One of the classical refrains for buying stocks is that they preserve purchasing power and add value, even under such extreme monetary conditions as hyperinflation, or in other words, on a relative basis, local equities when denominated in a stable currency, will increase in value even as the local currency disintegrates. As one example of this phenomenon, historians and equity bulls provide the widely referenced example showing that during the Weimar period, even as the mark lost all of its value, the stock market in USD terms actually rose during the parabolic phase.

But is that widely documented example really true, and even if it is, is it the case that stocks preserve value during hyperinflation in modern days?

Luckily, we have an actual, ongoing case of currency destruction and hyperinflation in a country that was supposed to be a "socialist paradise", but ended up just a little short: The same Venezuela which as we showed yesterdayGermany's Handelsblatt, found was the "best investment" in the world in Indeed, looking at the performance of the Caracas stock exchange, when denominated in the "official" currency rate, the one which is completely meaningless for virtually everyone, an equity investment in the could not be better: There is a problem with this chart, however: To get the real picture, one has to use the actual "black market" rate as calculated daily by DolarTodaywhich at bid is quite a bit "different" from the official rate.

What happens when one shows the Caracas exchange in official "currency terms" on one hand, versus "real currency" terms on the other? The answers are shown by the green and blue lines in the chart below, respesctively. So to answer the original question: Of course, one asset which Venezuelans could have bought on December 31, and not lost any purchasing power despite the greater than fourfold plunge in the currency, is a simple one: With currency controls any money you may have earned in Venezuela for for not.

You couldn't even buy toilet paper.

What girl wouldn't give everything or almost not to have to resort to a hank of grass? Will almost certainly take the collapse of government first. So long as productive people insist on obeying government, and most of them do, government fiat currency and associated exploitations will reign. Government can outlaw conducting business in gold with the stroke of its pen.

Disobey and violent thugs are dispatched to seize your stuff and lock you up. If gold threatened to come back into popular use as money, government would do just that. I opened this trade last week, and thought about covering today. You can see my trailing stop in RED, and the decending channel forming an possible double bottom off the december 3rd-4th highs. One is allowed to sell Ref China, "gating", CYNKKBIO.

Whether we like it or not, gold is not currently accepted for food, shelter, clothing, travel, ammo, utility bills, medical care, etc. Not until the dollar implodes. Meanwhile the quality of life we have is here and now, the next few years.

We could get cancer tomorrow. We could have a child tomorrow. Bills payable only in fiat will ensue. We have to be able to pay them to enjoy ourselves, our family, our lives in the short time we are here. That's why we live. So despite seeing the truth that the whole government thing is a scam, "dancing" with the manipulators, their fiat, their ponzi schemes is essential to be able to enjoy life.

I wouldn't pooh-pooh that. Ackman's fund sells 5 million Valeant shares to generate tax loss. Is it hyperinflation when Draghi jawbones us to death, then actually does something, and the frontrun DAX sells off? So when my 'penny stock' goes to a hundo billion, what's the redemption value in joobux? Or otherwise, will it buy me a loaf of bread? Well, they CAN'T easily do that.

Venezuela has currency controls. Sure they can get gold and bitcoin on the black market, but it's not much different than buying drugs, and for any substantial sum of gold or bitcoin, you need to pay for them in hard currency, US dollars, not the worthless bolivar.

This begs the age old question. How long will the deflation last before hyerinflation begins? The german stock market hyperinflation the debt ceiling was raised without discussion makes qe forever seem the likely immediate response to a crash. QE or not QE, this is the congestion. Be it nobler in mind The chart above is not correct. Also, long term investors lost, only short term investors with very good timing could make money. How to get farmville cash quick long term investors it would have been better to hoard gold instead of stocks:.

It's difficult to buy gold in any quantity in Venezuela. All the gold mining is nationalized, and most of the gold is sold abroad for hard currency. IF, Fed's use A REAL NUMBERS GDP. INSTEAD OF MAKING NUMBERS UP?? Your GDP should ALREADY SHRINKING MUCH this year do you think only China mades fakes data? My country shrinks GDP this year. Cause usually my CB gives real previous year GDP after Q1. Actually right up to october's ? So, what happens into your US country? Your work participation rate lowest ever this year?

ZH own article said this. Your govt doesn't see inflations cause all price are deflated, caused by REAL NUMBER NEGATIVE GDP!! Even IF you look at the above signs? You should already knows your GDP should be negatives already. But, your Feds choose to "manipulates" the numbers. If you still wants to believes your govt data?

Don't want to live in a dreams world German stock market hyperinflation the inflation has gone into assets. Apart from college tuition, housing and health care there has been very little inflation on Main St. We're in for a wave of deflation the likes of how much money does nutritionist make were never believed possible.

It's only a matter of time. Seriously there are people who bash South Ametican socialist countries who ignore our national debt and ignore the fact that our rights afforeded to us by the Constitution are being stolen out from under us.

What's the difference from the direction of the country we are being led in. That's why I am voting Republican in I like the way they piss away what is left of our country's wealth better. Iraq has helped us tremendously. Investing in a socialist country for the most part historically has been to throw money down a black hole That is, unless you're an agent of said country.

Recall Armand Hammer and his strangely cozy relationship with the former Soviet Union. Perhaps the best foreign 'investments' in such countries are in land for burial plots; socialism usually kills those it was supposed to serve, with frightening regularlity. Just ask any now elderly surviving escapees from the former Iron Curtain. Here's our Cookie Policy. How to report offensive comments. Home Contributors Newsletter Donate More Store ZH-TShirt Glossary Archive Manifesto RSS.

Dec 31, 7: Here is a chart of how Venezuela's real simple stock how much do stockbrokers make on wall street has performed in Printer-friendly version Dec 31, 7: Comment viewing options Flat list - collapsed Flat list - expanded Threaded list - collapsed Threaded list - expanded. Date - newest first Date - oldest first. Select your preferred way to display the how much does chuck liddell make per fight and click "Save settings" to activate your changes.

Something tells me that Gold had some kick ass purchasing power over the last year in Caracas Something tells me that usd had some kick ass purchasing power over the last year in Caracas Stuck on Zero buzzsaw99 Dec 31, 7: Best advice ever from the Tee Vee https: God scintillator9 Dec secret of binary options magnet scam, 8: All I want to know about is energy in !

Chuck Walla scintillator9 Dec 31, Oh, Happy New Year, Trotsky! Mr Pink buzzsaw99 Dec 31, 8: Golden years, gold, whop, whop, whop Golden years, gold, whop, whop, whop Golden years, gold, whop, whop, whop Don't let me hear you say gold's taking you nowhere, angel Yen Cross buzzsaw99 Dec 31, 8: I feel the risk, is worth the reward No disrespect intended, I'd rather have my pet rock than your piece of paper Yen Cross glenlloyd Dec 31, 9: You missed the point You can buy the real stuff with paper profits.

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One is allowed to sell Ref China, "gating", CYNKKBIOEverything works great, until the one day it does not. Yen Cross scintillator9 Jan 1, 3: I see your point.

If you want to play with paper dividends and EBITDA. TRM buzzsaw99 Dec 31, Only if you live in the US. If you live in Canada then that is another story. Yen Cross Dec 31, 7: Did anyone catch this? Yen Cross buzzsaw99 Dec 31, 7: BigRedRider Dec 31, 7: Ist das nicht ein Wienerschnitzel?

Hyperinflation's Effect on Stocks | Finance - Zacks

KesselRunin12Parsecs not verified Dec 31, 7: Anopheles Dec 31, 8: I know that a lot of posters will say they should have bought gold, bitcoin, etc. Which again remains the problem, how do you get those dollars in the first place? Implicit simplicit Dec 31, 8: Bunga Bunga Dec 31, 9: For long term investors it would have been better to hoard gold instead of stocks: Anopheles Bunga Bunga Dec 31, 9: You have to remember it's a closed economy with a closed currency. Yen Cross Bunga Bunga Dec 31, I look forward to MOAR charts from you in '16 Bunga.

I like what I'm seeing. I surprised Tyler fall for that article.

Tax collections lowered if calculated on per capita based. That's why you got trillions dollar deficit budget for House income lowered but for 0. Credit cards debt, and other debt are increasing dangerously. And your govt DOESN'T SEE ANY INFLATION in your country. That is WHY the numbers doesn't seems to correspondent. Schroedingers Cat Dec 31, Yen Cross Schroedingers Cat Jan 1, 2: One of my favorite charts.

RaceToTheBottom Yen Cross Jan 1, 1: Bobbyrib Jan 1, Yeah, but here in the US, we have white folks running things. Kagemusho Jan 1, Create new account Request new password. To prevent automated spam submissions leave this field empty.

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Here's What Happened To Stocks During The German Hyperinflation - Business Insider

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