Very entertaining interview with Gonzalo Lira. In it, he is discussing his views on how a hyper-inflationary crisis could be coming soon to an America near you.

My comments to him:

Fun interview.

What your interviewer didn’t seem to get (or believe), is that the amount of “money” in US Treasury Bonds so dwarfs the global commodity markets, that a mass-exit from treasuries / the USD, is way more than necessary for a hyperinflationary catastrophe.

If commodity prices go into a hyper-spike as a result of money rushing out of treasuries into something “real”, and that results in huge spikes in the prices of food and energy, very rapidly you are going to see one of two things happen in America: either Helicopter Ben is going to earn that nickname far more literally than anyone has yet used it, or there is going to be a revolution. Which seems more likely (at least at first)? There are a shit-ton of people in America who are barely making it right now. And the vast majority of them care nothing about these esoteric economic analyses (most couldn’t grok them if they tried). All they know is that they are struggling to feed and shelter themselves and they see other people who aren’t struggling and that is pissing them off. America of today is approaching the widest gulf between haves and have-nots in its history and at the same time has by far the worst “entitlement” mindset in the history of humankind. The sense of “I deserve” is far more prevalent now than during the time of the great depression when Americans still self-identified with a “rugged individualist” archetype. Unless the money spigots open wide and say ahhhhhhhhh, I don’t think that gas or heating oil or food prices would even have to double from here to spark a flat out revolt. And everyone here has guns, baby.

I suppose another possible approach from our fearful leaders in Washington in the case of a big spike in commodities would be subsidized price controls on food and energy. Pick your poison, I guess.

The problem of course is that as a result of Al and Ben’s cheap $ fund, bubble-blowing policies, there is already too much fucking money (debt) for the amount of “real” wealth in the world. This has to equalize at some point. For whatever reason, Mish obviously prefers to imagine a relatively “orderly” settlement of these affairs in the form of a deflation in which the non-productive parasites — who have amassed enormous wealth and power by literally sucking the productive wealth out of society as a whole — are suddenly going to change their spots and take voluntary haircuts. I could see that happening in parts of northern Europe or Japan where there is a strong cultural tradition of teamwork and social cohesion. But that seems unlikely to me in the dog-eat-dog America of today.