The probability of hyperinflation is relatively high mainly due to the monetary policy during the time of global pandemic. The endless printing of money, government incentives and lockdowns outline the possible event of hyperinflation. This can be compared with the economic climate of 1920’s in Germany, during the reign of the Weimar Republic.
Why this matters
Although you often hear that inflation is needed for economic growth, the truth can often be completely different. In the case of hyperinflation, there would be a huge increase in the price of basic commodities. Today’s situation is very similar to the situation in Germany after World War I, where we can see there was an extreme and sharp rise in inflation after the end of the war, as well as a loss of confidence in the currency and the authorities. Today’s mood is unexpectedly similar to this situation.
What they’re saying
In 1974, Jens Parsson wrote a fascinating in-depth historical analysis of the hyperinflationary collapse of Weimar Germany. Michael Burry took up the subject and outlined a plan for how the situation would continue.
What it could mean
Hyperinflation could mean a drastic rise in prices, widening the already huge gap between the rich and the poor. The world could thus find itself in a situation where it will be inaccessible for some people to obtain basic commodities, such as food, while there will be a few ultra rich people, who will have access to all the resources imaginable.
What you can do
To avoid getting into such a situation, it’s a good idea to start thinking about how to protect your assets. A good idea is to diversify the assets as much as you can. Whether in gold, digital currencies, real estates, shares or bonds or another asset that is attractive to you. In the case of hyperinflation, money loses value very quickly. However, keep in mind the golden rule when investing. Invest only as much as you can afford to lose.