According to today’s English WikiPedia entry, “hyperinflation” in economics is:
…inflation that is very high or “out of control”, a condition in which prices increase rapidly as a currency loses its value. Definitions used by the media vary from a cumulative inflation rate over three years approaching 100% to “inflation exceeding 50% a month.” In informal usage the term is often applied to much lower rates. As a rule of thumb, normal inflation is reported per year, but hyperinflation is often reported for much shorter intervals, often per month.
The definition used by most economists is “an inflationary cycle without any tendency toward equilibrium.” A vicious circle is created in which more and more inflation is created with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply (or drastic debasement of coinage) usually accompanied by a widespread unwillingness to hold the money for more than the time needed to trade it for something tangible to avoid further loss. Hyperinflation is often associated with wars (or their aftermath), economic depressions, and political or social upheavals.
I voted for President Obama and do not regret that decision. The Bush administration not only provided poor leadership for our nation in foreign policy and military affairs, but also advanced a destructive agenda of high stakes accountability for our schools which I staunchly oppose. I defy stereotypical categorization as an extreme conservative or a bleeding heart liberal, because on different issues I don’t fit clearly into either box. I was very dissatisfied and upset with the leadership of the Bush team on both domestic and international issues, but I am ALSO unhappy with the economic approach we see the Obama team taking toward our present recession. Are we speeding headlong into an era of hyperinflation due to government spending and unbounded borrowing? I hope not, but I fear that may be the case.
As a student of history, I’ve read scholars who contend the only thing which truly brought the U.S. economy out of the great depression was World War II. The administration of Franklin D. Roosevelt worked to spend the United States out of the depression, but I’m persuaded to think the unemployment rates of the 1930s were only remedied by the industrial full-court-press of the United States in supporting the war effort.
This historical issue is relevant to our current economic and political landscape today, since the Obama Administration seems bent on trying to SPEND our nation out of our financial slump. I don’t think that is the right course forward, or a course which can be effective in the long term. Conservatives have long-criticized Democrats as being “tax and spend” politicians. Where is all the money coming from for our current economic stimulus package spending spree? President Obama is mortgaging the future economic spending potential of MY CHILDREN and yours, borrowing YET MORE against the good name of the United States in the fervent hope that these injections of borrowed capital can jumpstart a sluggish economy. This is a bad plan, and I think as voters we should be speaking out loudly against it.
Our national as well as global economy is very complex, and I am not going to attempt to over-simplify it. A few things seem clear, however, which are NOT going to be effectively addressed by the American Recovery and Reinvestment Act. These include:
- Americans need to save more money and spend less. Our savings rate is much less compared to many nations (like those of east Asia) and we need a higher savings rate to be economically healthy.
- Too much debt is bad, for individuals as well as nations. We see evidence of this all around us. From individuals going bankrupt as well as corporations, to nations which are ostensibly drowning in their debt obligations to the International Monetary Fund, examples of excessive debt hazards abound.
- Printing money is not a viable solution to get out of a recession or depression. Is it true the United States government was the primary buyer of the last two months of treasury bill / bond auctions? How would that be possible? There is a limit to “the good name” of any individual, organization or nation, and the Obama Administration seems to be acting like the United States has an unlimited national debt ceiling. We don’t, and it is foolish to act like we do.
As a nation, WE SHOULD DEMAND that our nation STOP spending more money than we are taking in. WE SHOULD DEMAND that we start paying off our debts NOW, and stop mortgaging the futures of our children. Yes, our former national leaders have declared a never-ending “war on terror” analogous in many ways to the ill-informed announcements of prior chief executives of a never-ending “war on drugs.” The “weed the garden” metaphor from the Nixon administration for drug control is also applicable to crime and terrorism. We’re never going to completely eliminate crime worldwide, or terrorism in all its forms. It’s stupid to “declare a war” on something that is never resolvable entirely by military means. We are NOT fighting Hitler in Europe and Japan in the Pacific today, facing a global war which can have a definable endgame. THIS MEANS WE SHOULD NOT BE SELLING GOVERNMENT BONDS TO FUND OUR CURRENT SPENDING SPREE. This economic strategy is rash, hard or impossible to defend, and will lead our nation (in all liklihood) down a dark path of hyperinflation and even worse economic suffering.
I will readily admit that some of my thinking about these issues today was colored by a conversation with a friend who is an big fan of Rush Limbaugh. I’m not a big fan of Rush, but I am a big fan of anyone who has good ideas and gets me thinking. It doesn’t take a rocket scientist to figure out that individuals, businesses, and governments need to carry LESS rather than MORE debt today. The U.S. National Debt Clock should not just get our attention, it should GALVANIZE us as voters to take action.
President Obama and members of the U.S. Congress, please hear my plea. (Yes, I’m sending this to them by email as well as writing this blog post.) STOP BORROWING MORE MONEY TO PAY FOR GOVERNMENT PROGRAMS. No one asked my children if they wanted to take on all this new future debt, and as their father I’m speaking for them today: THEY DON’T WANT TO. Please encourage fiscal responsibility for individuals, businesses, as well as our nation, by modeling DEBT PAYOFF instead of DEBT BUILDING. No one wants hyperinflation. How can we avoid hyperinflation, however, if YOU (and by “you” I do NOT just mean President Obama, I also mean all members of Congress who have the power of the purse per the U.S. Constitution) keep on spending money WE DON’T HAVE AS A NATION?
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On this day..
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