Review: Meltup

The National Inflation Association has produced a video called "Meltup" that proposes hyperinflation is about to hit America, if it hasn't already. It is making rounds among the economic blogs and has been very successful on YouTube with a third of a million hits within a week of release. The vast majority of viewers who rated it gave favorable ratings.

It uses a lot of fearmongering, half-truths, and misinterpretation of data to arrive at its conclusions. While watching it, I wondered if it is not a straight up advertisement for silver bullion.

Still, I gave it a thumbs up myself, because hyperinflation is a risk in a struggling economy, it does an okay job of explaining that risk, and casts hyperinflation in a bad light (unlike some numbskulls), and also concluded that hyperinflation does not have to happen and it can be stopped with better economic understanding and political activism.

Here is a link to the video.

The NIA website offers a list of charts which I've placed in "Links" to the right. Ironically, most of the graphs look more deflationary than inflationary. The main exception is the 17th graph down showing the St. Louis Adjusted Monetary Base that shows skyrocketing base money production since September 2008. Even this, however, must be weighed against the 37th and 38th graph showing bank reserves, which have always perfectly matched base money production and strongly suggest all newly created Fed money is doing nothing but sitting in bank reserves, and not inflating the general economy.

I believe deflation is the more likely scenario to play out than hyperinflation when government bailouts exhaust themselves. More of this argument will be discussed in upcoming posts. Since my investments are heavily skewed to a deflationary scenario, I've always paid particularly close attention to inflationary arguments. I've signed up for the NIAs mailing list, and if they keep their charts up to date I think it is a good general barometer of the state of prices, money supply, and the overall economy.