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Peter Bernholz Hyperinflation Watch

March 09 2010 | 4:00 am PDT

fiscal.expenditures 300x230 Peter Bernholz Hyperinflation Watch

Click to enlarge.

Check out this chart from AFT, LLC.

According to Peter Bernholz, whenever you see a government borrow to cover 40% or more of its fiscal expenditures, it’s resulted in hyperinflation. Bernholz wrote about it extensively in his book Monetary Regimes and Inflation: History, Economic and Political Relationships.

The US has recently been as high as 44%.

Unless we see growth upwards of 3-4%, there is an almost 100% chance that we will see hyperinflation.

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  • jb

    Almost all the past cases have been where the borrowing has been in another currency. It seems that a country borrowing in its own currency and having some semblance of political and institutional stability can carry on the deficit game for a while.. ala Japan. Japan still hasn't seen any hyperinflation in a long time. Maybe it will eventually but its unclear when!

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