Sunday, August 29, 2010

Basic Needs (Bumped)

Guest Post: Hyperinflation, Part II: What It Will Look Like | zero hedge: "One of the effects of Chile’s hyperinflation was the collapse in asset prices.

This would seem counterintuitive. After all, if the prices of consumer goods and basic staples are rising in a hyperinflationary environment, then asset prices should rise as well—right? Equities should rise in price—since more money is chasing after the same number of stock. Real estate prices should rise also—and for the same reason. Right?

Actually, wrong—and for a simple reason: Once basic necessities are unmet, and remain unmet for a sustained period of time, any asset will be willingly and instantly sacrificed, in order to meet that basic need."
If you never read much about hyperinflation, this is what to read. Oh, and part the first also please. And even if you think you know that it's coming you need to read it too. Capiche?

No comments:

Post a Comment