Hyperinflation Warning for U.S.

It is at this point that we can now analyze why the U.S. is more vulnerable to hyperinflation (and will be harmed much worse by it) than any other Western economy. While the U.S. has previously only experienced the benefits of having the world's reserve currency, it has now brought itself to the point where it will experience the drawbacks of that role.

Being still the primary vehicle for international commerce, as well as the currency in which the world's largest debts are denominated, there is somewhere in excess of $6 trillion in U.S. dollar holdings in the hands of foreign entities -- either in the form of U.S. Treasuries, or dollars themselves. This means that while most episodes of hyperinflation throughout history have been driven by a domestic collapse in confidence, because of the vast numbers of U.S. dollar instruments held outside the country, the U.S. could suffer a currency-collapse (and the resultant hyperinflation) from either a loss in domestic confidence in the dollar or a loss of foreign confidence.