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After years of downplaying the importance of inflation, central bankers, government officials, and elites can no longer deny that it is here. Despite the use of questionable methodology, yesterday's CPI figure shocked at 6.1%. This is the highest figure since 1991. Remember, these are the same officials who promised the American people in 2020 that there would be no inflation and that there was nothing to worry about while we printed trillions of extra dollars.
The rhetoric soon turned to denial: Powell and company essentially denied the very existence of inflation. And when it became impossible to ignore it , they brushed it aside, calling it temporary. After more than a year of serious price increases, the story is entering its final stage. The narrative is changing.
The new view is that inflation is a good thing, a last- ditch effort to explain away the invisible tax that is consuming America. In today's video, we'll look at the potential for a massive hyperinflation catastrophe and analyze Michael Burry's latest statements on the issue, delving into the details of the tragedy brewing in Washington and on Wall Street.
But before we get started, I would like to give you a quick reminder, friends, to hit the subscribe button if you enjoy my content. I already have almost 86,000 followers, and I really want to reach the 100,000 mark by the end of this year. While talk of hyperinflation is often quickly dismissed as absurd, events unfolding in the world today are rapidly creating a dangerous environment where just a spark could cause a massive inflationary inferno.
Let's start with some facts. While we like to think that the United States is immune to disasters like currency collapse, let me remind you that no fiat currency in history has survived. Each of them has failed. The two longest-lasting of these—the British pound and the US dollar— have both lost the vast majority of their original value.
Now, before you get tired of the typical clichés about the fiat money apocalypse, let me be clear: we are still very, very far from hyperinflation in percentage terms. But, as you will now see, we may not be that far away from it in terms of time . Officially, hyperinflation is defined as monetary inflation that occurs at a very high rate.
What "very high" means in this context is quite subjective, but most economists agree that the limit is an inflation rate of over 50% for at least a month. Only seven countries on Earth are currently experiencing hyperinflation, but there are signs that we may be heading for disaster. Burry's tweet from November 10 underscores this.
While experts have previously blamed the economic recovery as a catalyst for rising prices, new data shows that the recovery has little to do with these recent figures. The CPI is 6.1%, which is very far from 50. But the government is interested in keeping inflation rates low. You can read about it at your leisure, but it is a simple truth that the methodology for measuring the CPI has changed dramatically over the past few decades.
It is also true that with each change, CPI figures look lower and lower, and never vice versa. For example, using the 1990 method, our CPI today would be about 10%. Using the 1980 method, it would be about 15%. How far can we go before we break? As you may know, Behr rarely appears in public or gives speeches.
However, in 2012, he delivered the commencement speech at the University of California (UCLA). Although this event took place almost 10 years ago, many of his statements still ring true today. The most important evidence of future hyperinflation for Baer is our government's dependence on the printing press.
While inflation is rising, we see modern politicians calling for more spending, more government assistance, and more social programs. Trillions of dollars that we think can simply be created out of thin air. So far, everything is going great and the party is on. But, as he explains in the following passage: "The party may be over soon." I can explain it in one sentence.
When people with a sense of privilege elect themselves, the party accelerates. A severe hangover is inevitable. Our country's economic policy was born from a synthesis of theories on how to cope with the Great Depression of the 1930s. However, she seems incapable of honestly analyzing the most recent crisis.
Unfortunately, at the highest levels of economic thought in government, questions are not tolerated. It's as if we're dealing with the binary judgment of fundamentalist religion. Financial theory and practice look no better. The prolonged crisis makes a mockery of the principles that have guided credit policy and risk management since the 1960s.
As it turns out, the information is not perfect. Volatility does not determine risk. Markets are not efficient. Personality is adaptive. But the dark ages of finance do not allow for such light. As you just heard, Behr is convinced that modern economists are naive and maladaptive. They believe they have found a solution to recessions and depressions, a problematic way of thinking that has instead ignited a decade-long party where excess is simply going overboard.
The rich get richer, and the poor get poorer. While the S&P 500 is soaring on paper , discontent is growing among Americans , and inflationary psychology is becoming apparent everywhere. Now I come back to the last point. How far are we from a currency collapse? Well, throughout history, hyperinflation has always started slowly and then quickly escalated into a catastrophe.
Take Israel, for example. In 1970, the inflation rate there jumped to 6%. High, but not catastrophic. Four years later, in 1974, it had already reached 40%. Now serious trouble was brewing. However, the government was unable to stop the obvious threat. By 1984, inflation had reached 450%, and was predicted to exceed 1,000% the following year.
Only then did Prime Minister Peres take decisive action, radically transforming the economy with the 1985 stabilization plan, which included the introduction of a new currency. This case proves how quickly things can change in ten years. And it's also proof that the government will do little to fix the situation until things get really bad.
Today, no one in the US government is prepared to act like Paul Volcker: raise interest rates, cut budgets, and roll back stimulus. In fact, it is beneficial for the government to push inflation because it helps them pay off their debts. Although the Fed likes to talk a lot, they actually do very little to combat inflation.
That's why we see the mainstream media changing its rhetoric, trying to sell the idea that high inflation is even a good thing. But not everything is so gloomy. As Israel has proven , despite a currency collapse and hyperinflation, the country has recovered and today has one of the best economies in the world.
Everything somehow works out in the end. And an economic catastrophe or currency collapse does not always mean the end of civilization. Dr. Michael Bury tends to think darkly, and in his opinion, the dollar will soon collapse, which will mean the end of American history. Back in 2012, he predicted a crisis in the near future, telling graduates that they would face a much bigger crisis by the end of their 20s.
Listen. Of course, no one has forgotten that you started your studies at the University of California at the height of the global financial panic. The consequences of which are far from being exhausted. It's not your fault, but the responsibility for the future it leaves behind is certainly yours. Because of what happened while you were growing up, you now face a future that will bring either another great recession in your 20s or, in your 40s, an American debt collapse.
ratio to GDP exceeding 200%. And I'm not saying that. This is data from the Congressional Budget Office. I. I think they ignore reflexivity, and I think you'll run into both. Not exactly what you want to hear at 22 years old after graduating from college. Where this will lead, no one knows for sure, but the next few years will be extremely important.
The course of history will be determined by those who control the printing press and monetary policy. The Federal Reserve faces its most important test in decades. How long can the dollar withstand such a policy? This is a big question. Thank you all for watching. As always, please like and subscribe if you enjoyed it.
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