Hyperinflation Guaranteed
Yes this is it! We have crossed the Rubicon and events in the world economy are now likely to unfold in a totally uncontrollable fashion. Clueless governments still don’t understand that it is their ruinous actions that have created a credit infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money. The consequences are clear; we will have hyperinflation, economic and human misery as well as social unrest.
When will the world finally begin to understand that we have reached the point of no return and that “the voyage of their life is bound in shallows and in miseries” (Shakespeare, Julius Caesar)? Sadly, we are probably not very far from that point. It is already starting to happen in many countries.
The latest EU and IMF package of $1 TRILLION (Euro 750 billion) is yet another futile attempt by governments to abolish poverty by printing paper. Let’s be absolutely clear, this money does not exist and the EU governments are hoping by declaring such a large amount that they can con the Wolfpack speculators. At this point the EU has just picked a large round figure out of the air. But when their bluff is called by the Wolfpack and the next attack happens, EU governments will after initial huffing and puffing start printing unlimited amounts of paper.
So the world is now on its road to ruin and there is no action, no leader and no new amount of printed money that can save the world or prevent a hyperinflationary depression.
Never in history has the world been in a situation when virtually all industrialised countries are bankrupt. Therefore there is no precedent for what will happen in the next few years. What we can be quite certain about is that events will happen in a seemingly random pattern and that it will be impossible to forecast where the next crises will start.
But although we will not be able to predict in what order events will take place, we can expect much of what is outlined below to happen.
Wolfpack Attacks
Already back in 2007 we warned about the very high risk of the CDS (credit default swap) market. This is now one of the primary instruments used by the Wolfpack (expression coined by the Swedish Finance Minister Borg). The Wolfpack, speculators with enormous fire power such as hedge funds and investment banks, use the CDS market to attack any weak financial sector, be it a country, a bank or a company. The combination of the leverage of the CDSs and the massive capital available to the Wolfpack makes it possible for them to bring down or badly maul whatever they attack. It was not the Wolfpack that caused the problem in for example Greece but they can bring down a weak victim quickly and profit immensely and immorally from it.
There are so many weak potential victims that the Wolfpack can attack and they will start with the most vulnerable ones like, Portugal, Spain and Ireland etc. But when the time is right they will also attack the US and the UK.
So in the coming year we will see country after country coming under attack from the Wolfback which will lead to acceleration in money printing and higher interest rates.
Iceland – Ireland – Greece – Who Is Next?
The EU support package of $ 1 trillion is supposed to be sufficient to protect the rest of Europe from another Greek tragedy. The dilemma with such a massive EU commitment is that no government expects to have to pay the money out. If they did the voters in the respective EU countries would throw out their government. Why should the German people, who are also having hard times, pay for the Greeks, Portuguese or the Spaniards, especially since these loans will never be paid back?
Greece is bankrupt but is still taking on additional EU loans of € 140 billion. In addition, their austerity measures are supposed to bring the deficit down from 12% of GDP today to 3% in a few years time. But who can be so stupid as to lend to a bankrupt nation which will sink into the Ionian and Aegean Seas in the next few years. With massive cuts in government expenditure, with major falls in output, with unemployment rising fast, with tax revenues collapsing how can Greece possibly be expected to improve the economy and pay a high interest rate on their exploding debt? In addition, as long as they have the Euro they will be totally uncompetitive. So if they couldn’t manage their economy in the so called good times, it is absolutely guaranteed that they have no chance of surviving in bad times. So Greece will default and so will Portugal, Spain, Italy, France, the UK, the US and many more. But before that there will be the most colossal worldwide money printing exercise which would have used up most of the trees in the world but for electronic fiat money.
So, if virtually bankrupt nations don’t cut their deficits, they will definitively go under and if they try to cut, they will also go under due to collapsing output and tax revenues and colossal debts. Thus whatever actions governments take or don’t take, they are damned.
The table below shows debt as a percentage of GDP for various OECD countries. The official debts (in red) are massive and unlikely to ever be repaid in real money. Total debts (grey bars) include unfunded liabilities such as pensions and health care. Spain has the lowest total debt to GDP of 250%. Germany and the UK have around 400%, the US over 500% and Greece over 800% debt to GDP. These figures are absolutely astronomical and prove that most governments in the world will be totally incapable of repaying their debts or funding the pensions or medical care which they have committed to. It doesn’t matter however much governments cut expenditure or raise taxes, all these countries are insolvent and nothing can save them.
The World Must Permanently Readjust
Most governments still believe that deficit spending and money printing is the solution to all their problems. Because the world economy’s expansion in the last 100 years and particularly in the last 40 years has been primarily based on credit and not real growth, governments live under the false impression that money printing will work this time too. But we have reached the point when investors will no longer buy worthless government debt that will never be repaid with real money. We will first go through a period when governments issue and buy their own debt thus monetising the debt or print money. This will be the hyperinflationary phase. Thereafter the world will realise that none of the government debt and very little of the bank debt will ever be repaid. Credit will then implode and so will also the assets financed by credit. Eventually there will be a new monetary and financial system and the world will start afresh. The adjustment period will be very long and will involve economic and human misery, leading to social unrest and major political change. It will be a horrible experience for the world during this extended period of adjustment. But it will be like a forest fire that clears out the deadwood and creates the conditions for strong new growth. Once the new era starts it will therefore be from a very much lower level and individuals will be rewarded for hard work with little or no social security safety net. Credit will only be granted for sound capital investment projects, not for consumption or speculation. Ethical and moral values will return and the golden calf will not be worshipped. But before that, the period of readjustment will be very long and extremely difficult for the whole world.
Regards,
Egon von Greyerz
Gold Switzerland
Whiskey & Gunpowder
May 24, 2010
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[...] Whiskey & Gunpowder - Yes this is it! We have crossed the Rubicon and events in the world economy are now likely to unfold in a totally uncontrollable fashion. Clueless governments still don’t understand that it is their ruinous actions that have created a credit infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money. The consequences are clear; we will have hyperinflation, economic and human misery as well as social unrest. [...]
[...] Hyperinflation Guaranteed [...]
You have just confirmed what I have been saying was occuring, and I am not even a financier. I really did not expect to spend my last years in this condition.
Good Sir,
From the factual historical record of debt repudiation via inflation, I concur with your analysis that says hyperinflation should follow. However, I offer you a different outcome, based on three facts you may not have considered, which are:
1. DIGITAL CURRENCY HAS REPLACED PAPER.
2. DIGITAL CURRENCY CAN BE REMOVED FROM CIRCULATION AT THE SPEED OF LIGHT!, by the entity that owns and controls the computer where they are “stored”.
3. All central banks own all digital currency in any form, anywhere, and have the right and power to take them back at any time to prevent hyperinflation!
In a prior time like that of the Weimar Republic, the national currency was paper. Today, that is no longer true. There is only about 60 Billion in cash circulating in the US today. Contrast that pitifully small “cash” quantity against the trillions upon trillions of digital currency units in the Stock Market, debt instruments (T bills, Bonds, muni bonds etc.), savings and checking accounts, and other financial derivatives. If you follow me so far, you begin to comprehend where REAL PRICE HYPERINFLATION would come from. And it most certainly will not come from cash!
Any citizen any where in the world, who has a digital account of any kind, could see withdrawal limitations placed on it, or frozen, or taxed, or “erased” at the speed of light by their central bank.
The bank has to power to do this, in order to prevent trillions of digital accounts from being liquidated into cash, or being spent into circulation, thereby causing the hyperinflation you have so eloquently written about.
THREE DIRTY BIG SECRETS ALMOST NO ONE KNOWS!
1. Every central bank is a NON-GOVERNMENT entity that is privately owned and privately managed.
2. The contents of all safe deposit boxes, all bank accounts and all forms of digital currency are the property of the private central bank.
In order to prevent hyperinflation via liquidation of those trillions upon trillions of digital currency units, the private central bank has ALL POWER to regulate, tax, restrict, reduce, even destroy and confiscate at will, any digitally denominated modern “money” account. This includes collapsing the domestic stock market!
FURTHER, IF….the private bank exercises any one, or a combination of all the above “anti-inflation” measures I have outlined, there is NOTHING a citizen can do about it. No citizen has the right to sue the private central bank to recover their losses from such confiscatory actions!
I give evidence of the above statements and reveal No. 3 in an article I am currently writing titled:
THE MOTHER OF ALL INCONVENIENT TRUTHS: AMERICA HAS A KING, AGAIN!
Respectfully Yours,
David Franklin
Yo, Ghost Buster!
Please pass the fondue…
PS.
While others say it will be hyperinflation that will consume us, my research says not so. This time, it IS different! My sense of where the deliberate planned collapse of all this digital currency and debt will take us, is into a world of severe scarcity and draconian restrictions of personal liberty and property, all managed by an elitist class, much the same as it was in George Orwell’s “1984″.
It is time for all good, honest and honorable men, women and children to take to the “lifeboats” that are still empty and available on this “New World Order DIGITAL “TITANTIC”, and row to a shore as safe, as far away and as soon as possible.
And the prudent person’s response should be….?
I’m surprised by the reaction of the Elites. This will effect them, they are cutting their own throats. Can they be so isolated as to think what’s coming will have no effect on them?
Jon I don’t know what to tell you besides go for “Hard Assets”. I’d say get your basics, food, water, security and shelter, anything leftover go metals, land and sustainability and out of debt.
At least that is what I’m doing. I just hope it will be good enough.
Check out the Texas ring they have a few ideas over there and it’s a darn good read. I also like ferfal’s “Surviving in Argentina” and Kellene’s preparednesspro.com. Always good info you can use for the future.
[...] Hyperinflation Guaranteed [...]
and when do they create the land grab scheme whereby the commons can not pay the taxes on their propertys and the “bank” can…..
To David Franklin,
While digital money can be removed from the system, not ALL of it can. Once you let that money out, some of it remains out there. For example, the FED printed digital money to buy toxic assets from banks at their book value which was higher than their actual worth. Currently, the fed owns all kinds of assets, like the Red Roof Inn. But eventually the FED has to sell these assets back to the banks and in doing so, the banks pay for the assets using the digital money they received from the FED in the first place when they got bailed out. The problem is that the banks will be buying those assets back from the FED at MARKET value which is a lot lower than what the FED paid. In doing this, the FED created digital money that it was unable to “suck back in”. There are many other ways that money doesn’t get sucked back in, but you must realize that when the FED buys any piece of junk asset, it will pay more for it than it will ultimately sell it for (otherwise, the FED is just handing a toxic asset right back to the bank and that’s not much of a bail out now is it?) So your theory is WRONG. It makes absolutely no difference what form money is in, only the math matters. In this case, once the FED let’s that Genie out of the bottle, it cannot put all of it back in again -only some of it can be retracted. Monetary inflation is here to stay.
*************************************************************************************
From the factual historical record of debt repudiation via inflation, I concur with your analysis that says hyperinflation should follow. However, I offer you a different outcome, based on three facts you may not have considered, which are:
1. DIGITAL CURRENCY HAS REPLACED PAPER.
2. DIGITAL CURRENCY CAN BE REMOVED FROM CIRCULATION AT THE SPEED OF LIGHT!, by the entity that owns and controls the computer where they are “stored”.
3. All central banks own all digital currency in any form, anywhere, and have the right and power to take them back at any time to prevent hyperinflation!
[...] Hyperinflation Guaranteed [...]
John, I think a prudent person would be trying to second-guess probable government actions. I can envision a price-freeze effort, which will help until the usual shortages appear–which we had in WW II. So, prudence indicates judicious hoarding of daily-needs items. Being all caught up on maintenance of necessary things like cars and refrigerators would guard against availability of repair parts as well as higher costs.
At some point, bartering would begin–which would mean possessing a supply of tradable items. Somewhere in the process, those who have necessary items would take intrinsic-value items in exchange. People have engaged in some form of trade throughout history, regardless of what any ruling group desires.
Ideas about “prepping” are all over the Internet, with varying degrees of rationality. It’s one of those deals where only each individual can make the decisions…
‘Rat
[...] Read more… Crash Dead Ahead [...]
[...] HI: What is hyperinflation and how is the US economy doing? http://bit.ly/9QSFdF hyperinflation http://whiskeyandgunpowder.com.....uaranteed/ Pathology of hyperinflation http://bit.ly/cfHwrI RT @TeaTephi: RT @survival4chicks [...]
Respectfully, I answer as follows:
In the end, only cash remains in existence, because it is some Thing physical (of substance) in Nature. All electronic units can be wiped away with the stroke of a key on a computer keyboard.
My statements are based on FACTS. Therefore, they are not theory and not “wrong”, from the rational, legal standpoint of what constitutes TRUE RISK.
The private central bank does NOT lawfully or legally PAY for or BUY any Thing. Any person, corporate or natural, cannot BUY, PURCHASE or OBTAIN any Thing, or an INTEREST in any Thing, unless there is Real Wealth exchanged on BOTH SIDES of the transaction.
This Free Market principle of what constitutes TRUE CAPITAL i.e., Labor, Resources, human Time of Life is known as RISK! The private central bank risks NOTHING! They RISK NO LABOR and NO RESOURCES of their own, in order to justify their claim of INTEREST in all REAL and PERSONAL property of WE THE PEOPLE.
Typing in mere digits via a computer keyboard onto a blank “balance” sheet (fractional reserve) and placing a dollar sign in front of them does NOT CONSTITUTE RISK of REAL WEALTH or TRUE CAPITAL!
WHAT THE BANK ACTUALLY DID TO CREATE YOUR MORTGAGE
When an individual member of the private central bank issued a “mortgage” for say, 100,000.00, to uninformed citizens, this is what actually happened:
A. They opened a new, BLANK balance sheet on their computer.
B. Gave this sheet a new account number, with the name and personal data of the mortgagee.
B. On the LIABILITY SIDE of the ledger, they typed in the number 100,000.00 and put a dollar sign ($) in front of it.
C. Print an “electronic” check payable to the mortgagee OR opened a new electronic “checking” account in the name of the mortgagee, with the 100,000 NO RISK digits placed into it.
D. Have the mortgagee sign the 30 year, purely “digital” debt bondage mortgage contract, pledging to RISK thirty (30) years of labor (TRUE CAPITAL) to pay back to the bank AT INTEREST, the 100,000 of invisible, untouchable “digits” that required only seconds to type.
E. Then the bank transfers the 100,000 digits to the ASSET side of the ledger, and claims the mortgagee to be an ASSET!
IN PRINCIPLE, this is no different than that of a SLAVE MASTER claiming you, his newly purchased slave, to be an ASSET! With the following exception: In the days of human slavery, slaves were purchased with some form of REAL WEALTH, i.e., gold or silver coins, an exchange of goods, property, etc.
AN “ACID” TEST of what constitutes TRUE RISK!
I duplicate steps A thru E on my computer. It only takes me about thirty (30) minutes of my Time of Life to complete. I disclose to you the step-by-step details of this process of how I created 100,000 units of modern, “digital” purely electronic currency.
QUESTIONS:
Being fully informed of the steps above, will you, the potential mortgagee, now sign the mortgage contract, and pledge to me 30 YEARS OF YOUR HARD LABOR, to gather in and return to me AT INTEREST, multiples of the modern digital “electronic” currency, that only took me thirty (30) minutes to create?
WILL YOU GIVE ME THIRTY (30) YEARS OF YOUR LABOR, FOR ONLY 30 MINUTES OF MINE?
If you answer is “NO!”, then you have proven to yourself and this readership that you comprehend what constitutes TRUE CAPITAL and TRUE RISK!
“A person can live a lifetime in the shadow of an idea, and not comprehend it.” Clara M. Franklin
“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.” John Adams
Most Respectfully Yours,
David Franklin
“But we have reached the point when investors will no longer buy worthless government debt that will never be repaid with real money. ”
Unfortunately, your conclusions are probably right, at least to some nasty degree. But concerning the quote of yours above, what makes where at the point that investors are no long willing to buy govt. debt? The yield on the 10 U.S. Treasary has been going down. Auctions seem to be doing okay. Someone is buying, right? What am I missing that we’ve reached THAT point?
Modern digital “money” only exists on a computer/server somewhere. If you have Modern digital “money” in an electronic account computer, on WHOSE..computer IS IT ON?
If it is not on yours, you do NOT own or control it. Possession is not just nine points of the law, it is eleven points.
If your electronic Modern digital “money” account is on someone else’s computer, it is THEIR PROPERTY! THEY are in possession of it!
Now, just how easy is it for the person who owns that computer to lose, or wipe out those modern digital “money” electronic computer blips that has your name on the account?, and just how long would that take?, a few seconds out of a minute?
The above is NOT theory. It is FACT! Take a deep breath, and think clearly about WHERE…and WHO is in possession of what you
“BELIEVE” to be yours, but is not in fact and in reality.
Respectfully and Sincerely to ALL,
Dave