This article examines two inflationary experiences in the past in an attempt to predict the likely outcome of today’s monetary policies. The German hyperinflation of 1923 demonstrated that it took surprisingly little monetary inflation to collapse the purchasing power of the paper mark. This is relevant to the fate of the “whatever it takes” inflationary policies of today’s governments and their central banks. The management of John Law’s Mississippi bubble, when he used paper money to rig the market is precisely what central bank policy is aimed at achieving today. By binding the fate of the currency to that of financial assets, as John Law proved, it is the currency that is destroyed.
GLOBAL ROYAL FAMILIES:
- Royal families have ruled Great Britain for centuries. They control massive wealth and exercise considerable influence in global affairs.
- The Dutch royal family is less visible.
- King Donald and Queen Melania are influential, but not royals.
- Prince William of Gates, Prince Jeffery of Amazonia, and Prince Elon of Teslovakia are new members of pretend royal families – “Tech Royalty.”
- Queen Hillary and King William of Clintonia are pretend royalty, but we aren’t going there…
- Other pretend royalty are Prince Barack and Princess Michelle from Obamanoya, and several Prince Georges from the Duchy of Bushington. Their days as pretend royalty are fading.
If you think that price inflation runs at about 1.6% you have fallen for the BLS’s CPI myth. Two independent analysts using different methods — the Chapwood Index and Shadowstats.com — prove that prices are rising at a far faster rate, more like 10% annually and have been doing so since 2010.
This article discusses the consequences of price inflation suppression, particularly in the light of Jerome Powell’s Jackson Hole speech when he downgraded the importance of price inflation in the Fed’s policy objectives in favour of targeting employment.
It concludes that the reconciliation between the BLS CPI figure and the true rate of price inflation is inevitable and will be catastrophic for the Fed’s policy of suppressing interest rates, its maximisation of the “wealth effect” of inflated financial asset prices, and for the dollar itself.
The US has its share of problems right now (see One Crisis Is Manageable. Five Might Not Be).
But China is right up there in the “when it rains it pours” sweepstakes. As the apparent source of the covid-19 pandemic, it’s still battling new cases and may yet be blamed for not just spawning the virus but consciously designing and then releasing it. It’s also battling unrest in Hong Kong, saber-rattling with Taiwan, and navigating a complex trade war with the US.
But those things might pale next what’s happening with the massive Three Gorges dam. Rain has been falling almost non-stop for weeks in Southern China, and floods – much worse than usual for this time of year – have inundated cities and towns (including covid-19 epicenter Wuhan) along the Yangtze River. The New York Times describes this combination of pandemic and flooding as “surreal and difficult”.
With stockmarkets barely ruffled, few are thinking beyond the very short-term and they are mostly guessing anyway. Other than possibly the very short-term as we emerge from lockdowns, the economic situation is actually dire, and any hope of a V-shaped recovery is wishful thinking or just brokers’ propaganda. But for now, monetary policy is to buy off all reality by printing money without limit and almost no one is thinking about the consequences.
Transmitting money into the real economy is proving difficult, with banks wanting to reduce their balance sheets, and very reluctant to expand credit. Furthermore, banks are weaker today than ahead of the last credit crisis, and payment failures on the June quarter-day just passed could trigger a systemic crisis before this month is out.
[Here’s a post from a guy I read occasionally. His style (to say the least) is quite over-the-top. Believe what you choose and discard the rest. –Bob]
The entire global financial structure is in the process of faltering, breaking, and crumbling. It is better described as sabotage by the Globalist cabal in league with their fascist partners. As the entire economy fractures, as all debt faces failure, as most assets break down, as countless households struggle, the King Dollar faces a certain sunset, true safe haven will be uniformly sought. Correspondingly, the Gold price is ready to launch onward and upward. It will light the fuse on the Silver price in sequence. Demand will skyrocket, while supply has been limited. Behold the greatest fraud and hoax in the history of mankind behind the corona virus. It is named after the Queen of England, a primary funding partner. She filed a corona virus patent in December 2018, from engineered creation. The COVID-19 entity is far more a fascist project to force political change than actually a virus at all. The disease is a mirage, and exaggerated agent of deep fear and fright. Let it be known that not 5% of the population know what a virus is, how it works, the method to identify, or the best prevention. Ignorance is a great ally to the global cabal.
There are lies, damned lies, and economists. Whether these economists work for the government or a bank, they spend all their time on the computer extrapolating current trends with minor adjustments.
If you want to understand the future, don’t spend your life preparing and constantly revising an Excel sheet with masses of economic data. Collective human behaviour is extremely predictable. But not by spreadsheet analysis but by studying history.
It drives you absolutely mad to see a whole world living a lie. How can anyone believe that the fake world the Fed and their fellow central bankers have created has anything to do with reality. We have fake money, fake markets, fake companies, fake banks, fake interest rates, fake income, fake pensions, fake social security, fake wealth, fake bail outs, fake buildings, fake holidays, fake cars etc which create false lives for most of us especially in the West. All these fake material values have also created false moral and ethical values.
IT IS ALL AN ILLUSION
“In short, the Fed is committed to rescue businesses from the greatest economic catastrophe since the great depression and probably even greater than that, to fund the US Government’s rocketing budget deficits, fund the maintenance of domestic consumption directly or indirectly through the US Treasury, while pumping up financial markets to achieve these objectives and preserve the illusion of national wealth.
“Clearly, we stand on the threshold of an unprecedented monetary expansion.”
Since the Great Recession hit in 2008, central banks have been in the business of keeping insolvent governments from defaulting through the process of pegging borrowing costs near zero. These money printers are now in the practice of propping up corporations–even those of the junk and zombie variety–by ensuring their cost of funds bears absolutely zero relationship to the credit quality of the issuer. To be clear, central banks have been falsifying public and now private bond prices to historic and monumental degrees just as the intensity of issuances and insolvency deepens.
And now, the Fed is bailing out bankrupt consumers with helicopter money in the form of enhanced and extended unemployment, grants through the Payroll Protection Plan and direct UBI to consumers through the CARES Act Recovery Rebates clause. All together there has been about $2.8 trillion worth of deficit spending so far.
An unexpected destruction of fiat currency has been advanced by the monetary and fiscal response to the coronavirus. Financial markets have yet to discount the possibility of such an outcome, but in the coming months they are likely to awaken to this danger.
The question arises as to what will replace fiat currencies. In the past the answer has always been gold but today there are cryptocurrencies as well, whose enthusiasts are more aware than most of fiat money’s failings.
This article describes the basics about money, what it is and the role it plays in order to understand what will be required by the eventual replacement for fiat. It concludes that gold will return as the world’s medium of exchange, and secure cryptocurrencies, unable to provide the scalability and stability of value required of a medium of exchange will be priced in gold after the demise of fiat. But then the rationale for them will be gone, and with it their function as a store of value.
The massive set of stimulus measures rolled out last month by the Treasury Department and Federal Reserve has left many Americans wanting more… and politicians scheming for new ways to dole out additional trillions in cash.
Most taxpayers have already received their $1,200 “stimulus” payments. However, that one-time payment will do little to repair the long-term financial health of the 26 million (and rising) who are newly unemployed.
And it surely won’t bail out all the small business owners who were callously deemed “non-essential” and forced to shut down during this pandemic.
This article asserts that infinite money-printing is set to destroy fiat currencies far quicker than might be generally thought. This final act of monetary destruction follows a 98% loss of purchasing power for dollars since the London gold pool failed. And now the Fed and other major central banks are committing to an accelerated, infinite monetary debasement to underwrite their entire private sectors and their governments’ spending, to prop up bond markets and therefore all financial asset prices.
It repeats the mistakes of John Law in France three hundred years ago almost to the letter, but this time on a global scale. History, economic theory and even common sense tell us governments and their central banks will rapidly destroy their currencies. So that we can see how to protect ourselves from this monetary madness, we dig into history for guidance to see who benefited from the Austrian and German hyperinflations of 1922-23, and how fortunes were made and lost.
A Hyperinflationary Depression has always been the inevitable end to the biggest financial bubble in history. And this time it will be global. Hyperinflation will spread from country to country like Coronavirus. It could start anywhere but the most likely first countries are the US and the EU or ED (European Disunion) They will quickly be followed by many more like Japan and most developing countries. Like CV it will quickly jump from country to country with very few being spared.
CURRENT INTEREST RATES ARE A FALSE INDICATOR
Ever since the last interest cycle peaked in 1981, there has been a 39 year downtrend in US and global rates from almost 20% to 0%. Since in a free market interest rates are a function of the demand for credit, this long downtrend points to a severe recession in the US and the rest of the world. The simple rules of supply and demand tell us that when the price of money is zero, nobody wants it. But instead debt has grown exponentially without putting any upside pressure on rates. The reason is simple. Central and commercial banks have created limitless amounts of credit out of thin air. In a fractional banking system banks can lend the same money 10 to 50 times. And central banks can just print infinite amounts.
This is probably the most important article I have penned. It is about the destiny of three individuals who all followed different tides. We are today at the point when the consequences of taking the wrong tide will be ruinous whilst the right one will be extremely propitious.
I have quoted Brutus’ speech in Shakespeare’s Julius Caesar many times in the last twenty years. But I believe that it is today more relevant than at any time in history, when it comes to economic affairs.
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.
Shakespeare – Julius Caesar
The moral of the story will be obvious. The outcomes are so vastly different that anyone who reads about the three human destinies below will easily sympathise with the one who took the tide that “leads to fortune” rather than the two who ended up “in miseries.”
The stock market has now priced in a perfect resolution for all of its erstwhile perils. Wall Street Shills would have you believe that since the Fed has turned dovish it will always be able to push stocks higher. The trade war is about to reach a peaceful conclusion and that will be enough to fix all that ails the global economy. A no-deal Brexit is off the table and a smooth transition out of the EU will occur. Peace will soon break out in Hong Kong and its troubled economy will have no contagious global economic effects. And, there will be a sharp rebound in EPS growth from the current earnings recession because…well…just because we need one.
However, beneath the surface of this economic charade the carcass is rotting and the stink can be smelled by anyone who isn’t willingly holding their nose. To this point, the leveraged loan market, which consists of loans made to highly indebted and barely solvent entities, has seen an increase of 100% since 2007, according to the Bank for International Settlements.
Five charts to contemplate as we prepare for the New Year
1. Gold’s annual returns 2000 to present
In the February edition of this newsletter, we ran an article under the headline: Will 2019 be the year of the big breakout for gold? Though we would not characterize gold’s move to the upside so far this year as ‘the big breakout,’ 2019 has been the best year for gold since 2010 even with the recent correction taken into account. Back in September when the price gold reached $1550 per ounce – up almost 22% on the year – 2019 was looking more like a breakout year. Now with the move back to the $1460 level, the market mood has become more restrained. As it is, gold is up 15 of the last 19 years and still up 14.45% so far this year.
In this interview with Silverdoctors, Egon discusses $666 silver and $10’000 gold. Some viewers commented the 666 price target.
Egon stated in response to these comments:
All the commentaries related to 666 and Luciferians have got the wrong Bible quote. Here is the correct one: 2 Chronicles 9.13 “The weight of gold that came to Solomon in one year was six hundred sixty-six talents of gold.” 666 talents of gold is today worth over $1 billion. So the wise King Salomon collected $1 billion of gold every year which has nothing to do with Lucifer.
- What is going on now in the global economy, and how does it compare to Nixon Closing the Gold Window in 1971.
- Governments are stockpiling record amounts of gold, but are we at gold fever yet, and what will that look like.
- Will we see inflation, deflation, or hyperinflation.
- Gold recently broke Egon’s Maginot Line of $1350. What does that mean and what is Egon’s current outlook for gold.
- What does Egon think about silver and the gold-to-silver ratio?
- What is on Egon’s radar for the autumn of 2019.
For the discussion of those topics and a whole lot more, tune in to the interview in its entirety:
Founder and Managing Partner
Matterhorn Asset Management
Phone: +41 44 213 62 45
Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 60 countries.
Individuals dream about winning the lottery, stock market profits, reducing debt, earning more income, attractive sex partners, and tasty food. But our dreams can turn into nightmares filled with inflation ghosts and monsters.
The derivative monster is a destroyer. Deutsche Bank stock closed at $6.76 on June 7, 2019, down from over $100 in 2007. A repeat of 2007 is possible. Price on July 25 is $7.89 – still sick.
By Keith Weiner – Re-Blogged From Gold Eagle
There is a popular notion, at least among American libertarians and gold bugs. The idea is that people will one day “get woke”, and suddenly realize that the dollar is bad / unbacked / fiat / unsound / Ponzi / other countries don’t like it / <insert favorite bugaboo here>. When they do, they will repudiate it. That is, sell all their dollars to buy consumer goods (i.e. hyperinflation), gold, and/or whatever other currency.
Predicting the end of the world, physical or financial, is seldom helpful. If the prediction is correct, how do you profit from the insight? If the prediction is wrong and the “end of the world” is delayed (typical), you lose credibility.
An estimate of risk versus reward based on an analysis of current information is more useful.
Assessment: The 2018-2020 risk for most asset classes, such as stocks, bonds, corporate debt, and real estate is high while the potential reward in those asset classes is low. Gold and silver are opposite. Their long-term risk is low (September 2018) and their long-term potential reward is huge.
By Bloomberg – Re-Blogged From Newsmax
Tommy Samson is explaining why he’s been forced to scale back business amid Argentina’s financial-market rout. His Buenos Aires firm imports surgical equipment such as sutures for stitching wounds, paying in foreign currency. Then he sells them to local customers in pesos.
The last link in that chain is breaking down — because Argentina’s currency is in freefall. It’s lost half its value this year, and some 20 percent this week alone. The slump threatens to spread havoc through the $640 billion economy, rupturing supply chains for businesses and straining the finances of households.
And it’s casting a shadow over President Mauricio Macri’s prospects of winning re-election next year. Even Argentina’s most market-friendly leader in more than a decade has struggled to restore investor confidence.
By Alasdair Macleod – Re-Blogged From Gold Eagle
Most people are aware that historically there have been speculative bubbles. Some of them can even name a few – the South Sea bubble, tulips, and more recently dot-coms. Some historians can go even further, quoting the famous account by Charles Mackay of the South Sea bubble, the tulip mania and the Mississippi bubble, published in the mid-nineteenth century.
The most valuable bubble empirically for the purpose of our elucidation has to be the Mississippi bubble, whose central figure was John Law. Law, a Scotsman whose father’s profession was as a goldsmith and banker in Edinburgh, set up an inflation scheme in 1716 to rescue France’s finances. He proposed to the Regent for the infant Louis XIV a scheme that would be based on a new paper currency.
By Michael Pento – Re-Blogged From Silver Phoenix
Two drones filled with explosives were recently deployed in a failed assassination attempt to take out Venezuelan President Nicolas Maduro. Chaos filled the streets as the military ran for their lives. But this sort of pandemonium is commonplace in Venezuela today: Where citizens have run out of basic necessities such as toilet paper and have begun eating their pets in order to stay alive. The mainstream Keynesian-brainwashed media doesn’t talk much about Venezuela or hyperinflation; perhaps because they are viscerally aware that the seeds of intractable inflation on a worldwide basis have already been sown by the global elites–and they don’t want to frighten you.
By Mac Slavo – Re-Blogged From Freedom Outpost
In the wake of socialist Venezuela’s massive hyperinflation, citizens have returned to the original monetary system in order to survive. The barter system is now prevalent in the collapsed economy of the authoritarian dictator, Nicolas Maduro.
Barter is one of the best ways to trade goods, considering its almost impossible to tax those transactions and since money in Venezuela is as difficult to come by as food and medicine, that’s now the preferred method of trading goods and services. Women in Venezuela have been turning to prostitution and asking for payment in food instead of cash for a while now, and as the regime tightens its grip on the private sector, more will have to turn to trade to survive.
By David Smith – Re-Blogged From http://www.Gold-Eagle.com
We can argue about the definition(s) of inflation until the cows come home – To be sure some economists spend a career trying to nail it down.
But for clarity’s sake, we’ll use the definition of the Austrian School (Mises.org) as an increase in the money supply. This is really the correct one, regardless of any bias of dogma, “schooling” or the mainstream media. Although most everyone defines inflation as an increase in the price of goods and services, this is actually a result.
By Jeff Clark – Re-Blogged From http://www.Gold-Eagle.com
Rising inflation has hit the headlines, sparking some attention from journalists. What most mainstream investors don’t realize, though, is that history shows inflation can quickly get out of control, and not just in some mismanaged third-world country. Surprise spikes in inflation have occurred right here in the US—and given the massive amount of currency dilution around the world over the past decade, a jump in inflation could easily kick in again.
From Zero to Raging in Two Years
Most historical inflation studies only go back to the 1970s. But as Mike Maloney has always taught, the further back you go in history, the more you can learn about the future.
I ran across a study by Amity Shlaes, an author with an impressive bio. Her research found several examples from the past 100 years when US inflation started mildly but then soared to alarming levels. What’s perhaps even more startling is that those inflationary spikes occurred within just two short years.
Check out how much the rate of inflation rose during these periods:
Based on an earlier version of the CPI-U, Shlaes says US inflation was at 1% in 1915. Within just two years, it soared to 17%. She reports this runaway rise in prices was because the Treasury “spent like crazy on the war, creating money to pay for it…”
The official inflation rate in 1945 was 2%, but surged to 14% within a mere 24 months, a 7-fold increase.
The CPI registered 3.2% in 1972, and hit 11% by 1974. Worse, it continued to march higher over the decade, peaking at 14.7% in April 1980, in what amounted to a near 5-fold rise.
In other words, there is clear historical precedence that inflation can rise suddenly and rapidly, and that prices can quickly spiral out of control. It would thus be dangerous for us to assume that inflation will stay subdued indefinitely.
In fact, you’ll notice these inflationary spikes occurred roughly 30 years apart. And it’s been over 40 years now since the last one…
What Inflation Could Look Like in 2020
Many analysts believe inflation will continue to rise, so let’s apply those historical increases to today and project how high inflation could potentially be two years from now.
If we matched any of those prior rates, here’s what inflation could look like by the year 2020, based on the current 2.38% CPI reading.
If we matched the 1917 rate, inflation in the year 2020 would hit a whopping 40%.
The 1947 increase would take us to 16.6%, exceeding what we saw in the 1970s and ‘80s. The 1974 rate would push us to 8.3%.
Even the least of these increases would catch most people off guard; even though real inflation (when calculated with old formulas, including items like tuition, healthcare, and energy) is quite a bit higher, when’s the last time North America was in a soaring inflationary environment?
Any of these scenarios would be good for gold, of course. And if we tip into hyperinflation, gold will still protect our purchasing power. One of the surest predictors of when the gold price will rise is when inflation takes off.
- Given the massive amount of currency abuse that’s occurred around the world, soaring inflation is not some farfetched theory. Sooner or later we could easily become victim to a rapid and scary decline in purchasing power.
Friends, history has a clear warning: Inflation will not stay dormant forever, and will likely pay a personal visit to your household soon. Do what Mike and I and everyone else at GoldSilver are doing and protect your purchasing power.
By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com
This article explains the money side of prices, and why government currencies, unbacked by gold, are doomed to collapse. And why gold, which is the sound money chosen by markets throughout history, will retain or increase its purchasing power measured in the goods it buys over the coming years.
Very few people have a full understanding of the relationship between money and goods. This is the relationship that sets prices. Yet, without that understanding, central banks will almost certainly fail in their policy objectives (as they always have done so far), and individuals unaware of gold’s monetary properties will be unable to protect their wealth in monetary and financial conditions that are becoming increasingly unstable.
[I just read an article on www.Silver-Phoenix500.com, by Ellen Brown, talking about the FED’s latest Rate Hike Cyle. I was going to add a comment to her post, but there is just so much wrong with what she says, that a simple comment won’t do. -Bob]
Ellen Brown discusses the FED’s current Rate Hike Cycle, giving reasons why it’s a bad idea. She says that higher rates will draw foreign money into the US and strengthen the Dollar, which will hurt US exports and increase imports. That indeed may be the case, but only because foreign Central Banks’ policies keep their interest rates near zero percent.
To the extent that stiffer competition and higher borrowing costs will hurt US businesses, then yes, US GDP will suffer. Considering that the FED has kept rates FAR under Free Market rates, creating bubbles in stocks and other areas of the US Economy, a market crash together with a Recession/Depression should not be unexpected outcomes.
Brown goes on to suggest that higher rates and a contracting Economy will cost the Republicans dearly in November 2018, and that also is a reasonable prediction.
Alas, after that, Brown’s logic and understanding get very cloudy. She wonders why the FED, seeing a slowing Economy ahead, would go ahead and raise rates, but she misses the obvious. The FED is a Keynesian organization, which makes them Democrats. A market and Economic crash while the Republicans are in charge will favor the Democrats at election time.
She says that interest paid by Uncle Sam and by corporations will triple in short order. But she just doesn’t get borrowing. When you borrow to buy a house using a fixed rate mortgage, if rates go up in the Economy, do you pay more? Of course not! The US and corporations’ borrowings mostly are long term using bonds of various durations.
Yes, rates will go up when you roll over your debt (or borrow more), but that very real problem doesn’t happen today – it creeps in over time. Now, to the extent that the borrowing was to fund spending that only made sense with zero interest rates, that rolled-over increase in debt due to bad decision making will clear away the incompetent leaders in business and will force government spending cuts. It could be very painful, but the pruning needs to be done occasionally.
Brown doesn’t want the adjustment process ever to be done, so she wants the FED to keep doing what it did (low interest rates). Even more, she wants the FED to monetize the entire federal debt (that the FED doesn’t already own).
She says that the new money, created out of thin air, will get into the banks and will be deposited by the banks as excess reserves – and that these excess reserves cannot be lent out by the banks. Her ignorance is staggering!
So, let’s review the concept of bank reserves. The FED says that banks MUST keep some of its deposits in ‘reserve,’ for use in regular day to day business and in case depositors (as a whole group) want to withdraw an unusually large amount from the bank. The ‘Required Reserves’ are not required on all bank deposits – far from it – but for the sake of this discussion, let’s assume that Brown at least has this right.
The Required Reserves are not available to lend out because… they are required. However, a bank may deposit more than the required reserve amount with the FED. The deposit amount over the required amount is called ‘Excess Reserves.’ While Excess Reserves indeed are available for the bank to lend out (contrary to what Brown thinks), the FED has been discouraging this extra lending by paying the banks about 1% to keep the Excess Reserves on deposit at the FED.
With the FED’s, and the government’s, policies keeping GDP in the toilet for a decade, banks have a limited demand for creditworthy, likely profitable loans, so banks have left a lot of Excess Reserves (in addition to their Required Reserves) on deposit with the FED, earning that 1% return. This is what the FED has referred to as sanitizing all the paper money it’s been creating to buy that ton of Treasuries.
If interest rates are raised by the FED, banks can be expected to start loaning out those Trillions of Excess Reserves. With the Fractional Reserve Banking system that the US has, those Trillions of Excess Reserves could turn into Tens of Trillions of new loans. That would cause much higher CPI increases than even the BLS statistics manipulators would be able to hide. Possibly to the point of Hyperinflation.
Brown wants the FED to create even more money out of thin air and to use it to buy up the rest of the National Debt – over $15 Trillion more! As it gets lent out (contrary to what Brown believes) that’s $150 Trillion in loans, and that definitely gets our country into Hyperinflation.
But, that’s unless the FED can prevent all that money from being lent out. While Brown’s way is nonsense, the FED does have the tool, and we’ve mentioned it already – the Required Reserve regulation. The FED could buy Treasuries and raise the percentage that banks are required to keep on hand. Instead of a 10%, it could become 10.1%, 10.2%, and growing with Treasury purchases to control lending.
A side benefit is that, the FED needn’t pay interest on Required Reserves. If the US pays an average 2% on all its debt to the FED, and then gets it all back, that’s $200 Billion savings on the current $20 Trillion National Debt.
I don’t recommend that we do this, but it is an interesting mental exercise.
By Michael Snyder – Re-Blogged From Economic Collapse Blog
Venezuela and Yemen were both once very prosperous nations, but now parents are literally watching their children starve to death as the economies of both nations continue to utterly collapse. Just like so many here in the United States, most of those living in Venezuela and Yemen would have called you completely crazy if you would have warned them that this was going to happen five years ago. In particular, Venezuela has more proven oil reserves than almost anyone else on the planet, and so to most of their citizens it was unimaginable that things could ever get this bad. But it has happened, and the collapse that has already begun in parts of South America, Africa and the Middle East will soon spread elsewhere.
The US Money Supply is about to soar. Since general price levels in the US Economy, as measured by the CPI for example, are a direct consequence of Money Supply changes, Americans are in for a bout of high inflation over the next few years.
To understand why, we must look at one way that the FED works. The FED tries to contol the Money Supply by influencing Interest Rates. It does this mainly by buying and selling various securities, mainly short term US Treasuries.
If the FED buys these Treasuries, using newly created electronic Dollars, the Treasuries go on its balance sheet and the new Dollars make their way onto Bank balance sheets. New “demand” for the Treasuries push up their price, which causes the effective interest they pay to go down.
By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com
Buy high and sell low is the mantra of many stock market investors. When a stock or a market reaches a new high, the average investor turns even more bullish. That is also the point when the media talk about it and it becomes headline news. This is now the situation for many stock markets worldwide. US, UK, and many European markets are now at all-time highs. But the picture is not rosy everywhere. The Chinese market is 40% lower than the 2015 highs and the French, Italian and Spanish markets are around 20% below the 2015 levels. Yet, few investors in the West worry about these peripheral markets but instead focus on the US and the main European indices.
There are times when there is still upside potential in markets which are making new highs. But a market which has been rising incessantly for almost seven years and which is grossly overvalued on any criteria is certainly not a low risk investment.
By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com
Investors in most countries make the mistake of measuring their returns based on their home market and their domestic currency. This might have worked when they only had access to their local investment market. But that time is long gone. Now we have a global economy and most Westerners have access to securities worldwide. Still, in for example Germany, the UK or Japan, investors measure returns in their local currency. Even more so in the US. Due to the size of the US economy and the importance of the dollar, few Americans look at investment markets or currencies in other countries.
By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com
Most people have no idea what money is. They believe that if they have 100 dollars or euros, that this represents real value as well as durability. Few people realise that their currency which they call money has nothing to do with real money at all. All paper currencies are ephemeral and return to their intrinsic value of zero. This is because reckless governments cling on to power by printing or borrowing endless amounts of fiat money in the hope that they will placate the people and buy votes. Fiat money as the name indicates, can never be real money. It is issued by edict and is not backed by anything but debt and liabilities.
Power Corrupts And Money Corrupts
It is a lethal combination which not only destroys people but also nations. And sadly, we have now reached a point in history when the unlimited amounts of fiat money that have been created will also destroy continents.
By Gary Christenson – Re-Blogged From The Deviant Investor
It is an election year. We should anticipate 8 years of upcoming trauma, following nearly 8 years of “hope and change,” after 8 years of “no nation building,” after 8 years of “I did not have sexual relations with that woman.”
Examine the official US national debt in 8 fiscal year increments (10/1/84 – 9/30/92 etc.) using linear and log scales.
You can see that official national debt has been rising exponentially. At the current rate of increase it should approach $40 trillion in 8 years. Given the likelihood of more wars, recessions, more social spending, and accelerating Medicare and Social Security expenses the total debt might be considerably higher than $40 trillion in 8 years, regardless of who is elected.
By GE Christenson – Re-Blogged From http://www.Silver-Phoenix500.com
Inflation is theft. It is a simple concept that a single mother and a retiree understand…but a PhD in Keynesian Economics probably does not. Examples:
In 1971 take $1,000 in crisp new $20 bills and place them in a safe while watching President Nixon blame speculators for the loss of Fort Knox gold. (He “temporarily” severed the last connection between gold and the U.S. dollar.) Spend those dollars in 2016 and you will feel ripped off because they would have bought most of a car in 1971, and in 2016 they might buy only four tires.
Take $400,000 and purchase an airplane in 1971. Today that $400,000 will purchase the helmet for an F-35.
A cup of coffee in 1971 probably cost about $0.25. Today it is $2.00.
By Andrew Hoffman – Re-Blogged From http://www.Silver-Phoenix500.com
Am I allowed to start with Deutsche Bank? Or do I have to defer to the Bank of Japan’s Keystone Kops; who once again laid a giant goose egg? Who, beyond a shadow of a doubt, proved they have not a clue what they are doing – in dramatically accelerating the pace at which the “Land of the Setting Sun” plunges to “second world” status, en route to becoming the first “Western Power” to experience 21st Century hyperinflation.
Hmmm, what to do? As sadly, I could easily write entire articles on countless other topics as well – such as the Bank of International Settlements issuing a dire warning about the massively over leveraged Chinese banking sector; Donald Trump’s surging popularity; Wells Fargo’s “crime of a lifetime”; the exploding worldwide pension crisis; OPEC’s Secretary General all but confirming “no deal” at next week’s “all-important” crude oil producers meeting; and the U.S. national debt – and budget deficit – expanding at the fastest rate since the 2008-09 financial crisis. And the answer is, I’m starting with Deutsche Bank – as unquestionably, it poses the greatest near-term risk to global political, economic, social, and monetary stability.
By Andrew Hoffman – Re-Blogged From http://www.milesfranklin.com/
Pardon me if this article starts out a bit disjointed, as I accidentally erased the notes I took last night, amidst the 155th “Sunday Night Sentiment” attack of the past 161 weekends. And afterwards, the 689th “2:15 AM” raid of the past 793 trading days, which I was able to document in real-time because someone called me at 3:00 AM, acting surprised that I wasn’t on “European time.” I mean, do I have a French, German, or British accent?
Thankfully, the amount of notes was minimal, as amidst the “summer doldrums,” trading volumes are exceptionally low – with “volatility” at 20-year lows, care of the most maniacal, relentless market manipulation in global history. Which, of course, is occurring because the global political, economic, and monetary situation has never been uglier. Not to mention, the powers that be MUST maintain the status quo to enable a Hillary Clinton victory – as if Trump wins, their ability to staunch the bleeding, and control the future, will be dramatically weakened. For what it’s worth, I strongly believe Trump will win – as like the “surprise” Brexit result, I believe Americans’ actual political leaning is far different than the propagandized “strong Clinton lead.” Frankly, it strains credibility that anyone would believe this to be true, given the historically horrible economy, the e-mail server scandal, and all out criminality of the Clinton Foundation.
By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com
This coming autumn we are likely to see the beginning of the hyperinflationary phase of the sovereign debt crisis. Hyperinflation normally hits an economy very quickly and unexpectedly…and is the result of the currency collapsing. Hyperinflation does not arise as a result of increasing demand for goods and services.
The course of events in a hyperinflationary scenario can be summarised as follows:
- Chronic government deficits
- Debt issuance and money printing escalating rapidly
- Bonds falling – interest rates rising fast
- Currency collapsing
By Michael Pento – Re-Blogged From http://www.Gold-Eagle.com
There are four stages of fiat money printing that have been used by central banks throughout their horrific history of usurping the market-based value of money and borrowing costs. It is a destructive path that began with going off the gold standard and historically ends in hyperinflation and economic chaos.
Stage one is the most benign of the four, but it sets the stage for the baneful effects of the remaining three. The first level of monetary credit creation uses the central banks’ artificial savings to set short-term interest rates through the buying and selling of short-duration government debt. This stage appears innocuous to most at first but is insidiously destructive because it prevents the market from determining the cost of money. This is crucially important because all assets are priced off of the so called “risk-free” rate of return. A gold standard keeps the monetary base from rising more than a few percentage points per annum and thus restrains bank lending. However, having a fiat currency also means a nation has a fiat monetary base. This leads to unfettered bank lending and the creation of asset bubbles.
[I DO NOT agree with the Helicopter Money thesis. Governments’ expansions of their money supplies unrestrictedly were the cause of every Hyperinflation the world has known, as for example in Wiemar Germany and more recently in Zimbabwe. –Bob]
By Ellen Brown – Re-Blogged From http://www.Silver-Phoenix500.com
Fifteen years after embarking on its largely ineffective quantitative easing program, Japan appears poised to try the form recommended by Ben Bernanke in his notorious “helicopter money” speech in 2002. The Japanese test case could finally resolve a longstanding dispute between monetarists and money reformers over the economic effects of government-issued money.
When then-Fed Governor Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was talking about something quite different from the quantitative easing they actually got and other central banks later mimicked. Quoting Milton Friedman, he said the government could reverse a deflation simply by printing money and dropping it from helicopters. A gift of free money with no strings attached, it would find its way into the real economy and trigger the demand needed to power productivity and employment.
By Michael Pento – Re-Blogged From http://www.gold-eagle.com
The financial world is buzzing about former Fed chairman Ben Bernanke’s recent trip to Japan, where he advised Japan’s central bank chief Haruhiko Kuroda on how to manage his nation out of multi-decades of stagnant growth. Channeling economist Milton Friedman, Bernanke warned that Japan was vulnerable to perpetual deflation and stagnate growth and that helicopter money–where the government issues non-marketable bonds with no maturity date and the Central Bank buys them with counterfeited credit–was the most useful tool in overcoming this condition.
Bernanke encouraged Japan to carry on with the Abenomics policies that have failed to date by supplementing monetary policy with even more fiscal stimulus—as if Japan’s 230% debt to GDP ratio wasn’t enough. And he assured Abe and his staff that the Bank of Japan (BOJ) has instruments to ease monetary policy yet further.
And in case this village needed another idiot, Nobel laureate Paul Krugman, also chimed in. Arguing that Japan should raise its inflation target to 4 percent and embark on a significant but temporary fiscal stimulus to boost prices in the economy. Speaking at a conference on Thursday in Singapore, Krugman called for “a big burst of government spending and maybe also cash donations.”
By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com
Internationally known bond strategist Hunkar Ozyasar makes a scholarly and comprehensive description of the material influence Money Supply has on Stock Prices:
“Money supply is one of the most basic parameters in an economy and measures the abundance or scarcity of money. Stock prices tend to move higher when the money supply in an economy is high. Plenty of money circulating in the economy both makes more money available to invest in stocks and also makes alternative investment instruments, such as bonds less attractive.
By Mac Slavo – Re-Blogged From http://www.freedomoutpost.com
When the country of Greece collapsed in 2012 we highlighted the desperate situation faced by its millions of residents:
With untold billions in private and public sector debt, the situation in Greece (and other debt laden European countries like Spain and Italy) has devolved to such an extent that some EU member nations are mobilizing their military personnel in preparation for full spectrum meltdown across the entire region.
Jobs are so scarce that many have been forced into underground barter economies and family farming to make ends meet. From massive austerity spending cuts that have torn to shreds the government social safety net, to shortages in critical life saving medicines and the near breakdown of the nation’s power grid, Greece is experiencing all of the overt signs of a nation on its last leg.
By Nick Giambruno – Re-Blogged From International Man
This definitive sign of a currency collapse is easy to see…
When paper money literally becomes trash.
Maybe you’ve seen images depicting hyperinflation in Germany after World War I. The German government had printed so much money that it became worthless. Technically, German merchants still accepted the currency, but it was impractical to use. It would have required wheelbarrows full of paper money just to buy a loaf of bread.
At the time, no one would bother to pick up money off the ground. It wasn’t worth any more than the other crumpled pieces of paper on the street.
Today, there’s a similar situation in the U.S. When was the last time you saw someone make the effort to pick up a penny off the street? A nickel? A dime?
Walking around New York City recently, I saw pennies, nickels, and dimes just sitting there on busy sidewalks. This happened at least five times in one day. Even homeless people wouldn’t bother to bend over and pick up anything less than a quarter.
The U.S. dollar has become so debased that these coins are essentially pieces of rubbish. They have little to no practical value.
By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com
Traders today universally believe inflation is dead, that there is no persistent decline in the purchasing power of money. That’s what government price indexes around the world are indicating. But this false notion is one of recent years’ main Fed-conjured illusions. Price inflation is the result of rising money supplies, and they have been skyrocketing. Serious risks are mounting that they will spill into price levels.
As simple as money seems, it is very complex in both theory and practice. We all understand the idea of working to earn money to buy goods and services. But the seminal treatise on money, the legendary economist Ludwig von Mises’ “The Theory of Money and Credit” published in 1912, weighed in at 445 pages! Money is a topic that endlessly preoccupies elite central bankers with doctorates in economics.
Money is ultimately a commodity, its value determined by its own fundamental supply and demand. If demand exceeds supply for any given currency, its price will rise relative to other currencies. As this money grows more valuable, it takes relatively less to buy goods and services. The persistent increase in the purchasing power of money, resulting in a persistent decrease in general price levels, is deflation.
By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com
In the early days of central banking, one primary objective of the new system was to take ownership of the public’s gold, so that in a crisis the public would be unable to withdraw it. Gold was to be replaced by fiat cash which could be issued by the central bank at will. This removed from the public the power to bring a bank down by withdrawing their property. A primary, if unspoken, objective of modern central banking is to do the same with fiat cash itself.
There are of course other reasons for this course of action. Governments insist that they need to be able to trace all private sector transactions to ensure that criminals do not pursue illegal activities outside the banking system, and that tax is not evaded. For the government, knowledge of everything individuals do is necessary control. However, in the monetary sense, anti-money laundering and tax evasion are not the principal concern. Central banks are fully aware that the financial system is fragile and could face a new crisis at any time. That’s why cash in their view must be phased out.
Michael Pento is an stock market money manager who follows the Austrian School of Economics (as do I). For those of you unfamiliar with what that is, Austrian Economics is Free Market Economics, as opposed to Keynesianism and other names for Socialism.
Michael was interviewed recently, and I’d like to share the video with you. It’s one of the few lucid, straightforward pieces that I’ve seen recently. But, understand that some of what he says is scary, so if you have a bad ticker, you’d better take a pill before watching.