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The Hyperinflationary Death Watch An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. – Alan Greenspan Every hyperinflation is unique. No one wants the chaos it will bring. We are not rooting for it. Monetary crisis is always part and parcel or a extension of the inevitable cycles of history. The current path will at some point become yet another statistic. Like each currency collapses that has come before it, the next one will be burned into the viscera and the psyche of a generation. It should serve as a warning, though sadly it will likely be forgotten again as the collective memory fades. Here is an excellent summary of the underlying process from the How Fiat Dies blog: Isn’t the U.S. very different from Weimar Germany or Zimbabwe?
The Buffet Paradox Watch as they do, not as they say. Quote from Warren Buffet’s father, Howard Buffet:
The irony is nearly absurd. Warren Buffett and his partner Charlie are the archetypes of the ant-capitalist movement. They are perceived to be the enemies of precious metals. Why does this dynamic duo scorn precious metals? Because they need the system intact. Their survival depends on the mainstream buying it. They are to the mainstream culture, as Goldman Sacs is to their clients. There is no awareness; no punishment for recommending a flawed strategy for your clients that enriches your owners. In essence, this is manipulation gone wild. It is what the bullion banks accomplish with their interventions. They move the price, paint sentiment, induce buying and scoop up the real assets. Buffet is buying physical assets and infrastructure. Energy and transportation to move that energy. Essentially, he is dumping dollars. And it is perfectly rational from the mainstream perspective. Simply follow the money. He is no different than you or I who, instead, dump dollars for hard assets and the infrastructure to store it. Growth is the key, velocity is the myth. Have you ever seen an economy in which it’s so easy to borrow, but so hard to earn? That is the key – the juxtaposition of no growth and low interest rates. It is unsustainable – and as the system fails incrementally, the very medication applied will be increased. We have billions of dollars of corporate buybacks pushing stocks higher. This is a far cry from real growth. The socialization of the U.S. mortgage market – where privately issued mortgages (unbacked by government guarantees) have virtually vanished. The unemployment number farce; if you remove enough potential workers from the count, the unemployment plummets toward zero. Orwell is twitching in his grave. The U.S. economy contracted by 2% in the first quarter of 2014, managing to wipe out $100 billion in economic growth from the initial forecast for Q1 GDP. But what is more compelling is that if one excludes the artificial stimulus to the U.S. economy generated from the Obamacare Q1 taxpayer-subsidized scramble, Q1 GDP would have contracted, not by 1%, but by 2%! All of this comes with good intentions centered on the belief that intervention on this scale will magically lead to an economy that no longer needs extreme manipulations to sustain itself. The monkey’s conclusion after the fish dies is that he should have done more sooner. This echoes all the way up to the most powerful money policy makers, including the infamous Ben Bernanke and his narrow belief that the first Great Depression could have been avoided if more aggressive monetary measures had been implicated. The calm before the storm. Today, we have the spectacle of stagnant wages and rising prices. Currently, we don’t have hyperinflation. We have steady, grinding, and relentless inflation. It’s not the inflation that makes you think of wheelbarrows. It’s the sort of inflation that quietly eats your grandchildren. Growth is the life blood of all organic systems. If an economy is not moving forward, it is dying. Organic growth in this iteration has all but vanished. Short term pain for long term gain is an anathema. Long written off and socialized out of the vernacular. This is the ultimate signal of impending collapse. And it is right in front of us. The next hyperinflation will very quickly become an historic anomaly difficult to relate with. Yet we can see the current experiment evolving right before our eyes. If only we dare to look and take action. 1. To receive early notification for new articles, click here. 2. Or to view all of our products and services and to understand why silver prices fell so far today, click here. 3. Or...support the cause, and buy me a cold one!
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