Sounds absurd doesn’t it? But some Shrinks might suggest that to be a true statement, in that our mental nerves might be able to get us in the end, so to say.
A year ago I studied hyperinflation. I wanted to understand it and learn to survive it. I was shocked when I finished because I walked away knowing it too is more of a state of mind than a financial crisis. Here is how.
Hyperinflation starts out as a smooth slow increase in loss of currency valuation. This is a financial condition.
But then a few persons realize at some point they lose value on a daily basis so they race out to spend that day’s earnings so as not to lose value. While they silently do this the inflation rate is still increasing, but slowly, still a financial condition.
Soon others notice the quiet fast spenders and imitate them. More and more people catch on so now its a daily growing crowd race to the store. The shelves grow bare, supply prices skyrocket from demand and now the inflation rate skyrockets straight up.
This is now psychological driven inflation and will continue for about six months until that currency collapses. This is the history of hyperinflation. No currency ever survived the psychological impact.
I am tired of typing so let's replace the term “hyperinflation” with “Bank Runs” in all the above narrative. That too is a State of Mind.
Janet Yellen spooked the deposit withdrawal herd (all those that heard her Friday).
Monday will be the recognized start of death hyperinflation in the U. S.
When cash is withdrawn from the smaller Regional Banks, credit for small businesses will dry up, collapsing the economy.