John T. Reed’s hyperinflation/deflation blog

Copyright 2013 John T. ReedSix countries with historically-stable banking systems In an article titled “O Canada!” Nancy Bush says there are six countries that have not experienced banking crises even as the rest of the world has. They are Canada, Australia, New Zealand, Singapore, Malta, and Hong Kong. This is from a paper by Columbia Professor Charles Calomiris titled “The Political Foundations of Scarce and Unstable Credit.” http://www.frbatlanta.org/documents/news/conferences/13fmc_calomiris.pdfThe basic idea of it is these countries have a different political system—namely parliamentary systems with centrally directed economies which make it harder for politicians to use the central bank for political purposes....

Copyright 2012 by John T. ReedI was not surprised to see Argentina in Anna Eisenmenger’s list of the six countries that helped her Austria during their 1920s hyperinflation. In my financial research for my book How to Protect Your Life Savings from Hyperinflation & Depression, 2nd Edition, I reported that Argentina was the number six economy in the world in the early 20th century and a contender to remain so or even rise in the rankings.But they went off the rails and stayed there choosing instead to enter the funniest banana republic competition instead. What do we care?Following Argentina’s exampleWe...

Copyright 2013 John T. ReedArgentina has high inflation—25% to 40% or thereabouts.They also have the usual capital controls and an official exchange rate to exchange the Argentinian peso (ARS) for the US dollar (USD). At present, the official rate is $1USD = 5.87 ARS. Check the current rate by Googling ARS currency. Tellingly, the Argenitine government and everyone else in Argentina will buy dollars at the official rate, but will not sell them at that rate. When an official exchange rate is legit—for gold or currency—the government is by definition willing to either buy or sell at that rate. One-way...

Copyright 2012 by John T. ReedI frequently am asked whether foreign-exchange trading accounts are an adequate way to hedge against U.S. dollar inflation. I recommend opening ordinary savings accounts in foreign currencies in foreign banks in the foreign countries that issued the currencies you are buying. When you can’t do that, I recommend buying the actual cash and putting it into a Canadian safe deposit box. Rule Number 1 of Reed’s Rules of Real Estate Finance (Those rules are in my book Fundamentals of Real Estate Finance.) is Simple is better than complex.That particular rule applies to all finance, not...

Copyright 2013 John T. ReedWe are so screwed.My view of what might trigger hyperinflation has changed radically in the last three years—for the worse.First, I thought the markets including the bond market and the foreign exchange markets would essentially become so unhappy with U.S. fiscal and monetary policy that they would start to shun buying U.S. bonds. They did. There has been no net increase in the holdings of foreign U.S. bonds buyers for several years. But that message from the free markets was nullified by the Fed. The Fed bought up all the U.S. bonds issued and many of...