Stockstradr (the OP): How do you define hyperinflation? I’m convinced that inflation will shoot up in the near/medium term, but I’m also absolutely convinced that we won’t have hyperinflation in the USA.

Hyperinflation is not just “high inflation” (of say, in the 8%-15% range). Hyperinflation is what happened in Germany in the inter-war period, when prices went up within the same day! It happened again in some South American countries in the late 1980s, when governments thought that they could inflate their problems away (sounds familiar?).

With hyperinflation, prices can double in a few days. You go to a bar and your second beer will cost more than the first. (You could order all your beers at once, to save money, but they’ll go flat. An economists’ joke is that you must find the optimum equilibrium between the beer’s foam decreasing rate relative to the inflation rate).

The implication for the housing bubble is that nominal house prices will not drop as much as we anticipated back in 2005 because of high inflation in 2008-2012. This won’t matter for real (inflation-adjusted) prices: they’ll drop the same as they would have without a high inflation scenario.

After all, what matters is the purchasing value of the dollar we use to buy a house: as the dollar’s value falls (due to the current inflationary Fed policies), we need more dollars to pay for the same value as before.