Now none other than the man who was made famous in The Big Short is calling for Weimar-style hyperinflation in the US. …
The US government is inviting inflation with its MMT-tinged policies. Brisk Debt/GDP, M2 increases while retail sales, PMI stage V recovery. Trillions more stimulus & re-opening to boost demand as employee and supply chain costs skyrocket …
Burry quotes this on the great German inflation after WWI:
The life of the inflation in its ripening stage was a paradox which had its own unmistakable characteristics. One was the great wealth, at least of those favored by the boom … Many great fortunes sprang up overnight … The cities, had an aimless and wanton youth”
Prices in Germany were steady, and both business and the stock market were booming. The exchange rate of the mark against the dollar and other currencies actually rose for a time, and the mark was momentarily the strongest currency in the world on inflation’s eve.
Side by side with the wealth were the pockets of poverty. Greater numbers of people remained on the outside of the easy money, looking in but not able to enter. The crime rate soared.
Accounts of the time tell of a progressive demoralization which crept over the common people, compounded of their weariness with the breakneck pace, to no visible purpose, and their fears from watching their own precarious positions slip while others grew so conspicuously rich.
Almost any kind of business could make money. Business failures and bankruptcies became few. The boom suspended the normal processes of natural selection by which the nonessential and ineffective otherwise would have been culled out.
Speculation alone, while adding nothing to Germany’s wealth, became one of its largest activities. The fever to join in turning a quick mark infected nearly all classes … Everyone from the elevator operator up was playing the market.
Sound eerily familiar? Then:
All the marks that existed in the world in the summer of 1922 were not worth enough, by November of 1923, to buy a single newspaper or a tram ticket. That was the spectacular part of the collapse, but most of the real loss in money wealth had been suffered much earlier.
Throughout these years the structure was quietly building itself up for the blow. Germany’s #inflationcycle ran not for a year but for nine years, representing eight years of gestation and only one year of #collapse.
Burry finishes with:
The world keeps score and motivates work though our money system. When the money system breaks, so does much of society. Every other political issue — short of war — will be blown away.
Since 1971 the money system has been unconstrained, with governments able to manufacture more money at whim, held back only by inflationary fears. As time went by that fear dissipated; now it is only paid lip service. Inflation has been understated (on purpose), then ignored, and now finally — with the opening of the spigots due to covid — it is being positively begged by central bankers to come and do its worst.
Any system where some people can print money eventually succumbs to corruption. The people in charge always find some “compelling” reason for printing more. History tells us that paper money systems last about 50 years on average. 2021 is the 50th year since 1971, the year our money system finally became untethered from gold.
Btw, both the US and Australian constitutions say gold and silver (only) shall be used as money. Ever wondered why?