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"Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency." --Gonzalo Lira.

Good reading on hyperinflation and related links:

"There have been any number of hyperinflationary episodes ever since paper was invented by the Chinese. What people don’t generally realize is that every one of these episodes was a corner in gold or silver." --Antal E. Fekete. See Monetary Economics 102: Gold and Interest.

Backwardation the signal to imminent hyperinflation

Taken from Monetary Economics 102: Gold and Interest. The normal condition of the markets in the monetary metals is that of contango. Backwardation is abnormal, yet it may occur. When it does, the regime of irredeemable currency will start to crumble. People in trying to save their financial future will take flight to the monetary metals. They will scramble to mop up the dwindling supply that is allowed to trickle down. Then all of a sudden all offers to sell the monetary metals are withdrawn. Supply goes to zero, facing an infinite demand. That such a development is not fanciful but a true description of economic reality as it unfolds is confirmed by history. Supply of the monetary metals went to zero and demand to infinity many times before, in France (the assignat and mandat inflations), in the United States (the continental inflation), in Germany (the Reichsmark inflation), to mention but a few of the notable cases.

My description of hyperinflation is not in terms of the quantity theory of money, but in terms of a model where the relentlessly declining gold basis leads to backwardation destroying the gold futures market. When all offers to sell cash (i.e. physical) gold are withdrawn, producers of essential commodities such as grains and crude oil refuse payments in dollars, and demand gold in exchange for their product. Backwardation in gold should therefore be considered the self-destroying mechanism for the regime of irredeemable (i.e. fiat) currency that “only one man in a million may identify and understand”. This is where supply/demand analysis is utterly useless. The huge stocks of monetary gold are still in existence, yet zero supply confronts infinite demand. The only way to fend off this outcome is for the government of the U.S. to come up with a credible plan to stabilize the dollar in terms of gold.

Holding the line on the silver price, or at least yielding ground to higher prices only gradually, is considered the first line of defense by the U.S. government protecting the dollar. If silver were allowed to be cornered, then gold would follow and that would be the end of the dollar, and the financial domination of the world by the U.S. government. However, all this is being undercut by the voracious interest in both gold and silver by the world markets, particularly India and China. The U.S. government's control over the pricing of precious metals is gradually but relentlessly eroding.