Hyperinflation (too early)

We've been told some asserts that we think they are absolute truths. However, if we stop to think about them, they are not so clear. Example: deflation. For our politicians and media this is the worse curse for a country. We absolutely disagree. Deflation is one of the best mechanisms to reduce costs and optimize production. We know it will be tough, but at the end only the best ones will survive and the country will be clean for a brighter future.

However, we believe deflation will only happen during the next few years, because governments think the solution for the public and private debt problem will be to create inflation. With inflation, debts go down, the same as savings.

Let's remember some facts. First, you can read this small "wikiarticle": Hyperinflation in the Weimar Republic. Perhaps, now you understand why Germans are so afraid of "printing money". We are not talking about a small inflation like 5% or even 15% a year, but figures like the following: the wholesale index in January 1922 was 37 and in November 1923 726 Billion!

Second, all the savings from the middle class were gone in less than 2 years: bank savings, bonds..., all gone. Rich people improved, though. They owned land, gold, and stocks, which served as good hedges against hyperinflation. As you can see on the chart, the stock market behaved very poorly at the beginning of the crisis. In USD terms, it went down from 20 to 5. However, at the end, it was a very good investment. Probably, we will see a less extreme situation in years to come, and at certain point we will have to avoid bonds. The risk will be rewarded.