Thursday, May 26, 2011

More on Belarus

I previously discussed some lessons to learn from the currency crisis underway in Belarus.  Zero Hedge has more insight into what is happening there, and warns of an impending hyperinflation there.

"Ultimately, Belarus will succumb to hyperinflation, as will each and every other government seeking to devalue its currency (hint: all of them): "Unless Belarus heeds Russia’s call for mass privatization of state assets, it is headed for “hyperinflation, massive un- and under-employment, and a shutdown of production,” VTB’s Moiseev said. The ruble will slide to 10,000 per dollar, he added." Of course, this is the primary side effect of attempting to avoid formal bankruptcy through currency devaluation. And all those who continue to believe deflation is an outcome that will be allowed by the Fed, need to look just to the former Soviet satellite to see what lies in store for everyone currently doing all in their power to devalue their currency."

Note that the situation has become so dire that the nation's assets must be sold to avoid hyperinflation.  The Belorussian  government has kicked the can down the road long enough that they've found themselves backed into a corner with essentially only two options: sell their sovereignty or hyperinflation.

I wonder if we've gone beyond our tipping point here in America?

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