Hyperinflation is staring us in the face.

On the Horizon.
Overall, there has been a significant improvement in risk appetite due primarily to the rally in equity markets, which will weigh on the USD. In addition, worries by Chinese Premier Win Jiabao over its massive US Treasury holdings has also caused USD selling. China, the U.S. government's largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe. China is clearly concerned that the Fed will solve this crisis with the fiscal deficit with Quantitative Easing measure by printing more US dollars; this will increase inflation and make their investments less valuable. (remember Inflation is a direct result of increased capitol supply) and Quantitative Easing is defined as (the creation of a pre-determined quantity of new money 'out of thin air' through open market operations by a Central bank as the start of a process to increase the money supply) when we look ahead at what is on the horizon, I see a period of (Hyperinflation) (remember back in collage Micro and Macro Economics, hyperinflation is defined by Phillip Cagan as a monthly inflation rate of at least 50%. International Accounting Standard requires a presentation currency providing for translations of foreign currencies into the presentation currency to establishes special accounting rules for use in hyperinflationary environments. They list four factors which can trigger application of these rules:
1. The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power parity (PPP)
2. The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in foreign currency’s.
3. Sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short.
4. Interest rates, wages and prices are linked to a price index and the cumulative inflation rate over three years approaches, or exceeds, 100%.
So a period of Hyperinflation is unchecked or out of control inflation where prices increase rapidly as the currency decreases in value. If you use the text book version of what causes hyper inflation then we may very well be on our way to a massive correction in the green back.