An investor, who rather alarmingly put his half his entire portfolio into bullion and the rest into mining stocks, asked Silver Doctors how hyperinflation will actually unfold.
What will the economy look like and how will prices affect the average person?
The Silver Doctors reply that hyperinflation happens when the economy enters a self-reinforcing spiral. First, high interest rates harm the main drivers of the economy, and people can no longer finance housing or automobiles. Lower demand hurts business profits and tax revenues fall, ballooning the deficit. Governments finance their revenue shortfall, which raises interest rates again, and the economy suffers even higher interest rates.
"Once the public as a whole loses CONFIDENCE in the purchasing power of their currency (the US dollar in this case), this is the trigger for hyperinflation," writes the Silver Doctors (their capitalization).
"It is critical to understand that hyperinflation is NOT inflation on steroids, it is a CURRENCY EVENT- a sudden and rapid complete loss of confidence in the currency. Most also fail to understand that in nearly all cases, a period of significant economic decline or depression precedes hyperinflation."
When the world enters hyperinflation, basic goods are in short supply because imports cost more and financing for businesses is dear. Consumers and businesses start hoarding.
"As to what this looks like in practice, we suggest you read LoneRangerSilver’s account of living through the Mexican Peso Devaluation, and Gonzalo Lira’s first hand account of the Chilean hyperinflation."
Thus the argument for bullion, the only replacement for currency.
"The best way to protect one’s self from this is by storing your wealth in physical tangible assets such as gold and silver."
Image arrests in food price riots, St. Quentin. France between 1910 and 1915