Imagine going to the grocery store tomorrow to find that a loaf of bread costs $34, a dozen eggs cost $42, and milk? How does $50 a gallon sound? Although this scenario sounds extreme, could this type of high inflation really happen in the United States?

The answer to this question is unknown, however, some economists think this extreme type of inflation is possible due to the record spending and printing of money our government has undergone. To define hyper-inflation in layman’s terms, it is when your $1,000 dollars is now only worth $1. In the past year the US Treasury has doubled the amount of money in circulation in the United States. This does not bode well for the value of the dollar here and around the world; this is made evident by foreign countries moving away from the US dollar as a trading currency. Hyperinflation is difficult to predict but most families can do it by just keeping an eye on how much they spend on the grocery store. When inflation is on the rise the cost of everyday goods such as bread begin to increase slightly, therefore causing consumers to spend more. Being able to predict inflation rates of coming years not only gives you a financial decision making edge, but can also protect you from bad financial decisions in the future.

First, establish a long trend growth rate for the US economy and pick a good starting point such as the growth rate since the great depression, etc.

Second, watch quarterly growth rates of the economy to see if they are in line with, exceeding, or dipping below the long-term inflation rate. Assume that there will be a normal rate of inflation.

Third, look at inflation rates of housing prices to make a rough prediction of coming inflation rates if economic growth exceeds the average growth of the long-term period. Collect data from multiple housing markets and compare housing prices from one to five years ago; which not only indicate wealth and spending, but also price inflation of supplies.

Finally, use the Consumer Price Index to check how prices have been rising over the past few months and years to calibrate your prediction for inflation change over the coming months.

Since the creation of the Federal Reserve in 1913, the value of the US dollar has gradually declined by over 90%. Since this decline was gradual, few people considered it a crisis. However, the stage has now been set for a worldwide crisis. Government debt is increasingly out of control and no one has a viable solution to this problem.

The only solution being used is to flood the system with more dollars. As these new dollars enter the economic system, the value of the dollar is teetering on a cliff. Is the dollar collapse imminent? Many hard-money economists believe so. More on Precious Metals Investment.

Two underlying problems created this crisis. The first problem is the desire of the government to control the economy. They do this by first using bursts of money to heat up the economy. Then they increase interest rates to slow down the economy.

The second problem is the use of unbacked paper currency (not allowed by the U.S. Constitution), which allows the government to create dollars without limit. Throughout history whenever unbacked paper currency was used it eventually fell to its intrinsic value — zero.

One result of this collapse is that the US dollar (which can be created endlessly out of thin air) would no longer be accepted in international trade. Therefore, the cost of critical imports — such as oil, manufactured goods, and raw materials — would increase dramatically. As for our domestic economy, the value of the dollar would continue to fall. As for the eventual result, no one knows.

Inflation forecasts are important because they influence many areas of the economy, from wage negotiations and the interest rate, to how businesses set their prices. High inflation can mean businesses spend less on things like research and development, fewer investors are willing to consider government issued bonds, and people behave inefficiently. For example, unions spend time and money negotiating more frequently, and governments and businesses are forced to issue short-term bonds as buyers turn away from long-term bonds.