@JB
Oil, seemingly, is that second currency. KSA, Russia, Iran, Venezuela - they all depend on high oil prices to sustain a bloated and inefficient public sector. There is no love for the KSA. It is like a marriage where the spouses sleep in separate bedrooms - for appearances only. We need their oil. They need our fungible currency to buy our toys.
Also, the U.S. is the marginal buyer of oil, globally. Our economy set's the market price b/c most every other national price level is manipulated by subsidy or tax. Just like in 2008, those producer countries got an awful pinch when the price tanked but there was nothing they could do except take supply off the market and wait for demand to firm up. It did once the stimulus arrested the collapse of the banking system and people returned to more "normal" patterns of waste.
@GO
You cannot justify hyperinflation based on "money printing." Main Street didn't directly see a nickel from TARP or QE. They didn't rain down greenbacks from the helicopter or give them out to the poor by the fistful. Those esoteric programs were meant to backstop bank capital by allowing the TBTF to do balance sheet repair via interest rate arbitrage and forestall the severity of the ARM reset. They have nothing to do with a hyperinflationary outcome.
Inflation and hyper inflation are totally, completely different. Hyperinflation is not severe inflation. Hyperinflation is the complete loss of confidence in a specific monetary instrument, leading to collapse in it's purchasing power. The reason you've seen uptick in food prices is because the energy to produce food is more expensive now. The same oil goes into every bushel of corn. It is just that the oil costs twice as much. That is not hyperinflation. That is "inflation" of food prices, or the "deflation" of your purchasing power relative to energy.
The inflation mechanism has worked
so far for oil and commodities. Leveraged speculators and social cuing from the FRB haven't hurt the bit either. That level of inflation, even at John Williams 6% CPI, doesn't precede any hyper-inflationary outcome. In fact, it foretells the deflationary outcome. Demand is destroyed as prices move higher, ultimately leading a kneejerk reaction in the opposite direction is supply overwhelms demand forcing the market to move lower in order to clear the excess supply.
I know this is the stick in the eye for a lot of Collapsniks - they latch on to the fantasy that hyperinflation will vindicate their accumulation of physical metal, their hoarding and their prepping. When everyone leans so hard to one side of an argument and their arguments take on a whiff of religious conviction, I look to the unexpected.
What would completely FUCK all these gold bugs, preppers and doomers? What would completely soil the plans of the FRB to inflate our price level to make the debt burden more reasonable? A deflationary dislocation. The deflationary dislocation is self-evident in demographic trends and reasonable economic growth projections. The deflationary outcome is what the Fed is desperate to avoid because it would leave a gigantic swath of the population destitute. Hyperinflation is not a reasonable alternative, it would leave us all destitute, if not dead.
Inflation in "life support" AKA food, water, energy is also be deflationary for asset prices AKA stocks, bonds, industrial metals and bullion. That was the feedback mechanism you witnessed in 2008. I spend less on things I want because I spend more on things I need. Oh shit, no one is going to buy anything but food and fuel. Sell Mortimer, SELL!
Hyperinflation solves nothing. It is the single most destructive outcome (politically, socially, economically) for what we're going through: the unwinding of a debt supercycle.
Deflation allows the market to clear, albeit in extreme pain and distress.
Hyperinflation allow the market to disintegrate and explode, forcing us to start at the beginning. The wet dream for gold bugs and preppers and sadistic Mad Max murderers.
I repeat, hyperinflation is a political choice. It is a policy decision. An attempt to arrest the government's inability to service its obligations. There is feedback into the monetary system, but it is not a monetary event - it is a political event motivated by the government's bankrupt financial position.
We are more likely to see a debt jubilee before we see hyper inflation.
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