The end of fiat currencies is likely to come sooner than later, from the consequences of today’s massive money-printing, particularly of dollars. Already, US government spending is financed substantially more by currency debasement than taxes, a condition that will almost certainly continue to deteriorate rapidly in the coming months. Furthermore, the global banking system, which is extremely thinly capitalised, faces a tsunami of bad debts which can only lead to a systemic failure — most likely in the Eurozone initially, but threatening all other jurisdictions through counterparty risks. It is coming to a head and is likely to happen soon, possibly triggered by the second covid wave.
Long before the two or three years required for any CBDC to be operational, the world’s reserve fiat currency, the US dollar, is already hyper-inflating. There are signs the markets are beginning to understand this. Bitcoin’s price has risen sharply, sending signals to everyone that the differential between its ultimately fixed quantity and the accelerating rates of fiat currency debasement is feeding dramatically into the price.
Despite the economic slump, equity markets are being driven to new highs as non-financial customers deem stocks to be preferable to bank deposits. It has not helped that the Fed reduced deposit rates to zero last March, well below everyone’s time preference. The Fed has also promised infinite QE in order to fund the fiscal deficit. Therefore, it is not surprising that individuals and corporations are shifting out of cash balances into financial and other assets, with the notable exception of fixed-interest bonds. Rising commodity and raw material prices are also telling us that dollars are been sold in those markets.
This is the point being missed in all commentaries: the mounting evidence that markets, being forward-looking, are beginning to abandon the dollar. And once it goes beyond a certain point, nothing will reverse a rapid loss of purchasing power to the point of worthlessness. To avoid this outcome central banks led by the Fed must immediately abandon inflationary financing of budget deficits.
That is not going to happen. In addition to the current hyperinflation must be added the inflationary cover for the costs and consequences of rescuing a failing global banking system. The costs are immediate, in that governments will take on their books everyone’s bad debts. The consequences are that through their central banks they will have no political alternative other than to counter the economic slump through yet more money printing.
US Treasury bond yields are already beginning to rise, perhaps reflecting this developing outcome as Figure 1 shows.
The up-arrow at the bottom-right of the chart shows that the downward momentum for the bond yield has reversed, forming a golden cross; that is to say the yield is above its two commonly followed moving averages which in turn are forming a cross with the 55-day moving average rising above the 200-day moving average, a strong indicator of a major turning point and of higher bond yields to come. The upward turn of bond yields is to be viewed in the context of the dollar’s trade weighted index, which is shown in Figure 2.
Currently standing at 92.40, if the dollar’s TWI breaks below 91.75 (the low on 1 September) it is likely to head significantly lower. With foreign holdings of dollars and dollar denominated financial securities totalling almost $27 trillion, the chances are that dumping of the dollar on the foreign exchanges will increase rapidly. That being the case, the Fed will not only be funding the unprecedentedly high (for peacetime) budget deficit but will have to absorb foreign sales of US Treasuries and dollars in order to keep the cost of government funding suppressed.
Evidence is mounting that it cannot be done. And with the end of the suppression of interest rates comes the collapse of accumulated malinvestments, of government finances, and of the currency itself.
If ever there was a political construct the unstated objective of which is to enslave its population, it is the European Union. Its opportunity stems from national governments which, with the exception of Germany and a few other northern states, had driven or were on the way to driving their failed states into the ground. The EU’s objectives were to support the policies of failure by corralling the accumulated wealth of the more successful nations to fund the failures in a socialistic doubling-down, and to accelerate the policies of failure to ensure that all power resides in the hands of statist looters in Brussels.
It is Ayn Rand’s vision of the socialising state as looter in action.[i] All of surviving big business is aligned with it: those who refused to play the game have disappeared. Senior executives with extensive lobbying budgets are no longer at the beck and call of contentious consumers and have hollowed out their smaller competitors. They have opted for the easier non-contentious life of seeking favours of the looters in Brussels, enjoying the champagne and foie gras, the partying with the movers and shakers, and the protection they bribe for their businesses.
It is a corrupt super-state that evolved out of American post-war policy — the child of the American Committee of United Europe. Funded and staffed by the CIA in 1948, the committee’s objectives were to ensure the European countries bought into a US-controlled NATO, in the name of stopping Stalin’s westwards expansion from the post-war boundaries. This was the official story, but it is notable how it formed a template for subsequent American control of other foreign states. It is the action of the jewel wasp that turns a cockroach into a zombie, so that its lava can subsequently feed off it.
This European cockroach is now in the final stages of its zombified existence. In Brussels they don’t realise it, but they are partying into the dawn of the next world, and they will have nowhere left to go. Outside of the Brussels hothouse and EU capitals it is hard to discern any support for a failing political system, beyond simply keeping the show on the road. The German population grumbles about lending their money to economic failures, but like any creditor deep in the hole they will remain blind to the deeper systemic problem for fear of its collapse. At the other extreme are the Greek socialists who claim Germany still owes them for their brutality and destruction seventy-five years ago. It is a Faustian pact between creditors and debtors to ignore the reality of their respective positions. It is the method of imperialism; but instead of being applied to other nations, Brussels applies imperial suppression to its own member states. And now that they been hollowed out, there is nothing left to sustain Brussels.
This is the destination they have arrived at today. Brussels and its European Parliament are nearing the end of their ridiculously expensive and pointless pig-on-pork socialising destruction. Not only have the panjandrums no one left to rob, nowhere left to go, but they have bankrupted a whole continent. Surely, the robbing of the rich and giving to the poor is close to its end. The creditors and debtors have nothing material left — money in everyone’s balance sheet will be written off through a monetary and economic collapse. It is the process of it and the destination we must analyse.
The Eurozone’s banking system is a heartbeat from collapse, as will become evident in this article. There are two basic elements involved. At the bottom there are the commercial banks with rapidly escalating non-performing loans, a phrase which hides the truth, that they are irretrievable bad debts. At the top is the Eurozone-wide settlement system, TARGET2, which is increasingly used to hide the bad debts accumulating at national levels.
Before we look at the position of the commercial banks, in order to understand how toxic the Eurozone has become we will start by exposing the dangers hidden in the settlement system.
The Chickens Are Coming Home to Roost
The imbalances between the ECB and the national central banks in the TARGET2 Eurozone settlement system are indicative of the current situation.
Germany (light blue) is now “owed” €1.15 trillion, an amount that has escalated by 27% between January and September. At the same time, the greatest debtors, Italy, Spain and the ECB itself have increased their combined debts by €275bn to €1.3 trillion (before September’s additional deterioration for Spain and the ECB are reported — only figures up to August for them are currently available). But the most rapid deterioration for its size is in Greece’s negative balance, increasing by €45.6bn between January and August.
Is the Bundesbank worried by the increasing quantities of euros owed to it in a system that was always intended to roughly balance? Certainly. Will it publicly complain, or privately demand they be corrected? Almost certainly not. For statist systems such as the EU depend entirely on total obedience towards a common objective. All dissenters are punished, in this case by the waves of destruction that would be unleashed by any state refusing to continue to support the PIGS. TARGET2 is a devil’s pact which is in no one’s interest to break.
The imbalances are all guaranteed by the ECB. In theory, they shouldn’t exist. They partially reflect accumulating trade imbalances between member states without the balancing payment flows the other way. Additionally, imbalances arise when the ECB instructs a regional central bank to purchase bonds issued by its government and other local corporate entities. As the imbalances between national banks grew, the ECB has stopped paying for some of its bond purchases, leading to a TARGET2 deficit of €297bn at the ECB. The corresponding credits conceal the true scale of the deficits on the books of the PIGS national central banks. For example, to the extent of the ECB’s unpaid purchases of Italian debt, the Bank of Italy owes more to the other regional banks than the €546bn headline amount suggests.
Increasingly, people are beginning to realise that their world is undergoing a period of rapid change, with the future of fiat money now uncertain. For most, it is too difficult to even contemplate. But growing uncertainties are driving wild speculation about what those in authority now have in store for the human race in the form of a global reset. It is a time for conspiracy theorists, aided and abetted by our politicians and central bankers who are being increasingly evasive, because events are spiralling out of their control.
Then there is America’s Deep State, or the British equivalent, the more recently christened Blob; an amorphous entity comprised of the permanent bureaucracy with its own agenda. These faceless planners have moved on from merely making ministers’ lives difficult if they deviate from the blob’s predetermined course — immortalised in “Yes Minister” and its sequel series “Yes Prime Minister”.
As we saw with Brexit, The Blob has been rigging political outcomes, even conniving in elections. Christopher Steele, an ex-MI6 officer produced a dodgy dossier on Trump to influence the American presidential election in 2016. But there is no such thing as an ex-MI6 Agent because of the Official Secrets Act, so we can only conclude that the intelligence arm of The Blob sanctioned it on a distanced basis. MI6 works with other intelligence agencies under the five-eyes agreement and is close to the CIA. Though they do not necessarily share intelligence, it is impossible to conceive of Steele’s role in influencing the outcome of a US presidential election without the CIA’s knowledge. Almost certainly, the fact that it was commissioned must have been with the CIA’s blessing.
At the time of writing, we do not know the outcome of the current presidential election, but enough doubt has been thrown on the validity of the voting process to implicate unknown parties in managing the outcome. It can never be proved, but for increasing numbers of sceptics it looks like a Deep State operation. It is therefore hardly surprising that conspiracies abound.
The World Economic Forum
The most prominent of these conspiracies has hit the headlines in recent weeks. Its ambition is to take the lead in resetting the world by dismantling the capitalist system in favour of a greater technocratic rule — a fourth industrial revolution no less, even planting microchips in humans to read their brains and control them. The leader is one Klaus Schwab, whose World Economic Forum runs the annual Davos bunfight.
As leader of the Davos forum, Schwab probably sees himself as the coordinator of world government. If so, at 82 years old he is probably getting impatient about the progress towards his personal vision of ultimate power. The covid chaos and the success of his climate change agenda must be encouraging him to think he is very close to a breakthrough. Alternatively, we might consider Schwab as a latter-day Charles Fourier (1772—1837), the utopian socialist philosopher, whose forgotten ideals were only marginally more narcissistic and bizarre than Schwab’s.
While the great and the not so good love the annual Davos party as a networking venue for the politics industry, when it comes to transferring real power to Schwab, it’s a no-no. The only time a politician transfers power is when he is deposed by his or her electorate, colleagues, or the military. And history is littered with utopians, like Schwab, grasping for power over their fellow men. In addition to Charles Fourier, we can include Georg Hegel (1770—1831) and Auguste Comte (1798—1857), as well, of course, as Karl Marx. As thinkers or philosophers, they were all influential in their day and some of their ideas persist in the naïve.
So, while increasing numbers of well-informed people are beginning to sense the end of the current world order, to assume that this will hasten the WEF’s grab for world domination by influencing events is a mistake. All our deep states, blobs and their branches, particularly central banks, will want to hold onto and enhance their executive power with the political class increasingly cast as cover. The planners at national level are not going to submit to Mr Schwab’s plans for world domination. Instead, international relations involve mutual cooperation to secure purely domestic objectives, something President Trump was in the process of destroying. From the Deep State’s point of view, perhaps that’s why he had to be deposed in favour of Biden, who is a long-serving compliant figure.
Central bank digital currencies (CBDCs)
There can be little doubt that central banks wish to increase their control over money and how it is used, cutting out the obstacle of commercial banks who produce most of the money in circulation through the expansion of bank credit. From a statist point of view, commercial banking is a dinosaur, an outdated remnant of free markets, perpetuating needless systemic risk and superseded by technology. Branch networks will disappear with cash, changing relationships between banks and the general public for ever.
By introducing direct central bank accounts for members of the public and every business, commercial banks become superfluous and can be allowed to die. And if one goes bust before commercial banking has ended, the facility to transfer all its loans and deposits onto a central bank’s books will then exist. The removal of systemic risk by the abolition of commercial banks is one of several likely long-term objectives of CBDCs. Commercial banks can be left with the role of investment banking activities in capital markets.
We can imagine the development of CBDCs going even further than just replacing cash. Stimulation by dropping money into personal accounts can be used to target increased spending by consumers, or even groups of consumers, sorted by wealth, location or other factors. Some consumers can be favoured relative to others, so in a swing state, for example, an incumbent administration might buy votes. While this would be strongly denied, as we have seen with unfettered fiat currency the state creeps incrementally towards unstated objectives, using every tool at its disposal. The election of Deep State-approved politicians then becomes possible.
Eventually, funding of all capital projects will come under the direct control of the central bank. And savings deposits, always seen to be a brake on consumption, can be banished. Capital can be made available for government schemes and favoured businesses on the say so of the central bank.
A future government statement might be issued on the following lines:
“Your Government is pleased to announce that the National Audit Office has approved a number of infrastructure projects targeted at improving communications between administrative centres. This investment over ten years will secure an estimated 500,000 jobs. The cost over the life of the project is XXX billion monetary units. The Central Bank has confirmed it will make funding for these projects available, both to your Government and approved private sector contractors.”
This would be a planners’ heaven. Furthermore, CBDC money can be withheld or frozen for anyone suspected of crimes and tax evasion, starving them into confessions of guilt. The justification is always that it is in the national interest to ensure that financial and tax crimes are eliminated — something commercial banks have singularly failed to do. Overseas payments can be routed through other CBDCs, giving the central banking network control over world trade. Just imagine foreign trade being conducted through a grander version of the Eurozone’s TARGET2 settlement system!
Worried yet? In the advanced economies Covid-19 has nearly eliminated cash, which doubtless is intended to be replaced entirely by CBDCs. The end of cash and bank deposits will allow the central bank to cap the amount of cash anyone can hold, and also ensure that everyone is paid a “living wage”. Already flagged, another intention is to eliminate the burden of interest rates and by controlling where money supply is expanded, manage the economy.
It is commonly assumed that those in charge of us know what they are doing — they don’t. They have become trapped at a socialist endpoint and are doubling down in their efforts towards greater socialism. But their dreams of future control are mere escapism. Individuals will lose yet more personal freedom, but ultimately the state cannot conquer human nature and the will of individuals to do what they want. The Soviets attempted it and failed, despite killing and starving many millions.
Central to the collapse of any state-directed reset will be the loss of faith in fiat currencies, and particularly that of the world’s reserve currency, the US dollar. This remains the case irrespective of whether circulating currency is in cash, bank deposits, or CBDCs. Indeed, the collapse could be hastened by CBDCs, because the intention is to increase the pace of injection of new money into the economy if it is required (it always is), and to impose deeper negative interest rates, which cannot be easily achieved under the current monetary system.
If these statist intentions are allowed to prevail, along with other agendas such as the elimination of cheap and effective fossil-based energy, the outlook for humanity is exceedingly grim. Like communism, the global reset into which the western world is drifting will destroy society. Those who believe in liberal values in the original sense of the term — not the modern socialist connotation — will find themselves welcoming the destruction of the current system before it is evolved any further.
The first thing to consider is the current relationship of the quantity of money to the economy. US dollar M3 money supply, the broadest definition of money, has increased along with US GDP: M3 stood at $18.327 trillion last July, while second quarter GDP was estimated at $19.52 trillion. The closeness of the relationship between these two figures is explained by the nominal GDP total being inflated by increases in the money quantity. The match is never perfect, because there is always some consumer expenditure which is subject to estimates, future revisions, or simply not captured by GDP. To these we can add statistical error. Furthermore, at the beginning of the inflation there would have been a base level for GDP when money was sound from which subsequent inflations occurred.
The degree of the dollar’s loss of purchasing power is deliberately understated in official statistics. Originally, the policy was to reduce the cost to US and other governments of indexation introduced following the 1970s decade of price inflation. It is remarkable that the statistical suppression of changes in the general level of prices, now adopted in all advanced economies, is rarely questioned. Consequently, the scale of the fall in the purchasing power of fiat currencies has been ignored with some important consequences, at least for governments and their central banks, which are concealing evidence of the failures of monetary and economic policies.
Figure 2 compares the cumulative increase in the general level of prices measured by the CPI, and the Chapwood index — comprised of “the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation”. The Chapwood price inflation numbers used in the chart are the arithmetic average of the fifty cities, the last data points being end-June 2020. Additionally, the growth of M3 money supply is included.
It should be clear that changes in the general level of prices are a theoretical concept which cannot be measured, because it is different for every individual. An average is therefore no more than an indication, even assuming the evidence is not manipulated by vested interests. Bearing this in mind, the cumulative price effect of the official cities’ CPI over the last ten years is for it to have risen by only 19%, compared with the Chapwood index which rose 159%, compounding by about 10% annually. By way of confirmation that the Chapwood figures are closer to the truth, we see that USD M3 diluted the dollar by increasing 109% over the period.
The lower increase in USD M3 relative to that of the Chapwood index suggests that as well as the dilution of the dollar’s spending power in a general sense, holdings of money have also been reduced relative to the commonly bought goods in the Chapwood index. In other words, consumers appear to show a relative preference in their spending for their common purchases over their less common purchases. This could be taken to be evidence of the earliest stages of a reduction of money balances in favour of everyday purchases. It is inconsistent with the official story upon which monetary policy is based, whereby the monetary authorities and their epigones delude themselves that price inflation is contained by the two per cent annual target, with some of them even claiming price inflation is banished for ever.
Figure 3 further illustrates the ineffectiveness of monetary policy by expressing GDP in 2010 prices adjusted by the CPI (the state’s version of real GDP), by the Chapwood index and finally by M3 money supply.
The monetary authorities claim that before the coronavirus crisis they had stabilised the US economy following the Lehman crisis. Measured by the CPI, by end-2019 the economy had grown by nearly 22% over nine years “in real terms”. But because the CPI is a heavily supressed measure of price inflation, the truth is different. The Chapwood index and USD M3 tell us that adjusted by these measures, GDP has more than halved from $15,241bn to $6,818 and $7,309bn respectively, measured by a base of 2010 dollars.
To be clear, GDP is simply a money total of all recorded transactions. It does not tell us anything about their quality, or indicate the degree of economic progress, or the lack of it. As always, there have been winners and losers. We can only conclude in the most general of terms that the contraction of real values has exposed the failure of monetary and economic policies.
Where it really matters is for governments, and the purchasing power of the taxes they collect.
A modern socialising government never reduces its expenditure, and budget deficits arise as a result of a reluctance to increase taxes to match spending. Prima facie it is evidence of an emerging hyperinflation, in that the decline in the purchasing power of the currency is driving the fall in the real value of taxation receipts, while at the same time it is realised that to raise taxes would be harmful to production, consumption, and therefore government finances.
Then came the coronavirus, an unexpected hit to nominal GDP, upon which government tax income depends. And now we have a second covid-19 wave, the economic consequences of which can only be guessed. Let us not forget that before all this happened, last September there was an emerging liquidity crisis evidenced by the failure in the dollar repo market, indicating, in all likelihood, the end of bank credit expansion. And we should also remember that the trade tariff war between the world’s two largest economies brought the growth of international trade to a sudden halt.
Anyone with an eye for the economic consequences of all these developments can only conclude that in addition to the already growing gap between government spending and tax receipts, governments are not just having to rescue their tax bases from a one or two-off hit from the coronavirus, but further rounds of inflationary expansions will follow at an increasing pace. Purely in terms of money quantities, hyperinflation is already well entrenched for the US dollar and all other fiat currencies subject to the same political and factual dynamics.
In the last ten years I have waged two crusades to bring attention to issues I believe to be in the public interest. From 2011, I wrote a series of articles about China’s gold policy, which had been accumulating physical gold from as long ago as 1983. The meme that gold was moving from west to east became broadly understood and almost a cliché. The second crusade was to inform the public that the business or trade cycle was only the symptom of a cycle of bank credit, which inevitably ends in a crisis of credit contraction.
It is now time for a new campaign, on a subject which I have been writing about in recent months, and that is to inform the wider public that their governments and their fiat currencies are now in a state of hyperinflation. It is not a development on the far horizon as many might think; it is already here.
What is hyperinflation?
To understand why hyperinflation is already with us is to know what constitutes hyperinflation. It is not rising prices, or a condition that exists when prices increase above a predetermined rate: rising prices are the consequence of both inflation and hyperinflation. As Milton Friedman put it, inflation is always and everywhere a monetary phenomenon, though he spoiled it by continuing, “…in the sense it is and can be produced only by a more rapid increase in the quantity of money than in output.”[i] He was wrong on that last bit, conflating the price effect with the increase in the quantity of money. When even so-called monetarists are imprecise about inflation, let alone hyperinflation, it is hardly surprising public confusion is widespread.
There can only be one definition of hyperinflation, and that is the one headlined above, which you won’t find in any textbook. There is even no definition of it in von Mises’s Human Action, only of inflation, and that is more a description than a definition. And since it is a relatively recent phenomenon of unbacked fiat currencies, hyperinflation was never defined separately from inflation by classical economists. The difference between inflation and hyperinflation cannot be distinguished by degree either.
Have a look at US M1, the quantity of narrow money in the American economy, shown in Figure 1.
The progression of annualised monetary inflation from under 6% before the Lehman crisis, to 9.6% subsequently until March this year, and 65% in the thirty weeks since is clear from the chart. If the monetary authorities have the knowledge, the mandate, the authority, the ability and the desire to stop inflating the currency, we would not describe it as hyperinflation, instead deeming it to be no more than a brief period of exceptional inflation before a return to sound money policies.
But sound money was emphatically discarded in 1971, when the post-war Bretton Woods agreement was finally abandoned — not that the monetary regime at that time was in any way sounder than Adam’s fig leaf was an item of clothing. For the fact of the matter is that sound money in America was arguably abandoned long ago, with the founding of the Fed at Jekyll Island before the First World War.
As a means of funding government deficits, inflation is capable of being stopped by cutting government spending and/or raising taxes. But now, a one-off increase of 65% of narrow money is to be followed by another massive expansion already in the wings. The hope is that that will be enough, just as the original 65% increase in M1 was hoped to be enough to ensure a V-shaped recession would be followed by a return to normality.
The early stages of a hyperinflation are always seen by the monetary authorities as the only policy to pursue. They convince themselves that there are either no consequences, or that they can be controlled. An example of the genre is found in a paper by Michael T Kiley, a senior Fed economist.[ii] In August he concluded that the lack of further room to cut interest rates to deal with the coronavirus requires quantitative easing to a total of 30% of GDP, or $6.5 trillion, to offset the lack of room for manoeuvre on interest rates. Kiley writes that about $3 trillion had been enacted between end-February and end-June, leaving a further $3.5 trillion to come. If we assume the full $6.5 trillion stimulus is enacted by next February, then the increase reflected in narrow money could be to more than double it.
Kiley wrote his paper before the second coronavirus wave commenced. He was modelling an economic contraction measured in real GDP of just 10% in the second quarter (actually 9.5% — not to be confused with the annualised rate reported at 32.9%). But, as I pointed out in last week’s article, with monetary inflation running at such a rate, a dollar last February is not the same as an inflated dollar next February, being diluted on Kiley’s figures by $6.5 trillion. The consequence is some extremely damaging intertemporal shifts, as described in the Cantillon effect, whereby ultimately both productive workers and the poorest in society lose savings, salaries and social security benefits through loss of the dollar’s purchasing power for the benefit of the government, its agencies, and big business.
In his economic model, Kiley flattens the Phillips curve, apparently in an attempt to goal-seek a preferred outcome. The Phillips curve is meant to replicate graphically the relationship between inflation and unemployment, the idea being that an increase in price inflation goes along with a reduction in unemployment. Flattening it is the same as assuming that at a deemed level of full employment prices will not rise as much as previously modelled. But it is one thing to forecast such a relationship when the inflation “stimulus” is in the order of a few per cent, when arguably the public is more aware of the stimulation effect of monetary inflation than they are of the dilutionary effect on the money, but it is another matter when it is as dramatic as it is today.
We must resist the temptation to accept a mathematical relationship between prices of goods and services and the rate of employment, such as predicted by the Phillip’s curve. Whatever the level of employment, production adjusts because of the division of labour. In their dismissal of Say’s law, modern economists fail to realise that production and consumption broadly march or retreat together. Other than users of currency being temporarily conned by the initial effects of monetary stimulation, there is no enduring relationship between the quantity of money and employment.
Errors introduced by the mathematical economists through artifices such as the Phillips curve conceal the consequences of policies based on their forecasts at the outset. Consequently, the recommendations of senior economists at the Fed using economic models based upon macroeconomic assumptions give false comfort to the committees they advise. Furthermore, the annualised rate of the budget deficit since March was about $4.4 trillion, financed entirely through monetary expansion and significantly greater than covered by declining tax income.
If these conditions persist in the new fiscal year — which seems increasingly certain, Kiley’s calculation of the further $3.5 trillion stimulus underestimates the problem. According to an op-ed by Allister Heath in today’s Daily Telegraph, Larry Summers, the US economist and arch-inflationist, believes that the cost of covid-19 will reach 90% of US GDP, substantially more than Kiley’s estimate of 30%. Over-dramatic perhaps; but can we envisage that the forthcoming stimulus package, and then undoubtedly the one to follow that, will restore normality and set the budget deficit firmly in the direction towards a balance? If the answer is no, then we already have hyperinflation.
