Lets break down the economic history of America in two periods. The first period , from 1800 to 1930, when the price level was stable and actually moderately falling. We had a deflationary boom in that period. The United States had 4 million people in 1800 and in 1910 it already had 90 million inhabitants. In this period we had the entire industrialization of the US, the construction of railroads, electricity, the first cars, the first airplanes and so forth under a stable price level.
Then the introduction of the Federal Reserve in 1930 and since then the US dollar has lost 95% of its purchasing power. We already had a lot of inflation. And if it took 100 years to lose 95% of its value, I think that the next 95% loss in purchasing power will be very quick.
In every society when you have large fiscal deficits combined with easy monetary policies, that was the case in Latin America after the petrodollar crisis in 1981, the likelihood that you will have high inflationis very, very high. And it happens relatively quick. If you look to the German hyperinflation in the 1919-1923 it happened in 4 years. I am not saying it will happen in 4 years in America, but we could easily see rates of inflation (if measured properly, because the governement is understating the true rate of inflation massively)of 10 to 20% in 5 to 10 years.
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.
