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Art Cashin On The Coming Hyperinflation

Tyler Durden's picture




 

We present today's thoughts by Art Cashin on the coming hyperinflation (and no, it does not mean very high inflation - it means a complete and total collapse in the monetary system - which is what Ben Bernanke is attempting to achieve), without commentary.

AN ENCORE PRESENTATION

(Today we will revisit one of the most devastating economic events in recorded history.It all began with the efforts of a few, well-intentioned government officials.)

Originally, on this day (-2) in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy. Many months earlier they had decided that what was needed was easier money. Their initial efforts brought little response. So, using the governmental "more is better" theory they simply created more and more money.

But economic stagnation continued and so did the money growth. They kept making money more available. No reaction. Then, suddenly prices began to explode unbelievably (but, perversely, not business activity).

So, on this day government officials decided to bring figures in line with market realities. They devalued the mark. The new value would be 2 billion marks to a dollar. At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar. In simple terms you needed 4.2 marks in order to get one dollar. Now it was 2 billion marks to get one dollar. And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar. In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind. They are too large to grasp in any “real” sense. Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example. “Young man,” he said, “would you like a million dollars?” “I sure would, sir!”, I replied anxiously. “Then just put aside $500 every week for the next 40 years.” I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that’s without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years. And a…..trillion that would require $500 million every week for 40 years. Even with these examples, the enormity is difficult to grasp.

Let’s take a different tack. To understand the incomprehensible scope of the German inflation maybe it’s best to start with something basic….like a loaf of bread. (To keep things simple we’ll substitute dollars and cents in place of marks and pfennigs. You’ll get the picture.) In the middle of 1914, just before the war, a one pound loaf of bread cost 13 cents. Two years later it was 19 cents. Two years more and it sold for 22 cents. By 1919 it was 26 cents. Now the fun begins.

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35. By the middle of 1922 it was $3.50. At the start of 1923 it rocketed to $700 a loaf. Five months later a loaf went for $1200. By September it was $2 million. A month later it was $670 million (wide spread rioting broke out). The next month it hit $3 billion. By mid month it was $100 billion. Then it all collapsed.

Let’s go back to “marks”. In 1913, the total currency of Germany was a grand total of 6 billion marks. In November of 1923 that loaf of bread we just talked about cost 428 billion marks. A kilo of fresh butter cost 6000 billion marks (as you will note that kilo of butter cost 1000 times more than the entire money supply of the nations just 10 years earlier).

How Could This All Happen? – In 1913 Germany had a solid, prosperous, advanced culture and population. Like much of Europe it was a monarchy (under the Kaiser). Then, following the assassination of the Archduke Franz Ferdinand in Sarajevo in 1914, the world moved toward war. Each side was convinced the other would not dare go to war. So, in a global game of chicken they stumbled into the Great War.

The German General Staff thought the war would be short and sweet and that they could finance the costs with the post war reparations that they, as victors, would exact. The war was long. The flower of their manhood was killed or injured. They lost and, thus, it was they who had to pay reparations rather than receive them.

Things did not go badly instantly. Yes, the deficit soared but much of it was borne by foreign and domestic bond buyers. As had been noted by scholars…..“The foreign and domestic public willingly purchased new debt issues when it believed that the government could run future surpluses to offset contemporaneous deficits.” In layman’s English that means foreign bond buyers said – “Hey this is a great nation and this is probably just a speed bump in the economy.” (Can you imagine such a thing happening again?)

When things began to disintegrate, no one dared to take away the punchbowl. They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all communism. So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.

Currencies, Culture And Chaos – If it is difficult to grasp the enormity of the numbers in this tale of hyper-inflation, it is far more difficult to grasp how it destroyed a culture, a nation and, almost, the world.

People’s savings were suddenly worthless. Pensions were meaningless. If you had a 400 mark monthly pension, you went from comfortable to penniless in a matter of months. People demanded to be paid daily so they would not have their wages devalued by a few days passing. Ultimately, they demanded their pay twice daily just to cover changes in trolley fare. People heated their homes by burning money instead of coal. (It was more plentiful and cheaper to get.)

The middle class was destroyed. It was an age of renters, not of home ownership, so thousands became homeless.

But the cultural collapse may have had other more pernicious effects.

Some sociologists note that it was still an era of arranged marriages. Families scrimped and saved for years to build a dowry so that their daughter might marry well. Suddenly, the dowry was worthless – wiped out. And with it was gone all hope of marriage. Girls who had stayed prim and proper awaiting some future Prince Charming now had no hope at all. Social morality began to collapse. The roar of the roaring twenties began to rumble.

All hope and belief in systems, governmental or otherwise, collapsed. With its culture and its economy disintegrating, Germany saw a guy named Hitler begin a ten year effort to come to power by trading on the chaos and street rioting. And then came World War II.

We think it’s best to close this review with a statement from a man whom many consider (probably incorrectly) the father of modern inflation with his endorsement of deficit spending. Here’s what John Maynard Keynes said on the topic:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…..Those to whom the system brings windfalls….become profiteers.

To convert the business man into a profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards.

Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose….By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.

To celebrate have a jagermeister or two at the Pre Fuhrer Lounge and try to explain that for over half a century America's trauma has been depression-era unemployment and deflation while Germany's trauma has been runaway inflation. But drink fast, prices change radically after happy hour. And, tell Fed Chairman Bernanke that it was the “German Experience” that caused many folks to raise an eyebrow when he alluded to the power of the “printing press” a few years ago. But, rest assured that no one would let it happen again.

 

 


Once again, we suggest everyone read The Dying Of Money before it is too late.

 

 

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Wed, 10/13/2010 - 10:58 | 645989 Sudden Debt
Sudden Debt's picture

I've recently bought a lot of 2 and 5 silver Reichmarks and when I looked them up in wiki, I found this interesting text:

[edit] History

The Reichsmark was introduced in 1924 as a permanent replacement for the Papiermark. This was necessary due to the 1920s German inflation which had reached its peak in 1923. The exchange rate between the old Papiermark and the Reichsmark was 1 ?? = 1012 Papiermark (one "trillion" in US English, one "billion" in British English, German and other European languages, see long and short scales). To stabilize the economy and to smooth the transition, the Papiermark was not directly replaced by the Reichsmark, but by the Rentenmark, an interim currency backed by the Deutsche Rentenbank, owning industrial and agricultural real estate assets. The Reichsmark was put on the gold standard at the rate previously used by the Goldmark, with the U.S. dollar worth 4.2 ??.

During the Second World War, Germany established fixed exchange rates between the Reichsmark and the currencies of the occupied and allied countries, often set so as to give the Germans economic benefits. The rates were as follows

http://en.wikipedia.org/wiki/Reichsmark

 

 This puts 4,6 Oz of silver = 1 month average salary

 

SILVER BITCHEZ!!!! BUY SILVER!!

Wed, 10/13/2010 - 13:23 | 646327 Slewburger
Slewburger's picture

As fast as I can. Personally trying to dry up APMEX.com. I've been mildly successful.

In the book, the exchange rate between the mark and the CHF kept changing (daily), and people couldn't figure out why the franc was getting so strong....to the fvcktards here it will probably be the RMB.

Wed, 10/13/2010 - 13:04 | 646558 Blindweb
Blindweb's picture

Interesting.  During the hyperinflation the gold:silver ratio went from 1:16 to 1:160, but apparently that was because there was a fear of communist invasion. 

Wed, 10/13/2010 - 13:40 | 646685 StarvingLion
StarvingLion's picture

The Goldbugs and Austrians are both simpletons who don't understand the system.  Here's why: http://csper.wordpress.com/2010/10/10/debunking-money-volume-1-money-myth-and-machiavelli/#comments

Wed, 10/13/2010 - 13:49 | 646715 tmosley
tmosley's picture

Broad brush you paint with there.

Makes me not want to watch your crap.

Wed, 10/13/2010 - 14:38 | 646874 Punderoso
Punderoso's picture

Funny, the guy in your video is the amateur simpleton who uses stupid strawman arguments against goldbugs and Austrians and cannot even describe what they believe correctly. Obviously, this fool has never read Rothbard or Mises, and looks like he is just regurgitating "Money As Debt" video series with his own personal emphasis that it is all "machiavellian".  The emphasis that it is "private" sounds like more socialist junkfood.  First of all the Federal Reserve is not private, it is a quasi-government entity that essentially acts similar to a cartel in controlling the money supply which has substituted paper currency for constitutional gold or silver currency.  The "private" part is emphasized incorrectly as the problem (as is always done by the socialist to try to mindjob you that a collectivist government/public fiat currency is the solution), rather than the fact that our corrupt government gave the Fed this cartel power with the Federal Reserve Act of 1913. It sure is funny how cartels/monopolies enforced by the government/law like the Federal Reserve do so much damage yet this is never conceived as the problem by this moron.  No the problem is that it is private?  Really, I thought in a free country that is were it should be with the people in a free banking system (read Rothbard), rather than taken away from the people by creating a government backed monopoly that controls the currency and forces us to use it rather than sound money.  A private entity does not have the power to do this, only a corrupt  entity who has partershiped with the government to enforce the monopoly can do this.

Wed, 10/13/2010 - 14:56 | 646924 EscapeKey
EscapeKey's picture

I suggest that guy goes back and re-reads Rothbard.

Wed, 10/13/2010 - 17:26 | 647413 CH1
CH1's picture

When people begin with insults, I seldom read any further. Is it not enough to say, "I think they are mistaken"? Venom more or less invalidates you.

Wed, 10/13/2010 - 14:59 | 646932 StarvingLion
StarvingLion's picture

THE AUSTRIANS ARE COMING...THE AUSTRIANS ARE COMING...Central Banks will abolished and you will be saved!  End Keynesianism now! Hahahaha...Looks like the ZH "Community" is just another grand bunch of dumb suckers fed constant propaganda:

"The Chicago school created Damon’s “monetary vortex,” which exists to claw back all of the wealth that was lost to “socialism” as a result of the Great Depression. When the vortex collapses, as any Ponzi scheme must, the Austrian school is waiting in the wings to blame the vortex on “Keynesianism” (it has already begun, in spite of the fact that Chicago monetarism has been the official policy of the U.S. and the Fed since at least 1975, when Congress issued House Concurrent Resolution 133) and insist on the abolition of central banks and the institution of “free” banking (which manifestly is not free, else they would not have had to market it as such; it simply would have been understood). Adopting the Austrian scheme will ensure that all the ill-gotten gains of the Ponzi scheme are retained by the fraudsters who perpetrated it and provide a monopoly over money that will allow its owners to create economic depressions at will. You don’t actually need a central bank to have a money monopoly. (And don’t think for a moment that the Austrian approach will end financial speculation financed through fractional reserve lending; the financial “innovators” were able to skirt reserve requirements that were adjusted in real time, and they will find it that much easier to avoid reserve requirements that never change.)

Thu, 10/14/2010 - 09:34 | 648929 infotechsailor
infotechsailor's picture

[ adopting the Austrian scheme will ensure that all the ill-gotten gains of the Ponzi scheme are retained by the fraudsters who perpetrated it and provide a monopoly over money that will allow its owners to create economic depressions at will ]

As the Austrians were against the bailout and against Fed intervention (or its existence at all), this begs the question:

Can your analysis possibly be anymore ass-backwards?

Your idiocy reminds me of the guy who tries to make videos "debunking" Peter Schiff with non-sensical commentary and poor editing.  Not surprisingly, the comments and ratingsare disabled.

Their channels are:

CountingTheHours
EnhydraLutris1
SchittReport
SchiffForSenate2012 (nice name)

Judging from the elementary spelling errors, and uneducated commentary, I wouldn't be surprised if these channels are all the same person (perhaps one of Bernanke or Geithner's 12 year old Nephews)

Wed, 10/13/2010 - 11:01 | 646004 SheepDog-One
SheepDog-One's picture

Hyperinflation in what, stocks-food-gasoline, hyperdeflation in everything else?

Wed, 10/13/2010 - 11:18 | 646088 SWRichmond
SWRichmond's picture

All things, including currency-thingies, deflate w.r.t. gold, some more than others.  Things (houses, strip malls) that were recently chased by a lot of fractional-reserve-credit-lending-creating-money-out-of-nowhere will deflate more.  You do the math.

Wed, 10/13/2010 - 11:50 | 646230 B9K9
B9K9's picture

Why is it that no one ever seems to mention the MIC, (peak) oil and their inter-relationship? Can we agree that the absolute number #1 goal of the USA is to maintain our military control of ME oil supplies? If so, then stop.end.of.story; all further discussions must be considered within this context. Ok, now that we have that issue settled, let us move onto the next question: Does a weak(er) dollar or a strong(er) dollar support this mission?

Granted, with a weaker dollar, we could still maintain control, but it would have to be perfomed in a much more brute force, overt manner. That is, we'd have to significantly enlarge our present occupation footprint and rely on a more basic method similar to what the Soviets used in E Europe after WWII. IOW, you and what army are going to make us move?

Our current strategy is a more elegant construct, in that we utilize both a carrot and stick. The carrot being the $USD that offers both utility and value storage. (You can buy a lot of fancy hardware with the $USD.) The stick of course being a carrier task force or two, some drones poised to blast apart yet another "wedding party", etc. Now, when a country has a well established imperial methodology in place, what does it take to alter firmly entrenched national security policies?

That's why I gotta laugh every time I see another rant about the power & influence Bennie, the Fed, Dimon, GS, etc. have over the US government. Sure, it's very powerful, but it's still trumped by the MIC. All monetary/fiscal actions taken to date have been directed towards attempts at re-igniting organic loan growth aka blowing bubbles aka "economic growth". That means saving the banks was merely a means to an end, not the end itself. (The end being national security.)

Let me repeat, there will be no QE and subsequent dollar destruction unless it is deemed as a viable mechanism to support our established military objectives in securing ME oil. If you want to bet against the MIC, be my guest. The MIC will be the last entity standing - the bankers can (and will) go down, entitlements can (and will) be cut, states can (and will) become insolvent & default. But the day the MIC leaves the ME is the day you might as well become a cannibal, because there is literally "no there, there" at that point in the story.

Wed, 10/13/2010 - 11:54 | 646294 SWRichmond
SWRichmond's picture

...but it's still trumped by the MIC.

Nope.  The central bank exists to fund the government so that it can afford welfare AND warfare.  Absent free-flowing money, the MIC dissolves.  What's the first thing any country does when it enters a a war?  Inflate the currency.

Wed, 10/13/2010 - 12:38 | 646458 doolittlegeorge
doolittlegeorge's picture

absolutely.  and with nat gas at rock bottom prices "we're gonna move beyond oil REAL quick."

Wed, 10/13/2010 - 12:09 | 646368 hedgeless_horseman
hedgeless_horseman's picture

What happens to the USD when the KSA et al can sell ALL OF WHAT IS LEFT of their remaining oil to the chi.coms?  Will they still want dollars?

Wed, 10/13/2010 - 12:10 | 646373 BobWatNorCal
BobWatNorCal's picture

"Can we agree that the absolute number #1 goal of the USA is to maintain our military control of ME oil supplies?"
No. Even the US Dem party is reluctantly accepting the need to switch to nuclear. (It will still be a few more years).
At that point, domestic supplies, shale/tarsands, etc will be sufficient for the foreseeable future.

Wed, 10/13/2010 - 14:53 | 646917 Commander Cody
Commander Cody's picture

No. Even the US Dem party is reluctantly accepting the need to switch to nuclear.

If only they backed up their hollow words with deeds.

Wed, 10/13/2010 - 15:14 | 646956 Citxmech
Citxmech's picture

Sorry - can't run the military on nuclear power.  There's a reason our defense complex is the #1 consumer of oil in the world.

Wed, 10/13/2010 - 13:43 | 646692 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Considering that maintaining world hegemony post its brief world hegemony is ill logic, I thank that any try for continued world dominance post peak production would be futile and the greatest mistake.  The US will lose all credibility, and wealth, if a desperate attempt is made for ME oil.  Europe will not have the US' back, as they have their NG pipelines.  Same for China.  It would be the US vs. the world, and it would be the greatest failure.

Wed, 10/13/2010 - 13:45 | 646705 StarvingLion
StarvingLion's picture

Give it up B9K9.  You're buddy Mako is the one-trick pony that is irrelevant.  You, OTOH, are all over the map wailing about.  Folks, I think this guy in the link below is zeroing in much better:

http://csper.wordpress.com/2010/10/10/debunking-money-volume-1-money-myth-and-machiavelli/#comments

Wed, 10/13/2010 - 14:27 | 646840 samsara
samsara's picture

Thank you B9K9,  for focusing on the target like a laser.   I lump writers into two camps,  those who factor Peak Oil and those who don't.   The MIC will trump All.

I saw the same thing with Mako the other day on Kunstler's Bank Shot article.  I wrote;

-------------------------

Mako,  First Love your posts.  But this statement.

 ....liquidated in the future from which a stable platform can be built for rerunning the same scam.

I disagree.  There will be NO running the scam again in ANYWAY similar this one. 

Two words.

Peak Oil.

We are in a Global Depletion of 2% - 4% of energy output for ever from a Petroleum perspective.

This is The END of Growth as Humans have come to know it.

There will be no rebuilding until our Global Pop. is down below 1 billion or so. 

Word of advice, before anyone Junks me,  Read the Robert Hirsch Report, or Spend a couple of months reading the Geological reasons why.  This is IT kids.

Cantarell - In decline

Bergan - In Decline

US - In Decline (since '71)

North Sea - In Decline

Ghawar - In Decline (Most Likely)

And That's ALL SHE WROTE.

No Recovery,  No Rinse and Repeat.

This is THE End Game and THEY know it.

(If you think Peak Oil has anything to do with Financials, Please don't junk, get educated first)

 

Wed, 10/13/2010 - 16:10 | 647171 the rookie cynic
the rookie cynic's picture

Pardon me plugging my own blog, but it seems apropo in light of today's discussion.

http://therookiecynic.wordpress.com/2010/10/03/coming-soon-to-a-neighbor...

Wed, 10/13/2010 - 16:16 | 647190 downrodeo
downrodeo's picture

"There will be no rebuilding until our Global Pop. is down below 1 billion or so."

 

Straight from the Georgia Guide-stones to your eyes. UGH! How unsavory!

Wed, 10/13/2010 - 21:02 | 647979 MurderNeverWasLove
MurderNeverWasLove's picture

This is The END of Growth as Humans have come to know it.

There will be no rebuilding until our Global Pop. is down below 1 billion or so.

That's why I junked you.   Physics are physics and human life is human life.

Kill yourself quick, because you're breathing my son's air.  You've had your chance.  Had your say.  Go die now.  If we're playing the mighty tyrant today, who hath commanded there be but a mere billion of us left by noon tomorrow?

I think climate change is the same scam.  I'm willing to talk and mostly listen about pollution and peak this and that, but no one has any right to price the state of the world in terms of lives.

 Murder Never Was Love

We humans are pretty good at figuring out how to get by and survive, without upstart eugenicists and their death-cult of sustainability.

I say everybody get to loving, because I've never felt there were too many little bundles of joy running around, although there has always seemed to be an infinite ability to shirk our responsibility to those in our human family.

Sure, while energy was cheap, the population skyrocketed.  In the most impoverished coutries high birth rate is a matter of survival as a people.  What would you do?  Just kill them off?  We've always seemed to see fit to let people starve.  Not even clean water, and a little soap.

We were programmed with the lifeboat from early on, and told that if you feed the starving, they'll just reproduce at a higher rate.  But the data has never borne that out.  The fact is that starving, desperate, terrorized people are easy to control, and easier to kill.  Perhaps a billion is some sort of ideal, but we're way past that now, and if half of the world is sick, starving, enslaved, imprisoned, or otherwise helpless or marginalized, then how the hell can we expect them to help everyone take care of each other?

Thu, 10/14/2010 - 03:12 | 648551 chindit13
chindit13's picture

I saw a piece from a think tank in the UK a while back that estimated the Earth can support about 1.6 billion people if petroleum based fertilizers are unavailable.  Don't know who funded the place, nor if they have some other agenda, but it is food for thought.

Sat, 10/16/2010 - 20:30 | 655724 MurderNeverWasLove
MurderNeverWasLove's picture

I don't really doubt that cheap petroleum is the primary driver for most of the growth we've had over the last century, and that includes factors like what you mention.  No doubt we'll continue to adapt as that ride is likely to fizzle out from many pressures, including population growth.  I think we are well on our way to innovating around many of those issues, but I don't count "family planning" or whatever the Chinese call it when they forcibly abort to meet the population goals of the central planners as part of that innovation.

 (++ on Legos comment, below)

Thu, 10/14/2010 - 07:34 | 648680 Justibone
Justibone's picture

I don't want kids, thank you very much.

I don't support anyone else's right to tell *you* not to have them, though, provided you can give them an acceptable upbringing, education, etc.  Also: keep them out of my Star Wars(TM) Legos(TM).

Wed, 10/13/2010 - 16:04 | 647144 lilimarlene1
lilimarlene1's picture

Isn't there a lot of rare earth in Afghanistan?

Wed, 10/13/2010 - 23:25 | 648278 Augustus
Augustus's picture

Why is it that no one ever seems to mention the MIC, (peak) oil and their inter-relationship? Can we agree that the absolute number #1 goal of the USA is to maintain our military control of ME oil supplies? If so, then stop.end.of.story; all further discussions must be considered within this context. Ok, now that we have that issue settled, let us move onto the next question: Does a weak(er) dollar or a strong(er) dollar support this mission?

 

Of course it is not settled.  It is in the interest of the Oil Cartel Members that there are buyers able to access their supply.  How long would ImaDinnerJacket remain in office if he did not have the ready ready from the sale of Iranian oil production?  And if not to the market with the US sucking up a large quantity, what price would he be able to get from the Hatians, who would be glad to take it off his hands if delivered for free.  Why are the oil supply nations interested in constraining the Somali Pirates?  so they can turn their only export product into cash.

Your statement relies upon establishing a false strawman and proceeds to wild claims.

Wed, 10/13/2010 - 12:38 | 646457 Tarheel
Tarheel's picture

Surely our Kenyan President would not allow our currency to be completely debased to the point of a $100 loaf of bread, right?!?!

Wed, 10/13/2010 - 14:48 | 646900 pan-the-ist
pan-the-ist's picture

Surely our WASP president woudn't try to fight two unfunded wars right?!?!

 

Wed, 10/13/2010 - 14:50 | 646905 Popo
Popo's picture

Wages.

It's all about wages.

No wage/price spiral, no inflation.

 

 

Thu, 10/14/2010 - 07:36 | 648682 Justibone
Justibone's picture

If only that were true.

Also, hyperinflation is a completely different animal from mere inflation.

Wed, 10/13/2010 - 11:03 | 646007 BrettFavre
BrettFavre's picture

this is so silly... completely devoid of any logic about how Fiat money works.... kinda like Art Cashin's market calls - LOL !!

Wed, 10/13/2010 - 11:17 | 646082 tmosley
tmosley's picture

He ridicules the man who speaks the truth, and chuckles uneasily to himself.

Wed, 10/13/2010 - 11:24 | 646131 HarryWanger
HarryWanger's picture

I feel the same way about Cashin - he's kind of the drunken old uncle they keep around to tell old stories about the good ole days. What do you expect from a guy who refers to the autumnal equinox for his stock moves. Have another scotch, Art.

Wed, 10/13/2010 - 11:37 | 646206 RockyRacoon
RockyRacoon's picture

Art the Fart has forgotten more about the Market than any of us here know.

Chide the old and infirm -- go ahead.  Just remember that you'll be old some day.

And we won't be good to you then either.

I wish Cashin would take a few of the years he has left and write his memoires.

Wed, 10/13/2010 - 13:36 | 646672 Screwball
Screwball's picture

I have thought the same thing.  Can you imagine what Art and perhaps Mark Haines could put in print?  Imagine what they have witnessed over the years.  I would love to read about it.  Like them or not, they carry a unique, interesting, and incredible story.

Wed, 10/13/2010 - 12:20 | 646406 Spastica Rex
Spastica Rex's picture

I feel the same way about HarryWanger  - he's kind of like the coke-addled nephew they keep around to tell stories about pop culture. What do you expect from a guy who refers to People Magazine for his stock moves. Have some more APPL, Harry.

Wed, 10/13/2010 - 12:39 | 646462 SheepDog-One
SheepDog-One's picture

LOL!

Wed, 10/13/2010 - 13:02 | 646550 What_Me_Worry
What_Me_Worry's picture

+1 rebuttal

Wed, 10/13/2010 - 14:43 | 646889 bada boom
bada boom's picture

"guy who refers to the autumnal equinox for his stock moves"

Who knows Harry, maybe it did work when people use to trade.

Wed, 10/13/2010 - 16:08 | 646895 oddjob
oddjob's picture

Afters years of taking so very,very much...this from Art Cashin means squat.A lifetime Wall street maggott begging for forgiveness is a sickening sight.

Wed, 10/13/2010 - 14:52 | 646911 Popo
Popo's picture

Harry - The bond market feels the same way.   Inflation?  Where?

 

 

 

Thu, 10/14/2010 - 07:38 | 648684 Justibone
Justibone's picture

http://www.shadowstats.com/

Inflation.  There.

Wed, 10/13/2010 - 11:43 | 646238 jdrose1985
jdrose1985's picture

Yeah good luck getting fuel prices to move up and immediately killing the real economy lol eventually the Fed will stop bouncing off the brick wall of world commerce which is becoming less and less profitable the further down we have to drill for oil.

Good luck going off the oil standard and all.

 

Wed, 10/13/2010 - 12:41 | 646473 doolittlegeorge
doolittlegeorge's picture

some folks "have their running shoes on."  the end of oil is the opporutunity of a lifetime.

Wed, 10/13/2010 - 16:32 | 647257 GoinFawr
Wed, 10/13/2010 - 11:03 | 646008 43 Steelie
43 Steelie's picture

How Bernanke isn't walking around with more bodyguards than Obama at this point is beyond me.

Wed, 10/13/2010 - 11:05 | 646016 Mako
Mako's picture

There absolutely nothing that Benny can do, all Benny and the Jets do is convince the lemmings that the Helicopters are coming. 

Hyperinflation is not coming, collapse is coming. 

Wed, 10/13/2010 - 11:10 | 646038 SDRII
SDRII's picture

and the difference is? lol

Wed, 10/13/2010 - 11:13 | 646051 Mako
Mako's picture

Complete difference... matter of fact they mean the opposite. 

The global financial credit system is imploding or collasping, there will be no large expansion of the credit system going forward.

Wed, 10/13/2010 - 12:13 | 646386 hedgeless_horseman
hedgeless_horseman's picture

there will be no large expansion of the credit system going forward.

The Fed will definitely give it a try.  In fact, they already are.

Wed, 10/13/2010 - 12:17 | 646397 LeBalance
LeBalance's picture

Hyperinflation is a political loss of confidence.  The result of Hyperinflation is massive printing.  The result of the massive printing is complete destruction of the credit system via increasing monetary velocity as no one wants to hold the paper after a transaction.

This is basic monetary science.  Basic.

You certainly like to have wars with people, but your basic knowledge needs work.

 

Wed, 10/13/2010 - 17:56 | 647496 RECISION
RECISION's picture

The result of Hyperinflation is massive printing. 

Which is interesting isn't it, because the article stated that they printed and printed and nothing much happened, so they printed some (a lot) more - and then prices started exploding upwards, finally.

Which is exactly the opposite of what you are stating.

If two men claim to be Jesus - one of them must be wrong. 

Thu, 10/14/2010 - 07:46 | 648694 Justibone
Justibone's picture

The article says that what caused the printing to have its disastrous effect was a loss of confidence by bondholders, mostly foreign.  I.e., Weimar printed, the bondholders lost confidence, the total effect of printing kicked in *after* that... then the Weimar gov't kept printing to keep the commies out.

It's like those simulations of dropping individual grains of sand into piles: you never know precisely which grain of sand will lead to a collapse, but areas of high instability can be observed so that pre-conditions for likely collapse are knowable.

It's also not unlike in trading: it's a fool's game to call an exact top or bottom, but even noobs can tell when certain stocks are top-ish or bottom-ish.  So, too, you can say the conditions for instability in sovereign bonds for the U.S. and Japan are both unstable-ish.  If a bond repudiation occurs, goodbye American Dream.

I think it's reasonable to conclude the above.  History rhymes, after all.

Wed, 10/13/2010 - 13:14 | 646593 SheepDog-One
SheepDog-One's picture

The difference is paying higher prices at the store, or having to engage in gunfights at the store....get it?

Wed, 10/13/2010 - 14:17 | 646802 ATM
ATM's picture

Sorry I don't get it. The higher prices lead to higher prices as people race to beat the higher prices. Then the stores will simply stop accepting paper money. Is that when the gunfights break out? Not sure I see that it has to be one or the other, it WILL be both.

Wed, 10/13/2010 - 17:00 | 647344 hbjork1
hbjork1's picture

ATM,

Sorry to use your comment but, historically the situation we (US) are currently in is not analogous to the German situation after WWI.

And any comment to disagree is certainly welcome.

1. Prussia(Primarily German but bordering France) had been an English ally in the defeat of Napoleon. The Germans were beginning to unify, had a colony in South Africa and there was talk of a possible wedding between a Princess of Spain and a Prince from one of the states of Germany (I don't remember the circumstances.).  The balance of power was changing.

2. Napoleon III declared war on Prussia which at that time included Alsace-Lorraine.  Prussia won handily (German support?). The Germans formed their constitutional monarchy under Bismark and were beginning to make inroads in the world markets with their high quality manufactured goods.  They were competing directly with England and France in world markets and that included the colonies of England, France and Italy (Africa). 

3. So what do you do if somebody is trying to take your markets and you don't have the power to directly do something about it.  One solution is enter into treaties  The weaker party agrees to market exclusivity in return for defense by the the stronger's army.  England, France and Italy became allies prior to WWI with defense agreements in other parts of the world.

4. Meanwhile, over in Austria, the Serbs, who were not German, were beginning develop tea parties agitating for an independant Serbian state.  The killing of the Archduke by a crazy guy is well known history. 

One thing lead to another and Germany lost. 

Point is, Germany was not entirely responsible for WWI. 

Germany lost:

A. Most important: Much of the generation of the young men fighting the war.  Very important because they weren't there when crackpot Adolf and his radical Brownshirts were coming to power. 

B. Their market (territory) in Africa.

C. Reparations (money that would have helped in reestablishing their industry)

D. Their previous competitive position in world markets. 

Yes, they may have made similar mistakes in their financial policies but they were subject to a lot of conditions that don't apply to the US at this time.  

Inflation yes.  Catastrophe no.

If anyone is looking for a good read, "Paris 1919" by Margaret Macmillian gives a good picture of the reality of the political problems, the times and the reasons why WWII probably was inevatible.

 

Wed, 10/13/2010 - 11:18 | 646090 tmosley
tmosley's picture

So stupid.  How can you not see that they are the same?

NO-ONE WANTS THE FUCKING HELICOPTERS, YOU BLITHERING MORON.

Wed, 10/13/2010 - 11:30 | 646157 Mako
Mako's picture

No, up and down are the opposite.  If smart is the same as being a retard, you would be smart.

You really should consider getting out of the trailer from time to time, maybe visit the library.  What do you have a double wide, I bet you have been blaming people your whole life for your own failures.

I assure you expanding and contracting will never mean the same thing.

Wed, 10/13/2010 - 12:01 | 646322 Calmyourself
Calmyourself's picture

I am still waiting for a timeline, a description of the collapse, whether it be hyperinflation ( loss of confidence) or hyperdeflationary spiral.  This system is more resilient than I think you give it credit for.  While I agree at some point it will crumble, I think it will crumble, not a fast collapse in either monetary scenario.  If you believe differently I would like to hear your reasoning.

I am taking a quick trip out of the trailer, sitting on the step reading a comic book..

Wed, 10/13/2010 - 12:02 | 646325 Mako
Mako's picture

Japan has been trying to avoid the unavoidable for decades, they will be going through this process for many generations.

Wed, 10/13/2010 - 12:09 | 646366 Calmyourself
Calmyourself's picture

You are getting it now, crumble not collapse..  Of course they have huge demographic problems to contend with..  I may invest in robots to care for the elderly and infirm as the Japanese have no children to do so..

Long robots..

Thu, 10/14/2010 - 07:50 | 648699 Justibone
Justibone's picture

Crumble is more likely than collapse, but collapse is possible.  No one can be credibly certain of the final outcome.

Wed, 10/13/2010 - 12:49 | 646496 doolittlegeorge
doolittlegeorge's picture

the equity market is not.  this ain't "going viral."  this is "going mayhem."  my personal view is the break came with "the Veto" of the bailout of the foreclosure industry but i'm still trying to figure that one out, too.  the real estate industry "is one of those sleepy things that isn't suppose to be a problem."  now every state AG is on board with a crisis that was first reported here.

Wed, 10/13/2010 - 12:08 | 646362 RichardENixon
RichardENixon's picture

Won't the effects be similar?

Wed, 10/13/2010 - 12:08 | 646364 tmosley
tmosley's picture

Yet you still think people want the helicopters.

Expanding paper is not the same as expanding economy.  The economy is contracting, but it never contracts to zero so long as there are people.  Paper can expand to infinite, hence hyperinflation, and and your blithering idiocy.

Wed, 10/13/2010 - 16:44 | 647299 GoinFawr
GoinFawr's picture

Mako, respond to this alone and I might take you a little more seriously:

How is it that any finite set can supercede a potentially infinite one?

FWIW and not that you've noticed: I myself have outlined a possible deflationary scenario in recent comments. However, mine hinges on elitist prestidigitation rather than fallacious mathematical constructs.

Seriously

 

Wed, 10/13/2010 - 13:29 | 646645 macholatte
macholatte's picture

 

will somebody please define "COLLAPSE"

That is the most overused word.

Are you talking a 20% or 30% or 40% or 50% move?

 

Wed, 10/13/2010 - 15:21 | 646994 Citxmech
Citxmech's picture

Tainter [who wrote perhaps the best book on the topic] defines collapse as a period where a complex society "simplifies."

For what that means for us, this poster's definition is about as good as any:

"This is The END of Growth as Humans have come to know it.

There will be no rebuilding until our Global Pop. is down below 1 billion or so."

Wed, 10/13/2010 - 11:06 | 646020 DeltaDawn
DeltaDawn's picture

Defies logic.

Wed, 10/13/2010 - 11:05 | 646014 Cognitive Dissonance
Cognitive Dissonance's picture

We present today's thoughts by Art Cashin on the coming hyperinflation (and no, it does not mean very high inflation - it means a complete and total collapse in the monetary system- which is what Ben Bernanke is attempting to achieve), without commentary.

For some reason Tyler, this understanding is often completely lost here on ZH. Hyper inflation is not just extra helpings of inflation. Period. End of sentence, paragraph and message. Please consume repeatedly until it has been assimilated. 

Wed, 10/13/2010 - 11:07 | 646025 Mako
Mako's picture

Inflation is the increase of the money supply.

Hyper "meaning above, excessive, or beyond".

Whoever thinks there is going to be huge increase in the money supply are in for a rude awakening.

Wed, 10/13/2010 - 11:20 | 646104 SWRichmond
SWRichmond's picture

Shall we once again devolve into arguments about definitions, such as my favorite, "what is money"?

For us mere mortals, hyperinflation means collapse of confidence in fiat money-du-jour.

Get back in your hole.

Wed, 10/13/2010 - 11:31 | 646173 Mako
Mako's picture

"For us mere mortals, hyperinflation means collapse of confidence in fiat money-du-jour."

You meant "you" the stupid person. 

 

Wed, 10/13/2010 - 12:01 | 646314 Cognitive Dissonance
Cognitive Dissonance's picture

Mako,

I see you continue to use your considerable charm and wit to make friends and influence people here on ZH. Keep up the good work.

On the other hand maybe, just maybe, another method might be more effective. Unless, of course, your intent is not to educate and inform but rather to bludgen and bloody as you exercise your internal demons of impotence and powerlessness.

Just a thought from one impotent maniac to another.

Wed, 10/13/2010 - 12:03 | 646330 Mako
Mako's picture

People are free to listen or not listen, just like they had a choice to use common sense or not.... humans continue to avoid common sense as much as possible. 

Wed, 10/13/2010 - 12:31 | 646378 Cognitive Dissonance
Cognitive Dissonance's picture

And I assume the last time you engaged in a categorically stupid act of epic proportions, immediately afterward you welcomed into your home someone to verbally humiliate you over your abject failure to see beyond your nose.

Personally I've found that beating puppies usually loosens their bowels in my lap. But that's just me.

Wed, 10/13/2010 - 16:00 | 647127 equity_momo
equity_momo's picture

CD , to be honest , Mako gets his point across succinctly , and im all for succinct. Its upto the reader to come to his/her own conclusions.

If humans cut the small talk and waffle and got to the facts we might see through the political asswipes that have ruled over us since we were living in caves.

 

Wed, 10/13/2010 - 16:56 | 647330 GoinFawr
GoinFawr's picture

Yah, I don't think 'succinct' is quite the right word for Mako's points: 'Terse', 'dismissive', or 'brusque' at best. But combine those with 'unfounded', 'fallacious', 'unedifying', and backed by nothing more than derision directed at anyone who disagrees with his suppositions and I am afraid he clearly demonstrates that he doesn't have the skill to put together much of an argument.

OT: CogD, you beat puppies? I mean, I'll admit, I've spanked my monkey a few times, but you're at least smokin' a turd in purgatory for that one.

Regards

Thu, 10/14/2010 - 07:53 | 648703 Justibone
Justibone's picture

He doesn't anymore; did you see his comment on the consequences? ;)

Wed, 10/13/2010 - 18:15 | 647560 Geoff-UK
Geoff-UK's picture

I'm with CD--Mako didn't get enough hugs as a child (also, possibly he's not getting enough roughage)...

Diff subject:  is it POSSIBLE there's a psychological aspect to hyperinflation?  As in, regardless of M2 or M3, individuals will consider any FRN to be a hot potato they'll trade for ANYTHING so as not to be holding the bag if things get worse?  So, REACTION to a POTENTIAL hyperinflationary scenario could in fact CAUSE that hyperinflationary scenario?

Thu, 10/14/2010 - 07:55 | 648704 Justibone
Justibone's picture

Hard to say.  I assume there's a large psychological aspect to hyperinflation, it being a crisis of confidence.  Could the fear of hyperinflation actually cause hyperinflation?  No doubt it already has on a small scale, i.e., citizens divesting themselves of FRNs in exchange for gold, food, ammo, etc.  Does it have the potential to do so on a widescale basis?

Hard to say.

Wed, 10/13/2010 - 13:01 | 646544 unum mountaineer
unum mountaineer's picture

ah ha..but sense is not a commonality...it is very rare. very. I've seen people put their own life in danger  or otherwise dangerous, life threatening situations because of a...job. some fun bux..not alot either. to put some funny money in front of self preservation..see it everyday

imo, i think you are either born with or not..sense that is..no tweeners...those that dont have "it" do have a choice..go to school..become real book smart..then run for government office or...aspire to be a money man...a central banker..

 

drug dealers have a very good grasp on scales of economies..they just cant express in terms that Bennie would get...cuz he's been in la-la land all his life.

Wed, 10/13/2010 - 13:17 | 646605 unum mountaineer
unum mountaineer's picture

ah ha..but sense is not a commonality...it is very rare. very. I've seen people put their own life in danger  or otherwise dangerous, life threatening situations because of a...job. some fun bux..not alot either. to put some funny money in front of self preservation..see it everyday

imo, i think you are either born with or not..sense that is..no tweeners...those that dont have "it" do have a choice..go to school..become real book smart..then run for government office or...aspire to be a money man...a central banker..

 

drug dealers have a very good grasp on scales of economies..they just cant express in terms that Bennie would get...cuz he's been in la-la land all his life.

Wed, 10/13/2010 - 11:20 | 646105 Fanatic
Fanatic's picture

How about a huge increase in the velocity of money? That would do the job just as well.

Wed, 10/13/2010 - 23:17 | 648258 animalspirit
animalspirit's picture

Here's an easy one.  

Individuals and small businesses with near-zero balance in their checking make deposits but must wait before they can access the funds -- three to seven days, or more, depending on their bank's "funds availability policy".  

Run that down to immediate (same-day), or overnight availability and money velocity will increase due to this (increasing) segment of the population.

 

And that's just the increase possible by speeding up availability once the check reaches the bank.  PayPal (and Chase's new Quick Deposit, as well as USAA's home scanner-based solution) are getting checks deposited sooner as well:

"We knew that this would be popular, but we had no idea how much pent up demand there was...,"

  http://news.cnet.com/8301-13506_3-20019027-17.html

 

There's no reason that in 2010 bank holds aren't just a matter of hours instead of a number of days.

 

Wed, 10/13/2010 - 11:36 | 646180 Mako
Mako's picture

The idiot pulls out a chart of only one component of the money supply... $1.8T is nothing compared to the system... like a fart in the wind..  That is not the entire money supply, the entire money supply is $52T+, unfortunately for lemmings like you it's not going up.

I love it when people go, you'll need a wheel barrow to go to the store... I laugh... you would show up at the bank with the wheel barrow along with the rest of the trailer trash and not only would the bank not fill it up, they would just lock the doors on you.

 

Wed, 10/13/2010 - 11:46 | 646255 Fanatic
Fanatic's picture

Velocity of money is the key factor.

Wed, 10/13/2010 - 17:08 | 647345 GoinFawr
GoinFawr's picture

Stop confounding Mako with 'key factors', or 'pertinent variables',  they get in the way of his conclusion derived from his alleged 'common' sense, egregiously. (you lemming)

 

Wed, 10/13/2010 - 17:14 | 647379 akak
akak's picture

Is not "mako" a kind of shark, which are fishes with very limited and primitive mental faculties?  Perhaps his choice of name here was more appropriate than he, in his unevolved and strictly instinct-driven thought processes, could have possibly imagined.

Thu, 10/14/2010 - 08:13 | 648721 Justibone
Justibone's picture

Sharks are a lot smarter than the fish they eat.  Great Whites have a special heat exchange bloodflow that keeps their brains several degrees warmer than the water around them.  I don't know specifically how intelligent a mako shark is, but large sharks are generally not considered primitive in terms of mental faculties.

The smartest things in the ocean are probably cephalopods (octupi and squids).  The second smartest are probably cetaceans (whales/dolphins).  Third smartest are probably certain kinds of sharks.

The dumbest are single-celled organisms and sponges, with cnidarians (jellyfish) coming in third on the Ocean's "Geithner List". ;)

Thu, 10/14/2010 - 14:54 | 650118 akak
akak's picture

The dumbest are single-celled organisms and sponges, with cnidarians (jellyfish) coming in third on the Ocean's "Geithner List". ;)

Choice!

Timmay is certainly a sponge, in more ways than one.  He even wears one on his head just to prove the point!

 

Wed, 10/13/2010 - 12:14 | 646388 tmosley
tmosley's picture

Here's a hint: the wheelbarrowfulls of money don't come from the banks.  The banks are closed.  The wheelbarrowfulls of money come from government spending into the economy.

I don't quite understand why you keep calling me "trailer trash".  I'm the manager of a multi-million dollar laboratory.  I've got my name on five patents, three of which are in the market.  What did you ever do, other than claiming that "WE'RE ALL GONNA DIE!" and run around with your hair on fire screaming that there is no way for anyone to survive and that everything will be worth nothing forever and ever and ever?

Wed, 10/13/2010 - 12:52 | 646508 doolittlegeorge
doolittlegeorge's picture

he hung out on street corner and hung a sign on his chest that said "the end of the world is near."  unfortunately for him...he was right.

Wed, 10/13/2010 - 13:59 | 646733 tmosley
tmosley's picture

More like standing in a town beneath a cracking dam with that sign on.  When people ask him how the world is going to end, he says "a flood will destroy the world, there is no way to avoid it".  Some people feel the same way, and build arks to save themselves and thier families (the equivalent of storing food, fuel, ammo, etc).  "Useless" he says.  "Look at how scared they are" he says as he sees people running for the hills.  The smart people are heading for the hills with whatever they can carry (ie buying gold).  Some are already building new homes on the hilltop, others have had homes there for decades, despite always being told how stupid they are, even as the land value kept rising.  They probably won't build in that valley again for at least a generation after the carnage is over.  Some from the town might get lucky and survive when the dam finally breaks, but they will find that real estate on the hill-top is a LOT more expensive than it was before the dam burst.  They might never be able to own land now.  The madman with the "end of the world" sign has certainly drowned, because he failed to take any action to save himself.  The thought himself to death with arguments based on false premises.

Wed, 10/13/2010 - 17:02 | 647352 GoinFawr
GoinFawr's picture

Really, he'll be gone in his 'Apochy' scenario? Well, that is a relief.

Wed, 10/13/2010 - 17:09 | 647353 GoinFawr
GoinFawr's picture

dup.

Wed, 10/13/2010 - 12:28 | 646426 Jean Valjean
Jean Valjean's picture

No the key factor is that money is debt and most of the 52T is debt and that debt is becoming valueless so money is becoming valueless, thus hyperinflation.

Wed, 10/13/2010 - 12:39 | 646460 Deflation
Deflation's picture

You're wrong. The total market credit debt you go on about on the z1 went UP this quarter. Stop lying.

Wed, 10/13/2010 - 11:43 | 646237 Burnbright
Burnbright's picture

Mako you do not need an increase in the money supply to have price inflation or hyperinflation. And the point people keep trying to make is that hyper inflation is not about an increase in the money supply but rather a loss of faith in the currency.

I respect your opinion because you are one of the few people on this site that actually understands that banks do not loan people any money, however you are completely wrong about deflation. We are experiencing deleveraging, not deflation. 

Wed, 10/13/2010 - 11:50 | 646272 jdrose1985
jdrose1985's picture

It doesn't matter, the inflationists are fighting deleveraging in one system (finance) AND deflating energy surpluses simultaneously 

http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply

 

Oil price goes UP economy comes DOWN until prices reflect the ability to pay. The time bomb ticks.

Wed, 10/13/2010 - 16:05 | 647152 equity_momo
equity_momo's picture

Mako you do not need an increase in the money supply to have price inflation or hyperinflation

 

Burnbright , you very much do need an increase in the money supply to have hyperinflation.

Wed, 10/13/2010 - 16:42 | 647294 the rookie cynic
the rookie cynic's picture

There's a lot of confusion about this term - hyperinflation. It means different things to different people.

I don't see it as excessive inflation, although excessive amounts of currency in the system can trigger the actual "complete loss of confidence in the value of the currency." 

Hyperinflation = no faith in the currency

That's how I categorize the term anyway. Anybody have a different view or clarification?

Wed, 10/13/2010 - 18:14 | 647556 equity_momo
equity_momo's picture

Chicken and egg. Too much currency in circulation plus the intent to create too much currency will lead to a loss in faith and thus currency collapse/hyper inflation. But all previous hyperinflations were caused through a hyper increase in the money supply first and foremost and then the confidence loss was self reinforcing. look at the 000000s the weimer , argentinians and zims added to their banknotes.

 

The irony is , as Mako points out , we have a >50 tril system with total outstanding derivative contracts totalling > 600 tril.   Benny B the Banana is not even hitting the gas , he is lifting his foot off the accelerator and still wondering how to slow down this car crash we are living through in super-slow-mo.

Deleveraging/defaulting is deflationary. It will take more than QE2 to ignite velocity. Bens problem is the smart money is ahead of the curve , possibly too far ahead of the curve. 

Wed, 10/13/2010 - 18:32 | 647619 Burnbright
Burnbright's picture

You are wrong, you aren't looking at the big picture. Too much currency is printed in the presence of a debt crisis (deflation) in fear of a purge of malinvestment. The deflation is temporary because loss of jobs is actually neutral in that the loss of wages is offset by the loss of goods and services in a free market. 

Hyperinflation will be caused because of capital destruction by the FED. The FED in along with government will destroy capital production through taxes, regulation, capital controls, and programs like tarp. Enough money already exists in the system. What do think would happen if we lost all our imports and reserves around the globe came flooding back to the US.

Wed, 10/13/2010 - 18:19 | 647569 Burnbright
Burnbright's picture

Burnbright , you very much do need an increase in the money supply to have hyperinflation.

No, a collapse in production and services creates the same effect. It is actually the reason why high unemployment is more likely to lead to hyperinflation and not deflation. 

Wed, 10/13/2010 - 12:06 | 646342 Calmyourself
Calmyourself's picture

Your wrong, vast amounts of printed currency have never created hyperinflation.  The loss of confidence in the currency forces the printing, the cycle then reinforces itself as further loss of confidence causes those with real assets like food to demand more of the increasingly less valuable scrip..

Wed, 10/13/2010 - 12:45 | 646485 SheepDog-One
SheepDog-One's picture

I agree, theyre maxed out on increasing the money supply. And something always left out of these discussions, a lot of people are very pissed off and set to revolt against everything. Now, a lot of people are also morons, but morons were never part of any meaningful revolt. Always about 5% pull those off.

Wed, 10/13/2010 - 14:16 | 646795 merehuman
merehuman's picture

Mako, are you taking into consideration Russia and China circumventing the dollar. China makes deals with S. American countries again avoiding use of the dollar, allowing them to trim their dollar holdings?

Meanwhile i see many countries have been buying dollars  to keep it propped up. Tis more than my head is ready for to say hither and yon might be the way.

Over all there is a mighty contraction. All of us in construction will have no employment for a long time. Thats a lot of money NOT being earned/created

 

 

Wed, 10/13/2010 - 11:14 | 646063 Id fight Gandhi
Id fight Gandhi's picture

People need to be reminded of ghe difference often. We all know inflation, but hyperinflation is a hellish nightmare.

Wed, 10/13/2010 - 11:15 | 646072 Double down
Double down's picture

CD you are very correct.  There is no "translation" between inflation and hyper inflation.  It is not a question of finance, nor of quantities.  It is an understanding, a realization and finally a vote.   

Wed, 10/13/2010 - 11:06 | 646018 DaveyJones
DaveyJones's picture

All hope and belief in systems, governmental or otherwise, collapsed. With its culture and its economy disintegrating, They then saw a guy begin a ten year effort to come to power by trading on the chaos and street rioting. And then came World War III.

Wed, 10/13/2010 - 11:08 | 646030 Cdad
Cdad's picture

Could this be why "Trading on Euronext halted for technical problems."  ?

...and "Unclear when trading will resume."  ?

How about a flash crash?  Anyone?  Anyone?  Bueller?

Wed, 10/13/2010 - 11:06 | 646019 Dixie Normous
Dixie Normous's picture

Forklifts and tractor trailers to do your weekly food shopping.

Here's a visual (what a trillion $ looks like):

http://www.pagetutor.com/trillion/index.html

Wed, 10/13/2010 - 11:11 | 646031 Mako
Mako's picture

You make the false assumptions your store shelves will even have anything on them.  Production will come to a stand still.  Stores will not be jacking up prices, they will just be shutting down... just like the real estate market is shutting down right now.

Wed, 10/13/2010 - 11:11 | 646045 SDRII
SDRII's picture

exactly worth more in the ground

Wed, 10/13/2010 - 11:12 | 646052 DaveyJones
DaveyJones's picture

agree plus that's coming on top of the already oil dependent collapsing industrial agriculture

Wed, 10/13/2010 - 11:14 | 646067 Mako
Mako's picture

All these industries are based on ever expanding credit system, no expanding credit system = collaspe of the industries.  Food is the last to go.

Wed, 10/13/2010 - 11:20 | 646101 FEDbuster
FEDbuster's picture

Got food, bitchez?  (couldn't resist)

Wed, 10/13/2010 - 11:27 | 646153 kridkrid
kridkrid's picture

A very sincere question for you, as I believe I subscribe to your POV.  This isn't the first time this has happened, no?  Is Mad Max a given or just (just... ugh) WWIII as a way to once again, redivide maps and recreate another financial system to mostly benefit the few central bankers.  Having something that you can trade for other things you might want makes sense for the transition, but why the collapse, for example of agriculture... didn't happen with the Great Depression and WWII?

Wed, 10/13/2010 - 11:39 | 646217 Mako
Mako's picture

Negative growth is not going to be fun, how everything plays out is yet to be determined... the unfunded liabilities will have to go.

Wed, 10/13/2010 - 12:06 | 646343 Jean Valjean
Jean Valjean's picture

You didn't answer his question Mako...because it's too logical and your an ignorant asshole.

Wed, 10/13/2010 - 12:38 | 646453 spartan117
spartan117's picture

+1

Mako has lost me as an advocate to his/her position.  It's always 100% complete doom, with no possibility of anything in the middle.  I personally see very bad times coming, but it's not going to be "The Road" or "Mad Max".  Things will be tough, and the standard of living for many westerners will be reduced from current levels - but it will not be the end all unless we have global thermal nuclear war.

Wed, 10/13/2010 - 13:30 | 646650 SheepDog-One
SheepDog-One's picture

Spartan well can YOU gather up the people needed to stop the planned 1 world govt, 1 world currency that 400+ world banks just called for again yesterday? Can you stop the plan thats already been set into motion and is now about 99% complete? What, do you people all actually believe this was all just by CHANCE? LOOK at what is actually happening- planned collapse of the USA economy, roll us into 1 world govt. DUH?

Wed, 10/13/2010 - 14:05 | 646756 tmosley
tmosley's picture

We've had those things for 30+ years.  They are now crumbling.

More centralization will only cause what remains of the system to crumble faster.  Autocracy only works sustainably on very small scales (think feudalism).  The larger it goes from there, the less stable the system.  This is always due to malinvestment.

It seems to me that the system is merely stalling for time at this point.  There will be a gold standard again in our lifetimes.  I wouldn't be surprised to see widespread adoption before the end of the decade.  This should lead to a couple hundred years of prosperity, but only if the leeches can be suppressed by the wealth producers.  

Here's hoping.

Wed, 10/13/2010 - 16:16 | 647193 equity_momo
equity_momo's picture

Hope is dangerous. Talk to Pandora.

Lets get the facts : the globalization movement is relentless. It is aiming for total global feudalism.

You think >6 billion people are not able to be herded into shackles? You are probably right.

You think we have reached peak credit and peak energy (the 2 are not mutually exclusive) ? you are probably right.

The Illuminati know the answer to both these questions.

 

So what happens next? Do the math. Humans are not hotwired to think like this , the will to live is too strong. But unless a game changing paradigm shift occurs soon (something far more important than the online shopping , say new efficient means to energy use or food/water production) then the cancer that is mankind is about to go through some harsh cheamotherapy

Wed, 10/13/2010 - 14:31 | 646787 bada boom
bada boom's picture

Sheep, you mentioned you don't believe they are going to do QE2. 

What better way is there to force America to it knees by devaluing its currency and forcing it to succumb to the 1 world currency.

All under the guise of trying to help the American economy.  Brilliant.

Wed, 10/13/2010 - 11:41 | 646222 SPONGE
SPONGE's picture

Because the elites believe that the human poplution is way too large. The Haig/Kissenger and Rockefeller models have called for 80% to 90% reduction in populations. An agricultural decline, brought to us by Monsato, DuPont and the likes (ethanol from corn, anyone?), I believe, is part of the plan to aquire that goal.

   To answer your question, the elites did not see a need to reduce the world's population in the previous crises.

Wed, 10/13/2010 - 12:06 | 646348 kridkrid
kridkrid's picture

I'm not so sure that is true.  I think the over-population mantra has been around for a long time, no?

Wed, 10/13/2010 - 12:32 | 646437 SPONGE
SPONGE's picture

the mantra, yes. But, i don't think the elite has deemed it to there advantage til now.

   Look at the Gulf Oil Crisis (Corexit) as just one example of toxifying the food production of the whole gulf, adjacent lard areas, and eventually affecting Northern Europe's agriculture through the slowing of the Gulf Stream. Multiply that with any of a number of new events/mishaps, and we've got severe food shortages around the globe, with the strong agricultural countries hoarding their food and stopping exports.

   Could get bad. Starving people are not happy or docile

Wed, 10/13/2010 - 16:00 | 647118 Cathartes Aura
Cathartes Aura's picture

Monsanto haven't created an aluminium resistant seed while the planes spray aluminium, barium & microbes daily on the populations. . . for nought, eh?

this is fact, and should really be factored into everyone's "maths". . .

Wed, 10/13/2010 - 15:31 | 647029 Chappaquiddick
Chappaquiddick's picture

Well there you go - that's the sting in the tail of all of this.  Population collapse.  We've all see the population growth curve but no-one cares to extend this pretty curve a few decades further to what will happen post 'peak population'.  There is no way we can continue to grow as we have - our best efforts would be an orderly retreat - what we'll get is a scramble for the remaining resources and the fact that the US has a military might greater than the next 13 nations in terms of strength and capacity combined, tells me clearly that the US is tooled up looking to fight for its survival.

Maybe this is as good as it ever gets and why we have not met our galactic neighbours - we're all programmed to self destruct before we're able to temper our competitive natures and cooperate to a sustainable future.

Wed, 10/13/2010 - 16:08 | 647155 Cathartes Aura
Cathartes Aura's picture

. . . and when people truly grasp that "US" does not mean "us" - that the survival of the nationstate does not include the inhabitants identifying as patriotic, or whatever, there will be a huge paradigm shift, if only "personal". . .

the military will indeed defend the oil, wherever they choose, because without oil, there IS no military. . . irrespective of which "flag" it chooses to fight under. . .

does "flag of convenience" cause any discomfort?

Wed, 10/13/2010 - 11:57 | 646304 RockyRacoon
RockyRacoon's picture

Wars are popular all around!  They provide production, employment, and the most vital element of population cohesion.   -- NOT --

That won't work out the same as it has in the past.  Something tells me, get ready, it will be different this time.

Wed, 10/13/2010 - 12:04 | 646336 kridkrid
kridkrid's picture

Not the same as in the past... as in no war... instead something else?  Or not the same as in far worse war, or something we would not otherwise accept as possible (nuclear war, for example)?  What do you think?

Wed, 10/13/2010 - 16:07 | 647159 RockyRacoon
RockyRacoon's picture

Sorry to be of no help here.  I don't spend a lot of time thinking about what might be.  I look at the current goings-on and act accordingly.   That's all I'm capable of with the limited time and resources I have.

Wed, 10/13/2010 - 12:45 | 646489 DeltaDawn
DeltaDawn's picture

Kridkrid, what will agriculture's customers (consumers) have to barter with for food? Farmers/processors would accept precious metals, gas, lumber, etc. but not golf clubs, iPods or used clothing.  Most consumers do not hold any forms of true wealth.  

Soon they may prefer the export market, the Saudis can pay in oil contracts/gold.  

Also, most ag. businesses cannot sustain much shock to their cashflow without going out of business. (Bank takes the farm, Chinese buy farm at bank auction).  

Plantable fields do not mean guaranteed food on the plates of all americans. 

Agriculture did not collapse during the Great Depression because the government had the cash to pay farmers to destroy their oversupply, an oversupply due to consumers not having the ability to pay. The government also gave food vouchers and set up soup lines for the consumers so they would not starve. Would modern farmers be willing to take federal reserve notes for their crops? No.  Will they be able to afford fuel when the dollar is in the toilet?

Americans might be fighting over ag. jobs (once held by illegal immigrants) just to get near food.  There is a massive oversupply of labor in our country.

 

 

Wed, 10/13/2010 - 13:41 | 646689 kridkrid
kridkrid's picture

thoughtful response.  Thanks.

Wed, 10/13/2010 - 13:01 | 646545 robobbob
robobbob's picture

People may need food, but other than sun light, it requires large amounts of credit-the basis of the original futures trading. Pay mortgage today, buy seed today, fertilize tomorrow, pay for labor tommorrow, hope for good weather, sell next week. In a choatic environment, how can creditor properly discount future risk. Without functioning credit markets, the process can't get out of the ground.

When people recount the Weimar Republic, they tend to go straight from hyperinflation to Hitler. What has largely been forgotten is that there was a delay of about eight years. After the currency re-issues, the economy recovered fairly well and was attracting strong international investment. It was the dark clouds of post 1929 and the peoples fear of a return of chaos that led to you know who looking like a much more attractive choice. People who ask why anyone would have voted for him have never eaten sawdust biscuits while watching a lifetime of savings and of promised social security benefits disappear-much of it perceived into the hands of investors of a certain minority racial group.

The spectre of Mad Max is the stick that the CBs want everyone to envision so that people will not only accept, but beg them, to implement their "solutions".

Wed, 10/13/2010 - 13:43 | 646694 kridkrid
kridkrid's picture

the last bit is interesting...The spectre of Mad Max is the stick that the CBs want everyone to envision so that people will not only accept, but beg them, to implement their "solutions".  I could see that... it's kind of the military "coup" that I've been thinking about.

Wed, 10/13/2010 - 19:22 | 647776 robobbob
robobbob's picture

for now MM is just a movie and an internet cliche. The TPTB will have to put the REAL in your face FEAR and memories of REAL gnawing STARVATION into people first before their man on a white horse will be accepted.

Wed, 10/13/2010 - 11:26 | 646150 tmosley
tmosley's picture

If production ever ceased, humanity would have gone extinct eons ago.

A house is a liability bought with debt.  Food is not a liability, and is bought with cash.  Same with gold.  

Wed, 10/13/2010 - 13:32 | 646658 SheepDog-One
SheepDog-One's picture

If production ever ceased, all would have ended eons ago? What? Hell food wasnt even being produced as it is today even 50 years ago! Go back to 1930's, a 'store' was a rare thing, most food was grown by people themselves.

Wed, 10/13/2010 - 14:10 | 646774 tmosley
tmosley's picture

Correct, production did not cease.  If the people did not grow food, humanity would have ceased to exist.  Trade continued, even if it was only on a local level.  Stores were most certainly not "rare", save in rural regions with low amounts of labor specialization.  

If money stops having value for an extended period of time, humanity is doomed to a quick death no matter what.  In any other time period, money always has value, contrary to Mako's deathmongering.

Wed, 10/13/2010 - 12:13 | 646385 Calmyourself
Calmyourself's picture

Funny, I picked up an offer on a townhouse today...  Good one too, 50% cash, decent % to list.

JIT will not shut down Mako, it will slow and shelves will have less variety.  Check out FERFAL's Blog on Argentina's issues, you may find it enlightening.

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