"Ah, you're just buttering me up, right?"

“If I rob a bank, they throw me in jail. But if they rob me, then they say that's OK” ~ angry Argentinian, 2002, after experiencing hyperinflation, Argentina style.

























Inflation 2008:

ABC's Nightline did a story last night on inflation, 2008 style. I've selected peanut butter to use as my example. Both jars are (were) the same price but you can't get the larger jar on the left anymore. And the one on the right contains 3 tablespoons less peanut butter than its predecessor. (I've illustrated this by reducing the jar on the right by three tablespoons but, in actuality, the smaller PB is in the same size jar on the store shelf -- it's its concave bottom that reduced the volume inside.)

This is an example of "gentle" inflation as it is appearing in late 2008. It's subtle. And it's happening across the board in many, many foods like cereals with slightly slimmer boxes, a little less tuna per can, smaller hot dogs that leave you still hungry after the two that used to fill you up. You just get less but the prices stay the same.

Now let's look at what we might expect in 2009 as we move towards "the summer from hell" if some "catastrophist" economist's dire predictions are right. Again, I'll use peanut butter for my example.

Inflation 2009:

Unlike 2008, some are expecting hyperinflation in '09 as the worthless U.S. dollar tends towards its true value, i.e., nothing. And where '08 inflation was gentle because it was made subtle through manufacturer's tweaking their peanut butter jars with new unnoticeable concave bottoms or slimming down cereal boxes a sly quarter inch in thickness, if we experience hyperinflation in 2009 manufacturers won't be able to make subtle packaging changes. That's because they won't be able to keep up with the skyrocketing costs of producing and shipping their product.

As a result, inflation, unlike it's gentle subtle 2008 style, will be blatant; aggressive. So while I used the same slightly smaller peanut butter jar as above (on right), inflation in 2009 may occur thusly:

In this example, the jar on the left in the late spring of '09 may cost $37 (compared to the jar, top, right, that went for 2.79 (bulk) at the end of 2008.

Flash forward to August 2009 and the peanut butter on the right may be going for $537 per jar.

Ah, inflation Argentinian style here in the U.S. where it's conceivable you may literally eat yourself out of house and home (and your car, savings, retirement, etc.) just to stay alive.

Unlike gentle subtle inflation, it's hyperinflation and, based on a U.S. dollar that is becoming obviously worthless real fast to the rest of the world, may be upon us faster than a speeding bullet in 2009.