Hugh Hendry Warns To "Prepare For Hyperinflation"
Courtesy of Tyler Durden
The endlessly entertaining Hugh Hendry, who gave Jeffrey Sachs a royal beatdown yesterday and pretty much discredited the Columbia professor for life, is back in this interview with Money Week’s Merryn Webb, in which he once again is not afraid to make "bold" statements. Such as that hyperinflation is pretty much inevitable, that China is the functional equivalent of the Next fashion chain in the 1980s, that instead of listening to idiots on TV who just talk their high beta books, investors should buy the largest and safest stocks. Interestingly, Hendry actually suggests a viable way to fix America’s problems, which would require China to write off its US debt, thus "securing the health and vitality of China’s biggest customer." Alas, we don’t think it would be sufficient, as China holds about $1 trillion of US debt (at least officially). For the Hendry plan to work, debt repudiation would have to go viral, with all banks, US and European, writing down foreign debts as well. Of course, this would bring about the crash of the financial system overnight which is why it won’t happen. And yes, it still will crash, as the financed assets are bled of all their cash flows, but at least the grind into systemic bankruptcy will be slow, painful (for the middle class) and very drawn out. As for hyperinflation, Hendry’s view coincides with that of Zero Hedge: "the current deflationary shock will deepen and then create "political legitimacy to go nuclear with hyperinflation" via the printing press."
h/t Kevin
