Hyperinflation Caused by QE and Massive Debt Could Happen - UBS

Hedge against QE and inflation with real assets

A very dramatic article out today from Zero hedge talking about hyperinflation.  In the article, there is a quote from the large Swiss Bank UBS describing hyperinflation.  UBS notes that hyperinflation is more of a political issue involving the complete loss of confidence in fiat currencies, as everyone switches to real assets to protect their purchasing power:

"Hyperinflation: Paper money only has a value because of the confidence that the money can be exchanged for a certain quantity of goods or services in the future. If this confidence is eroded, hyperinflation becomes a threat. If holders of cash start to question the future purchasing power of the currency and switch into real assets, asset prices start to rise and the purchasing power of money starts to fall. Other cash holders may realize the falling purchasing power of their money and join the exit from paper into real assets. When this self-reinforcing cycle turns into a panic, we have hyperinflation. The classic examples of hyperinflation are Germany in the 1920s, Hungary after the Second World War, and Zimbabwe, where hyperinflation ended in 2009. Indeed, hyperinflation is not that rare at all. Economist Peter Bernholz has identified no fewer than 28 cases of hyperinflation in the 20th century."


While we at GreenWorld still believe that hyperinflation is a very low probability event, it is certainly what might be called a "fat tail" type of risk that is worth hedging against.  There is no question that it is worth asking how we can protect ourselves from QE and the money machines of central bankers.  We remain firm in our belief that real asset investments are the ideal way to hedge against QE and the risk (however small) of hyperinflation.  Lately, we have seen a great deal of interest from investors in our agriculture investments, and we encourage investors to take a look at our offerings in European farmland, African farmland and Australian farmland.