebound.

What About Gold?

Gold does well in deflation and in times of severe credit stress but not when there is slowly falling price inflation.

Gold fell from $850 to $250 between 1980 and 2000 with inflation every step of the way.

If you believe as I do, that central banks are struggling with credit stress on multiple fronts, then buy gold. But don't expect high price inflation anytime soon. And write off as totally nonsensical any notions of hyperinflation.

Here's the deal:

Gold's recent action is not a hyperinflation signal or even a high inflation signal. Rather, gold is signaling debt deflation and the Fed's panic to contain it.

Mike "Mish" Shedlock

Comments (73)
No. 1-28
Tony Bennett
Tony Bennett

"And they rise more in places where government touches the most: Education, medical care, and housing are three prime examples."


Good post. And I am glad you added the above. Prices rise when government provides protection to rackets / cartels ... or when government subsidizes ... or barrier to entry (red tape, high cost to comply, etc).

Business "forced" to operate in free market have competitors to hold price in check.


US gold holdings biggest in the world. Unproven. Where's the audit? Who's doing the audit? So suddenly the government is trustworthy when it comes to gold?

What happens if it's zero?


Deflation? And yet the stock market keeps rising. Sure, we believe that.

Jacques Arnaut
Jacques Arnaut

Excellent explanation. This is spot on. Oddly enough, I have yet to see it stated anywhere else. So y'all go ahead and buy gold, but not for the silly "Sky's falling, Weimar/Zimbabwe coming" reasons.

Hansa Junchun
Hansa Junchun

As a one-time collector of inflationary banknotes (I must have 10,000 different examples of Weimar period notes), I notice that abuse of this term "hyperinflation" dates only from 2008, when the TARP bailout of dying banks coincided neatly with the genuinely hyperinflationary collapse of the Zimbabwe dollar. For whatever reason, the psychological impact of a modern society struggling with wheelbarrows full of trillion dollar bills etched itself onto the minds of Americans who benefit from dollar reserve status and therefore are uniquely defended against any kind of hyperinflationary scenario whatsoever.

Before 2008, hyperinflation as a term referred exclusively to any situation where prices doubled within 24 hours. That happened only three times in history: Germany November 1923, Hungary July 1946, and Zimbabwe October 2008.

In all other cases, Russia 1922 and 1993, Austria 1922, Poland 1922, Greece 1944, China 1949, Turkey 2000, as well as France 1794, America 1777, Confederacy 1864, it was always characterized as "inflation" or "rampant inflation".


Government guarantee (implicit or not) of the housing market, coupled with the central banking cabal instituted low interest rates (to compound their previous hubris), is the source of the housing bubble.


As far as I can tell Congress and the Fed have been successful in creating inflation. Deficit spending and low interest rates are inflationary.

Two examples of inflation from 2009 to prior pandemic shutdown.

  1. Look at housing prices.
  2. Check salaries of pro sports baseball, basketball, and football.

@Mish - the million dollar question : Hold cash or buy stocks?


Mish, don't you think the scope for significant price increases in terms of USD versus some commodities like foodstuff and precious metals is possible? Yes we have a demand shock but on the other hand

*Food is essential so the demand will be there for it
*Supply lines are likely interrupted because of the virus and the lockdown, so less supplies of essential items
*The Federal reserve by purchasing corporate and junk bonds is directly printing money into the economy. As we have seen with Treasuries once this starts it is difficult to stop so more of this will likely come
*The $2 trillion fiscal stimulus provided helicopter money (from debt proceeds that the Fed purchased of will purchase via money printing) to the masses, and more is coming

Furthermore, since the Fed will lower rates and will monetize so much debt, deleveraging will probably be limited and thus the scope for deflation as well.


Yes, it all comes to down to definitions, but most importantly, the ramifications of policy. The plebes and slaves do not like an increase in the prices of goods and services. The official CPI numbers are nonsense. Where is housing/rent and also higher education? But if you can keep the prices of goods and services from increasing, and yet have assets increase in price, then the aristocrats are happy, and the plebes and slaves happy. The latter groups can dump the inflated cost of higher education on their offspring via student loans, and can salivate at the possibility of owning homes and equities, which some achieve.


I'm an average person. To me, inflation means the prices of goods and services rise. And they have, particularly after the 2008 implosion, but the media never acknowledged it. I've noticed prices rising again and I expect them to go higher. AWC above thinks inflation will be 6-7% while Social Security is talking about a 1% increase in the cost of living next year....

A new poll shows that 70% of the U.S. population is boiling mad--a number that hasn't changed since the last presidential election. I wonder if the pandemic, coupled with ever-rising prices, will be the final straw?



The 2008 recession opened my eyes to just how corrupt things have become. Prices are up and continue to rise. Money printing combined with low production of goods and services cannot be good. Just wait until it dawns on the general public that social distancing will be with us for YEARS. What will the tens of millions of newly destitute do?



First, many, many thanks for this post. This inflation/deflation question has been keeping me up at night. I have watched everyone who has something reasonably intelligent to say: George Gammon, Peter Schiff, Marc Faber, Danielle DiMartino Booth, Lyn Alden, Refinitv TV, Hedgeye TV, Harry Dent (who seems to overweight demographics).
One analyst argued that the dollar can’t decline because it the best of a bad bunch.

Lyn Alden makes an interesting case for a decline in the dollar.

Dollar supportive
1- demand for US dollars is high because of almost $14T in international dollar denominated debt
2 - dollars must be had to pay those debts and dollars must be had for other trading (oil, e.g.)
3 - US currency cannot adjust to trade imbalances because we are a reserve currency. The demand for dollars keeps the currency above it’s equilibrium price (Triffin’s paradox).

Dollar destructive
1 - Massive money printing leads to a declining currency, as illustrated in the case of Japan (from 2012 – 2015, when the Yen went from 70 to a $ to 120). Unlike Japan, whose debt is mainly owned domestically, large amounts of US debt is held abroad.
2 - Some of the internationally held/owned debt needs to be sold to service the dollar denominated debt.
3 - The likely increase in use of other currencies to facilitate trade (e.g., Euros, Yuan, Rubles)
4 - It is not in US interest to keep the dollar as the only trade currency (as it prevents adjustment to equilibrium or a more competitive exchange rate)
5 - Lower attractiveness of US as an investment destination:
A - Judged by the twin deficits (fiscal/trade) and NIIP (-$11T), US is the worst debtor nation of the G7.
B - an overvalued currency and uncompetitive industrial base
C - massive money printer

Based on these factors, I think DXY settles out around 75 in the next few years

Sidebar: but Japan has been in unlimited QE for years, they have no inflation

Japanese save 20-30% of their money (slowing velocity)
Japan is a net exporter (creates external demand for Yen, limits downside)

When I think of MMT, I think of the psychology experiment where, if a rat presses a bar, it gets cocaine. Eventually, the rat chose to press the bar continuously, not even stopping to eat, and dies. Once people get MMT, the desire for more will be infinite. Politicians, being panderers more than statesman, will compete over who will give the most MMT to buy votes (Biden is already talking forgiving student debt).

A secular decline in the dollar and an incipient MMT addiction is why I lean towards inflation looking out one or two years.


We may very well see asset deflation combined with consumer goods inflation...toilet paper lol! My 5 cents is most likely Mish is correct, as this debtberg craters deflation across the board...


I would add that you can only have true hyperinflation when the debt of a country is denominated in terms other than their own currency. Thus, the coronavirus shutdown may lead to hyperinflation in other countries, but not in the US.


Credit is the key here. If you have actual paper currency, it will be more valuable when the ATMs and Banks fail.

Toilet paper might be even more valuable in such a situation. You can use that at least once.

The illusion is that any of the debt or equivalent obligations (e.g. Pensions) will be paid back. That credit expansion is what appears to be hyperinflation, but is just a hyperinflated credit bubble, which when popped will reveal only a few billions in real underlying assets exist.

I used the $5 bill in an envelope where it is exchanged and the last transaction price is written on top. Someone may have paid $500 for it but inside is still a $5 bill. of course you could pay $0.50 for the envelope. The day of reckoning is when the envelopes are all opened.

Theoretically, the fed could print $1 for every $1 of defaulted debt, causing a currency collapse, but that is monetizing the mark to market (zero).


My Hershey stock was up $3 today to close at $146. How sweet it is. Reminds me I should get ice cream tomorrow.

No inflation though. Lol.


Mish, Thanks for trying to educate people on inflation / deflation. It is a subject people really need to understand yet probably only 1 in 1000 actually do. Our money supply is primarily digital, and money is created whenever credit is used. When you swipe your credit card to make a purchase, you create the money for that purchase right then and there. You also create inflation. The inflation comes from the interest you pay on the credit for that purchase. It does not come from the Fed printing money as is so often wrongly thought. The Fed accommodates inflation, it does not create it. It does not matter how much money the Fed makes available, some one has to borrow it.
Deflation, which is what we will now experience for the first time since the great depression, is the destruction of money, caused primarily by the default on debt.
When a debt is defaulted on, the money that was created by the origination of the debt, simply disappears.
The asset which was purchased by the debt however still remains and must be resold if possible to raise cash lost by the default of the debt.
On a mass scale, the destruction of money and the flood of new assets needing to be sold causes asset values to plummet, which begins a chain reaction of default and devaluation. People who find themselves upside down on credit purchases tend to default on the debt.
We saw a lot of this during the 2008 recession, but on a small scale compared to what is going to happen now.
The amount of money being destroyed by this crisis dwarfs anything the government or the Fed can do to mitigate it. This is a world wide crisis and our banking system is vulnerable to debt default both domestically and internationally.



This may not be your music preference, but the song is about inflation, very well done by a band from Oklahoma called The Tractors (Bonnie Raitt on slide guitar in this one) and they aren't well known but are really solid (and don't assume country):

Maybe save for your next appropriate article if you dig it.




Gold is rising as global faith in fiat currency declines


A) I do not agree with the definition of hyperinflation.

You do not need millions of percent or even a one month 50% to have hyperinflation.

Any SUSTAINED inflation over 10% for months and years qualifies, particularly if that inflation is not in specific regions of the economy due to specific causes such as happened in WWII "for the duration." They would have had hyperinflatyion then but the government instituted rationing instead. On the other hand there was black market supply and demand that was hyperinflationary.

Under Nixon we had a sever bout of inflation, and when he resigned Ford took office and it got a lot worse. Then came Carter and it became a mini hyperinflation with 4 years of double digit price increases. We were well on our way to hyperinflation when Volker simply shut down the economy with a prime rate over 20% to stop it. It worked. But it was a severe induced recession to do it.

Some of you keep insisting that any nascent hyperinflation will be snuffed out by the so called debt overhang.

I am just flat out getting sick of saying this. DEBT is MONEY. The more debt "overhang" the more money that is in circulation. The more money in circulation the higher prices will be.

What so many of you are missing is a total misunderstanding in accounting. It involves periodicity and mark to market, but, a simple version is when production NET of population increase rises then in order for standards of living to rise (and that is what this really is all about) production has to rise beyond that population increase while money/debt remains stable.

So production increases have to be reduced/adjusted for population increases as well as net increases in monetary supply and debt has to be counted as part of that supply.

The reason this has not followed a direct pat that can be charted is the US has a unique position as the reserve currency and as such we can, and have exported all inflation for years. But, that position has eroded. And it can disappear overnight.

What the Fed is doing right now is writing a check they HOPE everyone else will cash. They believe they can get away with it because if we are shit shape other currency blocks will be in even worse shit shape and they might be right. But to prove it would require everyone calling their bluff and I see that happening even less than I see deflation.

B) in order for DEFLATION to happen you have to have lower demand for goods and services. In the past famous deflations were a product of lower demand. Demand was lower because cash was in short supply. And it was a problem because money was tied to PMs or other trade that could not support higher wages and without higher wages you did not get higher prices. There were not too many dollars chashing too few goods.

The Fed claims they target 2% or more inflation. But, to get that you have to have production rising at least as fast as the population and you have to have the population getting wages at least 2% more every year. That has just not happened. And it will not happen till wages rise.

Instead what we see is more than 60% of the population that can't put $500 together in an emergency, and we are now in an emergency for tens of millions of people in America.

Wealth inequality is sort of like a new economic paradigm. The overall economy has more money in in it. A lot more, trillions and trillions more. But that wealth is in the hands of well under 1% of the population. The vast majoority of people are facing eviction and having all their choices limited by lack of cash/credit. That seems on the surface as deflationary, but they will have to come up with a way to pay the hyperinflated prices. Because debt is like a crosscut saw, it works both ways. Sellers of goods and services must get $$$$$ they demand or they fail. They cannot service their letters of credit unless they do. Fot that to happen they have to charge prices based on foot traffic. The fewer the customers the higher the prices must go.

I will give you and example. I went to Staples today to buy an office chair. The last time I bought one was 2009. It was $89. Now a comprable chair is well over $200. But it also comes in a box not assebled. I am not interested in spending all day assembling a chair. I bought bedroom furniture that was not assembled in Oregon because there is no sales tax there. By the time I was done I had hired someone to help me because you just can't hold that shit together while you operate power tools, and now I have to pay someone $100 to come haul away all that cardborad and styrofoam.

I was the ONLY customer in Staples. I had money and I had something I was looking for. They did not provide it at a price I was willing to pay, so I left with nothing. Does that mean they are going to lower their price? No.

There is an old saying, "Don't fight the Fed." The Fed says they want inflation and trust me they will get that no matter what Mish or others think. Will it be 2%? 20%? 200%? 2,000%? Over what timeline?

The bottom line is the Fed wants inflation and they will get it. So deflationists can have a margarita and rub one out while watching the sunset. It is going to happen if the Fed says it is going to happen.


Awesome Post!


Mish, excellent post.


"States will raise property taxes to meet revenue needs. That will further reduce demand for houses."

Yes, provided that landlords keep rents flat and eat those property tax increases. Yeah, it could happen. Sure it could.

  1. I remain amazed at how US-centric hyperinflationists in general are. [dollar, and U.S. will decouple from the world]

  2. Hyperinflationists ignore US gold holdings, the largest in the world. [Fed's lying about how much real gold they have, which doesn't include painted over bars that are not gold]


First you admit that printing money caused hyperinflation in Weimar; and the Fed has announced unlimited money printing, so yes, the symptoms are there for that one. Venezuela was simply caused by giving away cheap oil; how is that a hard to reach place? Clearly, it doesn't take $50,000 per person, since that wasn't a condition for other countries.

"Weimar Germany: Demands for war reparations following WWI set in motion finances that could not be repaid. Germany turned to the printing press.
Zimbabwe: Prime Minister, Robert Mugabe confiscated land to give to the people. The result was white flight and capital flight. The country collapsed as did the currency.
Venezuela: To fight poverty, presidents Hugo Chávez and Nicolás Maduro took over the oil industry and gave cheap gasoline to the people. In US dollar terms, gasoline is now a penny a liter. But you will not find any at that price.
Wake me up when AOC is president and Congress authorizes free money to the tune of $50,000 per year per person, indexed to prices."


Why is M3 no longer published then? That's perfectly "normal" right.

Trey LePark
Trey LePark

I think that if a person wants to be forewarned of a hyperinflation event, all they have to do is watch the Dollar charts. The Dollar is very strong and continues to price at well above normal. Don't quote me on this but I believe the long term average is in the mid 70s. It's at 99.60, even after the Feds latest round of printing. The deal is that not only is the Fed printing right now, but all of the world's central banks are printing like mad. Tit for tat. The Funny Money will continue for who knows how long but don't look for it to end anytime soon. We actually need to print even more to bring the value of the Dollar down.

Global Economics