What Bitcoin Did: Is Hyperinflation Coming?

Right now, investors are worried about inflation. It’s on the rise, with the UK reporting a new high just this week. This could be just one more sign that we’re in a massive bubble, where sovereign debt could become an issue.

With rising debt levels and rising interest rates leading to higher servicing costs for that debt, things look unmanageable. The bursting of this bubble could happen in a number of ways.

Given the propensity of governments to print money, hyperinflation could be a solution. Rather than pay off the debt with austerity and avoiding more debt, government could simply print money and pay that debt off.

As we’re seeing now, printing money on a smaller scale during the pandemic, can lead to high inflation. In a hyperinflation, prices could rise even further. That would wipe out debt in real terms quickly, but it would also destroy a lot of the economy along the way.

Nation after nation, from Zimbabwe to Venezuela to the Wiemar Republic, has faced hyperinflation from printing too much money. The end results are an economic depression. Meanwhile, there’s also political strain, as new politicians come into power to take power, not to fix the problem.

Unwinding from current debt levels without hyperinflation is historically unlikely. Investors need to be prepared for the possibility of higher inflation rates for longer.

To listen to the full analysis of how destructive hyperinflation can be, click here.