News Report (from CommodityOnline): “World is hit by hyperinflation & monetary collapse” The most probable sequence of events resulting in hyperinflation and monetary collapse is as follows:
1. A broad based shortage of goods that are thought essential develops and this is not relieved in time to satisfy demand.
2. Consumers trying to acquire essential goods that they believe are in short supply become fearful and are prepared to pay increasingly higher prices and stockpile these goods further increasing shortages and accelerating prices as a sellers market develops.
3. Prices rise for essential goods in short supply as an increasing proportion of the money supply circulates in these goods, also with increasing velocity and as most of these goods are consumables with high turnover upward re pricing quickly occurs.
4. The proportion of available money circulating in goods that are perceived as essential increases and the demand for less essential goods diminishes i.e essentials become disproportionately more expensive than the norm against non essential goods displacing money towards the goods most in demand further fueling inflation,
5. The shortage of essential goods accelerates as manufacturers increasingly focus on short term survival, longer term risk is avoided and investment in the production cycle is reduced accelerating 1.
6. The normal balance of demand for all goods increasingly prefers those goods required to satisfy primary needs and people engaged in making and supplying less immediately essential or non essential goods become unemployed who then pressures governments accelerating condition 9.
7. Eventually goods not immediately required but non the less essential are needed and rapidly increase in price as they also become in short supply.
8. Consumers with least money first find it increasingly difficult to secure essential goods, become frightened and are forced to allocate greater proportions of their money on essential goods and demand greater income.
9. The demand for money forced by need and fear becomes irresistible so governments feel insecure and provide increasing amounts of fiat new money.
10. Consumers first to spend the new money see some value but soon as this new money is distributed and its value is lost, the velocity of money also accelerates as people rapidly exchange money for goods, wealth is seen as best protected when stored as goods rather than cash further increasing price and reinforcing condition 9.
My Comment: This is a perfectly logical scenario, although it may drag out over years and hence seem unrealistic to us right now. But more importantly, the solution to the economic crisis must be a moral one, because it’s the next level of human development. The solution must be fundamentally different, bringing us to the new, following level.
The universal interdependence (the global nature of our “small village”) shows us that in order to come out of the crisis, we must change our current relationships to the opposite ones. We have always sought to separate from one another, but today, in order to survive, we will have to start caring for one another. We cannot wait for instructions to come from the authorities or the government. It is man who must change (correct himself), and hence, it’s up to him to create this change (via education).
The new social relationships of mutual care will gradually produce a new system of government – a council of people who are great with respect to their vision of Nature and Society (the Creator).