Tag Archives: Inflation

Does Fiat Money Always Fail? Usually.

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A question came up about whether fiat money systems always fail. Some have made the argument that fiat systems don’t always fail and that something like a gold standard is worse. I think those that make this point need to understand that a fiat money failing usually goes hand in hand with the government failing at the same time. In fact, hyper-inflation is the final gasp of most dying governments. Very few come out of the situation intact because the markets lose confidence and dump their currency to whatever sucker will pick it up. Consider this, how many governments still Continue reading →

Argentina’s CPI Still Rigged – Brace for Impact

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I am fond of using Argentina as the poster-child for incompetent and corrupt government management of an economy. They have destroyed their own economy so many times from inflation and collectivist policies that I’ve lost count. I use their manipulation of their own Consumer Price Index (CPI) as a possible outcome of relying on Treasury Inflation Protected Securities (TIPS) in the U.S. to save you from high inflation: TIPS Are a Bad Idea: Argentina’s CPI As a follow-up to this very sad story that continues the cycle of impoverishing millions, I see this: Argentine leader’s image falls as inflation soars Continue reading →

Inflation and Business Intuition – Why TIPS Are Likely to Fail You

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Treasury Inflation Protected Securities (TIPS) comes up repeatedly in conversation about inflation protection. In particular, many people claim they would be fine for future inflation in the U.S. and are the “perfect” inflation hedge according to some. Perfect? Really? Those sound like famous last words to me! First, we’ll ignore that the “perfect” inflation hedge has recently auctioned 10 Year TIPS at a negative rate which will ensure loss in purchasing power. Secondly TIPS, as has been discussed here before, have only been in the U.S. since 1997 and have never been through high inflation of the US dollar. So Continue reading →