Thursday, June 18, 2009

9 Failed Currencies

I consider massive hyperinflation a possible end game. Unlike many investors who are worried about it in the short term, I think such a scenario has 2 or 3 years to start developing. At the mint website it gives a brief (to brief to give much practical value) overview of 9 failed currencies in the last 100 years. Germany Weimar Republic from 1922-1923, Hungary from 1945-1946, Chile 1978,91, Argentina 1975-1992, Peru 1988-1991, Angola 1991-1999, Yugoslavia 1992-1995, Belarus 1994-2002, and Zimbabwe 2000-2009.

There are many other examples of severe inflation not mentioned such Mexico. My argument is that the government has not done enough yet to create such a scenario but Ben's helicopter is always a threat and eventually deflation could cause Bernanke to overshoot creating a massive inflation.

I would love to read more in depth on each of the 9 failed currencies mentioned. Understanding the playbook may be vitally important.


John said...

What happens to the values of equities during hyperinflation?

Where is money generally safest? Commodities? Foreign currencies?

Market Seer said...

At first at the start equity values go down and then they go way up in currency terms. For instance Mexico's stock market during the 80s went up alot in peso terms and down alot in dollar terms.

Yes foreign currencies, commodities, eventually real estate, and certain equities.

At some point, when/if the government takes over Citigroup, or the Fed responds to to a Europe implosion, the stock market is likely to go spiraling downwards. That is when you go all in for equities because that is when the real printing presses will start to begin hyper inflation.