Will we have hyperinflation?

Even the question is scary.

The fascination for hyperinflation and its consequences has been with me since childhood. In third grade I went to a small school in Sweden with only two classrooms, one for grade 1 and 2, and one for grades 3 to 6. One boy had a very large stack of old German money, and we used to play with them. Many were hundred mark bills, stamped over with a cheap ink stamp 1ooooo Marks or 1 Million Marks. I collected stamps in those days also, from a 2 Pfennig stamp to 20 Milliarden Marks (That is 20 Billion Marks) stamp.

How did this hyperinflation happen? Germany lost the great war (WWI) and as a punishment were forced to pay large war reparation penalties. My own grandfather had a fishinf ketch, named Majblomma (Mayflower). They ysed to go fishing on Doggers Banks and land the catch in Aberdeen or Hull, then catch some more fish on the way home. One day a German u-boat came up and one officer informed them to go into the life boat, for they were ordered to torpedo the fishing boat. So they did. After the war my grandfather got compensated for his loss, and he bought a much larger schooner, and his team could aontinue fishing in the North Sea. These war reparations sank the German economy, and the Weimar Republic solved the problem by printing money. This worked for a whils, and then hyperinflation set in. This was in my opinion the major reason for Hitler’s rise. He got Germany back on strong economic footing, and being the Master Race, Germany was going to rule the world, after they had won the war. (WWII). With great sacrifice that didn’t happen.

Did it happen again? A few days ago, Nikki Haley sent a real 100 bolivar bill in the mail to my wife. There was probably a message in that, I for one grabbed the bill to see how much it is worth today. It was printed in August 2014, and was then worth on the official exchange 6,3 bolivars to the dollar, so the official value was over 15 dollars, but the real black market value was about one dollar. Then real inflation set in, and in 2018 they made a new bolívar soberano (sovereign bolívar) each worth 100,000 bolívar fuerte (strong bolívar), so the old 100 bolivar bill was then worth 0.1 cents. But it didn’t stop there. The March 7 exchange rate is 1,889,000 bolivars to the dollar, so the 100 Bolivar bill Nikki Haley gave my wife is now worth 0.000000053 cents

That is hyperinflation.

Could it happen here? I used to think never, but now i am not so sure. There are warning signs in the money supply, especially the M1 money supply. The Fed has stopped using it as an indicator of the nation’s fiscal state. Here is a chart of what is going on:

“As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

If I understand this right, the FED reduced the denominator in the equation for the velocity of money, meaning that the gain in the system can now be infinite.

Not very assuring.

Nikki Haley did it again! Snagged the Volvo deal

Haley

Nikki Haley did it again! She had a meteoric rise in the South Carolina Legislature, and her big break came when Governor Mark Sanford had some extramarital incidents and then he and his (ex)wife endorsed her for Governor in 2010. Even with the Sanfords’ endorsements she was mired in fourth place in the polls. Then Governor Sarah Palin endorsed her and it propelled her to first place. She forced a run-off in the GOP primary, which she easily won, and after some planted stories from fellow Republicans Sarah Palin stood by her, and she became Governor, the youngest U.S Governor, female minority to boot. She has done a lot of things right for South Carolina since then, so she won re-election easily in 2014.

Her latest feat is snagging the Volvo assembly plant.

Gov. Nikki Haley and state Commerce officials made the bombshell revelation that Volvo Cars has decided to open its first U.S.-based plant in Berkeley County, bringing millions in investment and 4,000 jobs to the state by 2020

Haley  said the Charleston Port was a deciding factor in snagging the deal.

“And they wanted to see a state that was going to care about the business atmosphere, but more than that, a state that was going to have a relationship. Because they wanted to be made in America, and all credit goes to Volvo Cars for saying we want to make it in America. More importantly, we love that they’re now going to be made in South Carolina,” Haley said.

The $500 million facility at the Berkeley County timber plantation, which is nearly 40 miles northwest of port and export-rich Charleston. At full capacity, 100,000 cars will be built at the factory each year.

Haley credited the state’s workforce for helping land the automaker.

“They saw the fact that this is a state where they build planes,” Haley said. “We now have three car companies, we now have five tire companies. We have carbon fiber, we have TV. What they knew was if we build it, we build it well, we build it with quality, we build it with loyalty, and we build it with pride. And that’s something you can’t just find anywhere.”

Information on jobs at the plant can be found online. Or, if you’re a vendor interested in doing business with the plant, you can find that information on the Commerce Department’s website.

So, what is so good about the South Carolina Workforce? Besides being a right to work state, and a nearby good port in Charleston, what else is there?

South Carolina has a very good Technical College system with Workforce Training with readySC™,  providing well-trained employees to qualifying companies that invest in South Carolina. A comprehensive and customized process, readySC™ includes recruiting, screening and training, tailoring guidelines and curriculum to fit a company’s needs. This is not Crony Capitalism, just concern for a well trained and educated work force.

This is the future of manufacturing. Rather than concentrating of University education, the backbone of manufacturing is through Technical College, and even trade schools.

Good going, Nikki Haley and South Carolina!