Truth and Purple Prose

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In a widely-quoted interview, popular investment newsletter publisher Marc Faber told Bloomberg:

I am 100% sure that the u.S. will go into hyperinflation. The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.

Now, hyperinflation generally means price increases of over 1,000% a year. It happened most recently in Zimbabwe, where a toxic mix of crooked politicians and bad policies produced inflation that was over 200,000,000% in 2008. Yes, over 200 million.

Faber may have been going in for a little George Soros- style America bashing there. He may have been trying to stir up controversy and sell some newsletters.

But the sad thing is that artificially low-interest rates do tend to cause inflation, the Federal Reserve does seem intent on a policy of keeping interest rates very low.

It won’t take sub-Saharan fiscal madness or Weimar Republic-style “wheelbarrows full of cash” to hurt value in the United States. A year or a year and a half of double-digit price jumps will do the trick.

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