One week ago, Bank of America hinted at a tsunami of monetary stimulus, combined with a surge in monetary velocity leading to unprecedented economic overheating… or rather historical as some have mentioned the post-WW1 Germany which saw an epic surging velocity and inflation after the end of war psychology, and especially the government’s monetization of debt, and compared it to what is going on right now.
The other name for that period: Weimar Germany.
Now, overnight, none other than Michael Burry of Big Short fame, has sent out a lengthy tweetstorm predicting hyperinflation.
Below is an easily readable repost of Burry’s lengthy post, which shows just how close our current situation is to that of Weimar Germany.
“Trillions more in stimulus & then the re-opening will boost demand as employee and supply chain costs go through the roof,” he tweeted.
He then quoted from Jens Parsson’s 1974 analysis of what the Weimar period looked like:
“Almost any type of business could make a profit. Business bankruptcies were few. The boom removed the normal processes of weeding out weak businesses.”
“Speculation, while adding nothing to Germany’s economy, became its largest activities. The urge to join in and make a quick profit affected all people..Everyone was playing the market.”
“Throughout those years the economy was building itself up for the downfall. Germany’s inflation cycle ran for nine years but there were eight years of gestation and only one year of inflationary collapse.”
Then his key take away:
“The above was written in 1974 about 1914-1923” and then he makes the final warning that “2010-2021 is our gestation” saying that “when dollars fall from the sky…management gets creative and end up taking more risk.. paying out debt-backed dividends or getting into risky opportunities will beat a frugal posture in this climate, hands down.”
We are almost there now. The only question is when do we enter the exponential collapse phase.