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<p>[QUOTE=&quot;NorthKorea, post: 1594717, member: 29643&quot;]Yuan/Yen/Won are all the same word. Essentially, to answer your question, look at Japan and Korea. Both currencies collapsed significantly. If you&#039;re talking about the CYB/RMB or whatever other names the communist based yuan goes by, then it hasn&#039;t had enough time to collapse. It was fixed to the dollar for a very long time, so, by definition, in dollar-denominated terms, it wouldn&#039;t be able to collapse.</p><p><br /></p><p>That said, with China (essentially) controlling the global money supply with a HUGE net export balance sheet, a collapse in the global basket of currencies would be the mirrored effect of a yuan collapse. Hyper-inflation, if should occur, would be a global phenomenon.</p><p><br /></p><p>The greatest fear isn&#039;t runaway inflation, it&#039;s runaway deflation. This is why the world shifted to the petro-dollar and off the gold standard. If deflationary pressure is felt, you simply print more money.</p><p><br /></p><p>I&#039;ll try to explain it as best as I can...</p><p><br /></p><p>PM values in the short-run are a defensive holding. They protect you against spikes in inflation. In the long-run, however, they are speculative, at best. Sustained inflation means that PMs become a form of fiat, in and of itself. Why? Because we denominate the value of PMs in the standing fiat of our respective nations.</p><p><br /></p><p>This is where deflation becomes a culprit. When inflation is happening, there is a flight to safety. In the short-run (say six months to three years, depending on if it&#039;s macro-economic or micro-economic), you have a spike in the value of PMs. People bid up the price of the PMs as insurance against inflation. The problem is that the insurance itself eventually becomes a tool of inflation. Once we reach a situation where the value of PMs exceeds the intrinsic value (in terms of utility) for an extended period, you end up with changing outcomes:</p><p><br /></p><p>Gov&#039;t intervention. This is where gov&#039;t agencies outlaw possession or seek to prosecute individuals for market manipulation.</p><p><br /></p><p>1) Producer intervention. Producers increase production in response to increases in price. With resources such as silver, shale oil &amp; nat gas, you&#039;ll see start-ups to extract additional supply at higher prices. This creates a price ceiling on the underlying commodity, as producers know their industries. When prices settle, they usually close facilities that were unreasonably costly, hoping to curb in collapsing prices by restricting supply.</p><p><br /></p><p>2) Consumer intervention. Consumers look to alternate products which are cheaper. As consumers change purchasing habits, opting for lower-cost base materials, the manufacturers decrease their consumption of high-priced commodities for their raw materials. This causes a drop in the underlying commodity prices.</p><p><br /></p><p>3) Deflation. Because the utility of underlying commodities is diminished, you see a collapse in the intrinsic value of the commodity, which, in turn, leads to a collapse in the market value of the commodity.</p><p><br /></p><p>Steps 1-3 are essentially the concept of &quot;peak&quot; commodity pricing. This is why PMs aren&#039;t the panacea that gold/silver bugs make them out to be. If fiat currencies truly failed (on the global scale that gold/silver bugs need), there would be chaos and anarchy. If we enter into that scenario, you won&#039;t want to be holding PMs, as no one would accept them in trade.</p><p><br /></p><p>The inflation of the dollar is not a problem. The assets of the US government exceed the liabilities of the US government. The GDP of our nation still exceeds the service cost on the national debt. We aren&#039;t even close to being truly insolvent. The bigger problem is deflation of the global basket of currencies. If PMs raise in value in the US, stabilize in dollar-denominated terms, yet collapse in every other currency, all the PM bugs will be in dire straits.</p><p><br /></p><p>I honestly believe we won&#039;t see $50 silver in constant dollars (adjusted to, literally, today&#039;s dollars) until someone discovers a good consumption vehicle for silver.[/QUOTE]</p><p><br /></p>

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