What Would Hugo Do? | Economic Prismeconomicprism.com/what-would-hugo-do/
519 sats \ 2 comments \ @siggy47 14 Sep econ
Overall, Stinnes’ hyperinflation playbook was generally straight forward. He used debt to load up on hard assets prior to the hyperinflation. Then, after the hyperinflation, his hard assets retained their value, in real terms, while their price shot through the roof in nominal terms (relative to the currency).
What this meant is that the debts he owed in terms of the Papermark he borrowed in dropped to the point of being insignificant. Hence, he was able to pay off his debts for practically nothing while retaining his hard assets and becoming filthy rich.
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43 sats \ 0 replies \ @BTCLNAT 14 Sep
"According to the Bureau of Labor Statistics' own inflation calculator, $1 today has the purchasing power that $0.03 had in 1913 – the year the Federal Reserve was born."
That says it all. If we use the calculator and compare over the past 14 years, the purchasing power for $1 today was $0.69 in 2010.
Now, unlike in 1920, the FED is doing what Mises proposed in one of the alternatives:
"The alternative is only if the crisis should come sooner as a result of a voluntary abandonment of further credit expansion..."
Are they holding on to credit expansion even if it means a slowdown in the economy to avoid total collapse?
Are they anticipating the game of investors based on Hugo's experience in Germany?
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43 sats \ 0 replies \ @snufon 15 Sep
I don't see a convincing argument for the hypothetical massive shakeout once rates are cut. We also need to take into account that the market is becoming smarter over time: the mind-games of the Fed are less and less effective as years pass.
Anything can happen but on average you're better off holding. I would agree with the "don't buy on margin" advice however
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