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Art Cashin On The Coming Hyperinflation
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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Robot, I couldn't find the "Flag as ADD-Afflicted, Hopelessly Blinkered, Meaninglessly Transient Chart Porn" option, so I had to just flag your post as "Junk" instead.
I'll drink to Wiemar Ben, after all, what could go wrong?
It is simple today....dollar down, market up. And, beware of convertibility of gold, silver, whatever to $$. AS gold rises, it will, stock market rises due to $$ deval, there will come a point where to convert to $$'s make less and less sense because the conversion will be in lower value $$'s. Got it?
So, yes gold etc, until....
Oh and my folks had the hyperinflation exp. It is not fun. Beware of rosey colored glasses wearers.
like it. old gent knows history very well. enjoying reading his work.
being right or making money? it is your own choice.
Actually, *this* is what you get when you let Art loose with a keyboard. CNBS, in true young turks rule the world fashion, marginalizes Art by merely using him as a consistent source of comedic quips in 2-minute floor interest seqments. If that is all you see, then you might try looking a tad deeper...
It will be a sad day on the floor when Art passes. I'd love a compendium of his aphorisms.
Another thing to note.
When credit card companies are breaking out to new, 52-week highs, probably not a good idea to be betting on a financial catastrophe until these groups start showing relative weakness.
Right now, the financials' price action is getting stronger, not weaker.
Save it for your Tweets. This is not the place for random brain farts.
don't forget retailers. from bear massacree to "bear genocide."
'Financials price action' on zero volume lol frothier than a Paris coffee house.
Our resident malfunctioning robot stated:
Yes ---- right now.
RobotTrader, they do have pharmacological treatments for Attention Deficit Disorder now, you know. You might want to investigate some of them. Having more than a five-minute time horizon can be a wonderful and useful thing.
Trading on NYSE Euronext Brussels, Amsterdam and Paris were down for about 35 minutes, then resumed. On resumption the indices moved (up, of course) without any apparent trading activity shown in the underlying stocks (e.g. Arcelor-Mittal, BNP Paribas, KBC Group)... As if indices are programmed. Perhaps just a display issue on my trading platform? (but the official Euronext website did not display trades neither)
A classic cautionary tale-probably lost on our Harvard trained Dear Leader and his minions.
I like this line- "People heated their homes by burning money instead of coal. (It was more plentiful and cheaper to get.)". Kinda makes you go "Hmmm" , doesn't it?
In light of this, China's $2.5T is worth crap.
Has anyone noticed that the 10yr is down?
Would one not expect some movement on trillions in future purchases?
Are the vigilantes riding in already?
talk about "waiting for Godot."
I'd like to think that someone, or some entity, will have the foresight to take away the punchbowl in some meaningful way. However, my two primary fears are:
Perhaps I'm just a simpleton. But I prefer my way over the alternative.
What people are losing by this Benny Boy dollar destruction is "purchasing power", nothing more and nothing less. So your stocks go up, but so are the prices of everything around you, so you haven't made one single dime. You think you have made something, because you have a paper profit, but when you go to spend that money, its worth same as it is now and probably less if this trend keeps going.
Those getting crunched are the ones who have nothing and can't afford anything, since they have no job. All that money people think they are making on the DOW inflation, is going to be taxed to hell and back to pay for those who have nothing.
The only fix is to stop playing in the casino. Quit making these scumbag firms rich, and allowing them to stay employed. Let them hit the bread line and see how they like it.
Study your history books. It provides many answers.
Fed Copies Weimar Hyperinflation
http://www.youtube.com/watch?v=AMY3aJwhfqg
The fed is an arm of an evil group of men who control the global banks
it needs to be shut down
if it is not, total collapse is guaranteed
http://www.youtube.com/watch?v=RRkvg_LuZvk&feature=related
http://www.67riots.rutgers.edu/d_victims.htm
Oh yea the thing about change.
Thanks, Art, for the history lesson. I just put 3 loaves of bread in the freezer. I figure in a year or two I'll sell them for $100 billion each and retire in opulent splendor. Wait! I better diversify: make that 2 loaves of bread and a dozen bagels.
and what are you going to buy with the 100 billion, a loaf of bread?
two fresh loaves of bread!
I'll pay my mortgages! :-)
Good luck finding the title!
Okay, these two comments screwed with my mind.
If we do a hyperinflation scenario, and no one can determine who owns what, no one can pay off anything even in inflated dollars.
Whoa!
Apparently stupidity has not yet left the building....
A ridiculous post. Totally exaggerated. There will not be hyper-inflation, and to say otherwise is utterly delsusional. Our government would never allow such a thing.
Instead, our currency is going to go the way of milk, eggs and other perishables.
See, once QE[_] goes exponential, and we're at QE[10^3], for example, the government will distribute money with an expiration date. It's simply going to "preempt" hyperinflation by baking in...you guessed it, hyperinflation.
On Monday mornings, every American household will receive that week's allotment with an expiration the following Sunday night. The money can be spent, starting at 12:00 p.m. on that Monday.
At 12:01 p.m., the Fed through CNBC will report on inflation. The headline number will scream "Inflation contained at only 2%!"
Nevertheless, there will be a frantic rush to SPEND, SPEND, SPEND...
Every County Square will turn into a trading pit on triple witching day, as money received for one product is immediately spent on some other product...and the economy will be humming along nicely, thank you very much.
Problems of younger adult unemployment will be squashed as they will be employed as "runners". More good news on the economic front!
[Of course, bartering and black marketeering will be punishable by death and violators shot on site. ]
[Government Employees and banking executives will receive a different kind of monetary compensation that you don't need to concern yourself with.]
Variation on a theme, but not an exact replay of prior folly. We'll do it in out own special way. And they will make it look like someone else's fault the way it turned out, etc. We were doing the right thing but Bonzo over there accidently hit the wrong lever and ... aren't we all in the crapper now, huh!? Boo-Hoo! Poor little old mis-understood us!
Considering that most of you look more like Gordon Gekko than Tom Joad its quite easy to stipulate and conjecture about inflation, hyperinflation from your gilded trading floor (or computer screen) when none of the last few years has actually affected your lives. I don't give a rats ass if some of you have lost hundreds of thousands, millions, even just a few grand on this whole shit show...at least you had some to begin with. Given the gains the market has made since the bottom, you swine have probably made off like bandits while us at the bottom continue to be sucked dry by the long attrition. I agree with what you are saying Mako, but drop the trailer park insults. You will be living in one soon (if you are lucky). I guess that's the most disparaging thing about it...you all believe you are in the same class as the elites, because they let you clean the linens after the orgy... Unfortunately you are just members of the outer party and when the victory gin runs dry its only a short drop to the EBT line. (EBT is the modern electronic food stamp for all of you who have never seen one.) lol
HAYDUKE LIVES!
This is getting whacked. I can't decide whether to buy more PMs or buy more food/ammo...
I'm torn on this myself.
Do they make gold bullets?
Personally, I just buy some extra every time I go to the store. I've accumulated two years worth of food this way.
I don't put much stock in ammunition. If you need more than a few thousand rounds outside of practice, then you are doing something wrong.
Read the book, One Second After. Buy the bullets, or better yet the means to melt and refill rounds.
So what about my mortgage? Will I be able to pay it off in the hyperinfalted dollars that are predicted to flood the market? It seems my mortgage debt is a fixed number while the inflationary spiral is not. I should be able to pay off the debt easily if I have other assets that will spiral up in a hyperinflationary scenario. Any thoughts?
Will uncle Sam own it? What do you want to bet he will and he will reverse index it and screw you like he just did the seniors? Pay it off now......
Yes, the indexing is the problem isn't it..
Anybody here have historical knowledge regarding indexing debts to hyperinflationary averages to contain debt value?
Calling all historians....
I'm counting on precisely that. Lets say you bought 500oz of silver at 20 for $10k. Your current mortgage balance is 100k. When silver hits $200 you sell (trade) for $100k and pay off your mortgage. Of course I am not including fees and taxes on the equation or the reduction in principal between now and then, just keeping it simple. So your best bet is to figure how high do you believe silver is going to, buy that much physical for that express purpose and then pay off your mortgage with the sale. Of course, that lump is kept separate from your survival PMs (pre-1964s, etc) and is earmarked for that purpose. I'm also making triple payments on my mortgage and I'm completely out of unsecured debt (Credit Cards, etc) because those have variable interest rates that will skyrocket with inflation (after all, banksters need their bonuses). I also have a year worth of staples in place (gold is not nutritional), basic needs (medical, water filters, etc) and long/hand guns for all family members (Hungry people are angry people) and a plan B in case I need to hit the eject handle. Best case scenario, nothing happens, the economy recovers and I'm sitting on a whole lot of very valuable stuff. I'll eat the food, give the PMs to my kids in 20 years. Worst case scenario.....
Now that is what I am talking about when recommending preparations that keep you safe fed and ready to enter a new paradigm if one comes along successfully. If nothing happens, oh no, house with lots of food and I bought precious metals.. Nice, you are an example many could learn from on this forum.
I am however still hoping we can hear from someone who has historical knowledge of the bankers getting a legislature Bund or otherwise to index debts to a sliding scale to prevent the above scenario of the little guy finally getting a break...
The essence of the problem here is that the US govt is essentially insolvent. The present value of its off balance sheet liabilities, combined with its on balance sheet debt plus its backstopping of the financial sector's losses dwarf the govt's ability to pay for this in the future. Outside of taking a red pen to it all (or to much of it) the government has chosen the path of more debt and print baby print.
The message to everyone out there is to get the hell out of the US dollar because the world is going to be sprinkled (helicoptered) with the stuff like there's no tomorrow. So you buy other currencies, precious metals, commodities, pretty much anything as a hedge against the printathon that Benny is unleashing. The implication for those in the US or those pegged to the US dollar (eg China) is that your are going to start importing inflation in a very big way. Good luck to attracting foreign interest in 2.5% yielding 10 yr bonds in an inflationary environment. Interest rates will go up and if they don't (courtesy of FEd manipulation) then your currency is going to nosedive and inflation will be all the more severe.
This is seriously crazy stuff.
I have heard many people on this site compare America's current condition with that of Weimar Germany, but I don't recall anyone mentioning France's occupation of the Ruhr, I think that was a contributing factor. Also, who brought about Weimar Germany?
Siting hyperinflation in Weimar Germany only proves that hyperinflation is possible, nothing more. When France invades after forcing us to pay reparations and instituting their preferred form of government here I will start to worry.
China our France, but it is not an occupation, rather we drove our industry out of our country and most of it landed there (or the capital shifted there, at least, even if there wasn't a 1:1 correlation between the companies that shut down in the US and those that set up shop over there).
Also, our national debt is our reparations package, except ours is more unpayable than their was, and it's accumulating interest.
It's not occupation....or is it...
http://www.mysanantonio.com/business/local/China_stakes_claim_to_S_Texas_oil_gas_104753969.html
We're already being invaded financially. When we try to poison the well by debauching the currency, our occupiers will not be very happy.
I think this is correct. That hyperinflation is not merely a monetary phenomenon but a political one as well. Hyperinflation will not occur soley by a loss of faith in the currency but it has to be coupled with a loss of faith in the government as a whole.
There are many of us that have lost complete faith in the government at all levels.
Bernanke has no idea what he is up against - he thinks it is is just a credit deleveraging. Wrong, and wrong again.
http://www.youtube.com/watch?v=0pZ2eqEBCVI
Yea Im starting to think Bernanke is in WAY over his head, and daily consulting some economics book for answers. This is all utterly insane, its certainly not an economic course of action. Its just 'survive today, do whatever, to live and figure out what to do another day'.
Gravity v. Bernanke
Inflation in the things you need, deflation in the things you don't need.
Inflation kills savers and the unemployed, and promotes risk taking among the survivors. Deflation kills businesses outright, but frees up money on the sidelines which must then immediately find a use or else it evaporates.
Dead businesses don't hire people, so people become creative. Everyone becomes a risk taker then and the money on the sidelines finds work to do.
A healthy system can survive either inflation or deflation by moving vulnerable savings and hot money into risk thereby rebooting the economy at another level, maybe even retooling the entire machine. However it requires that somewhere is an outside healthy enough to support the new products and buy into the emerging economy. This has been the global experience in the last three centuries, and as a rule it works.
No more.
There is no outside now, not for anyone.
This is why the game is over, chums. Pile on peak-everything (but oil in particular) and you don't even have the bounty of nature to pull from. This is a very bad, very dangerous situation. We find ourselves complacent and lied to and driven like sheep into an end-game to which most bring neither skills nor prior experience, an end-game played on a field of knives and pit-falls and casual death. I doubt any race of people have ever faced a more daunting situation as this, and never before has the entirety of the human race been placed in so narrow and sharp a passage.
We are near 7 billions, choking the planet, consuming everything. We have no where to turn. No place to hide. We have two entrenched enemies we cannot begin to fight; entropy and ourselves.
This is how I see it. If I have seen it clearly then most of us will fail to die as our fore-bearers did -- of benign neglect and old age. I fear that the generations alive today -- old and young -- will largely perish on the battlefield.
Calm down, (rhetorical slap across the face), we are not choking the planet, don't believe everything you read and that means here too..
Entropy applies on a cosmological scale and scale when discussing entropy is everything..
Sir,
One of the ways we separate the wheat from the chaff here on ZH is to look for credibility. You have been posting for around 5 weeks on around 30 articles, most of them over the past 2 weeks. Cougar has been here well north of a year and has posted on over 500 articles.
So may I suggest that rather than slap cougar rhetorically, then finish with a simplistic rhetorical flourish of your own, that you sit in the corner, shut up and listen for a while. Cougar has shown himself to be thoughtful and deeply knowledgeable. While he by his own admision has been wrong in the past, a verbal slap from a punk like you is just a summer breeze until you have gained some ZH credibility.
CD,
I look forward to earning my credibility within ZH but my rhetoric and credibility will stand or fall on its own and my posting time here is independant of that metric. Five years or five weeks writing and two years reading, I will take my chances within this exchange of ideas whether you like how I express my ideas and opinions or not. But thanks for the advice.
You can declare you're credible until the cows come home as long as you live in a vacuum. But if you're going to interact with a group of people, it's the group that determines an individuals credibility. You may agree or disagree with their conclusion, but it doesn't change the groups decision. Just your opinion of the credibility of the group.
Since you decided to come in from the cold after two years (BTW ZH hasn't be around for two years but that's OK) you must value this group or you would not have joined. So what's the game here? Do you think you can add or subtract to the community? Either way, you must be respected or disrespected by the community before either can be accomplished. Thus your credibility is determined by this group with regard to any posting of yours to this group. So your credibility is not independent of the time you have spent posting here, but in fact it is quit dependent.
With respect to this group, your tree doesn't make any noise when it falls unless the group acknowledges it fell. Clearly you are intelligent. So do you mean to tell me you wish to converse with the screamers and shouters, the agenda driven and narrow minded here on ZH? We have plenty here. No, I think you want to converse with the more thoughtful, intelligent and open minded. So that is the group you must approach and influence.
You can't push your way into that group and you know it. You either ask for entry through reasonable and lengthy dialogue or you bark like a junk yard dog around the edges. Sure the groups listens to anyone, at least at first. But conversations are a different matter.
CD,
I never declared my credibility, I did say that I would earn it and I intend to do that. Again, my rhetoric and opinions will from here on out stand on their own and be judged by the group for better or worse. I disagree that the group dynamic is the only determination of worth or credibility as I have seen many posts junked repeatedly that were worthy of attention and introspection by the group. I would refer you to your previous warning to me regarding group think. I have not been reading ZH for two years but I have been awake and reading other sites for longer than two years. My sojourns finally led me to ZH. Thank you for the kind advice.
Entropy wears many masks. Humans -- by being more clever than rust -- are the masters of entropic evolution. We alone learned how to turn the stones into smoke, after all.
Embrace your inner phage.
When the basic fuel within a sun has been exhausted, there is one massive flare up, then an implosion, followed by a massive and all engulfing explosion. The powers that be are engaged in that flare up, ostensibly in order to kick the can down the road. We have been assuming they do so because that's what they do.
Maybe there are other reasons why the world's economic system was set to afterburner and then turbocharged even more when the US took the world off the Gold standard.
Oops, sorry, sounds too much like one of them there theories, doesn't it? Don't go there, just stick to the beaten path because all your answers lay within those narrowly defined confines.
Even contrarians can be guilty of group think.
I respect your positions and enjoy your writing CD, but make no mistake this contrarian is willing to take walks down many different paths and explore honestly and critically many theories. What I am saying to Cougar is relax, there will be time to make self preserving moves in all scenarios if you as I have advocated many times take precautionary steps now. Even the red dwarf end game you lay out above would give us time to take some steps.
I also stick by my assertion that we are not on a macro scale poisoning the planet and would be willing to have that fact based argument with anyone here.
Then you have already been un-done by complexity and scope.
From inside the box things seem to be under control, don't they. You define the problem in a way that determines the answer, you look no further than the edge of the box for data, and the answer is always stay inside the box. You are missing some significant inputs, namely anything operating outside the box. Which is by definition, nearly everything. Including 300 million years of contingent history.
The box will not save you but it will comfort you while the gears turn and make the box smaller and smaller until there is no box. The box takes the contents with it when it goes. Box-logic is therefore a self-limiting problem.
Try making your own theories rather than adopting some one else's. This involves real out of the box thinking, not just against the grain contrarian positions.
Rather than say to me that we are not burning up this planet, explain to me how we are not. Or rather how 7 billion souls on this planet has no effect on the ecosystem. Either we are adding to the system or we are taking away from the system. Of course, one might try to say that we are earth neutral. I'll start anywhere you want.
Okay, don't be in the box, explain to me how the planet is not being burned up, system positive /system negative... Umm, perhaps I opened the wrong door here, you guys just stay in that lotus pose, ummm, ummmm...
I will go over here, backing up very slowly..
Seriously, you want to talk resource depletion, global warming or actual examples of the planet burning great. You can keep your philosophical ideas of in the box out of the box pop psychology for someone who would like to engage in such navel gazing. Maybe we could start by you explaining how the planet is burning up it is your supposition after all..
This response of yours says everything there is to know about you.
Your preachy holier than thou attitude are telling me all I need to know about you. I was polite and tried to engage with you. I get pop philosophy and navel gazing neither of which I am interested or obligated to learn at your knee. I am not sure where your attitude was attained or earned but unless your name is Tyler, I do not have to care. Whether I am too advanced for your take or a neanderthal, it matters not, the free flow of information and opinion continues. Have a nice evening.
What you have described has nothing to do with any Malthusian reality, but rather with its totalitarian imposition by mind control. Hop a daylight flight from LA to DC and look out the window a bit. You'll be lucky if you spot one city. Get it? It's all a lie.....
+1 Malthusian's are obfuscating Luddites
It sure would be nice if it were as simple as horse racing. Mine is better'n your'n can be fun. But I get worried by things on the ground. To quote the farmer (from memory) "They are going to take the last 4 inches of Oklahoma topsoil and fuel their SUVs with it."
It's not just my idea that we are running out of ShitThatMatters (tm) all you have to do is get your head out of your ass for a couple years. Out here, in the real world where things rust, the planet is burned up.
Besides I'm not a Luddite. I'm a biologist. And I do get tired of having to dumb down complexity, but it's called a "tipping point" for a good reason. It is all fine and wonderful and McNuggets for everyone -- until it ain't. People have been bitch-slapped by the end of ShitThatMattered before. They aren't around to tell you about it. It's like when you learn something important about life just in time to have it kill you. Funny how that is. Isn't it.
The last two paragraphs of Alan Greenspan's 1966 article Gold and Economic Freedom:
"
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
Don't fight the Fed(s)! Until they come to take your gold...
Harry and Robo you 2 Hopium heads are really starting to look like a couple of idiots, cheerleading a stock chart like some Yahoo!Finance lemmings...go cheer your stocks while ignoring the dollar collapse. What are you cheering for? 1% in the markets is barely treading water in loss of purchasing power!
BTW Robo hows that 'gold blowtorching' going bwaaaaa up $25 last I looked.
perhaps i should have called it DLG since in the ZH zone we have to expain things "back asswardly."
Makes ya' wonder "what happened in the 2000's" doesn't it? Having said that the point you all keep missing is "our inflation, your problem." We've been "exporting these higher prices" for years now. The equity guys know this and are bidding up prices because "Ben Bernanke is killing the competition." I agree--this cannot go on, but it can be sustained and right now short sellers are getting real world lesson in what "fighting the Fed" can really mean. In short "irony is a bad investing strategy."
The people who SHOULD be 'fighting the FED' right now is the US military, not the shorts.
"Don't fight the Fed(s)!" Until they come to take your gold...
+1
I hope Bernanke, Obama, Geithner, and all the rest are shitting their pants because this is not an economic course of action, this is The Joker economics, hanging on by fingernails and the have no possible answer but implosion and massive civil unrest and revolt.
Why America is going to win the global currency battle
By Martin Wolf
Published: October 12 2010 22:30 | Last updated: October 12 2010 22:30
Currencies dominated this year’s annual meetings of the International Monetary Fund. More precisely, two currencies did: the dollar and the renminbi, the former because it was deemed too weak and the latter because it was deemed too inflexible. But, behind the squabbles, lies a huge challenge: how best to manage the global economic adjustment.
In his foreword to the new World Economic Outlook, Olivier Blanchard, the IMF’s economic counsellor, states: “Achieving a ‘strong, balanced and sustained world recovery’ – to quote from the goal set in Pittsburgh by the G20 – was never going to be easy ... It requires two fundamental and difficult economic rebalancing acts.”
The first is internal rebalancing – a return to reliance on private demand in advanced countries and retrenchment of the fiscal deficits that opened in the crisis. The second is external rebalancing – greater reliance on net exports by the US and some other advanced countries and on domestic demand by some emerging countries, notably China. Unfortunately, concludes, Professor Blanchard, “these two rebalancing acts are taking place too slowly”.
We can consider this rebalancing on two dimensions. First, the erstwhile high-spending, high-deficit advanced countries need to de-leverage their private sectors on the journey to what Mohamed El-Erian of Pimco, the investment company, called “the new normal”, in his Per Jacobsson lecture. Second, the real exchange rates of economies with robust external positions, strong investment opportunities, or both, need to appreciate, while expansion of domestic demand offsets the consequent drag from net exports.
Aggressive monetary policy by reserve-issuing advanced countries, particularly the US, is an element in both processes. The cries of pain now heard around the world, as markets push currencies up against the dollar, partly reflect the uneven impact of US policy. Still more, they reflect the stubborn unwillingness to accept the needed changes, with each capital recipient trying to deflect the unwanted adjustment elsewhere.
To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world.
If you wish to understand how aggressive US policy might become, read a recent speech by William Dudley, president of the Federal Reserve Bank of New York. He notes that “in recent quarters the pace of growth has been disappointing even relative to our modest expectations at the start of the year”. Behind this lies deleveraging by US households, in particular. So what can monetary policy do about it? His answer is that “very low interest rates can help smooth the adjustment process by supporting asset valuations, including making housing more affordable and by allowing some borrowers to reduce debt interest payments. Beyond this ... to the extent that monetary policy can ‘cut off the tail’ of the distribution of potential adverse economic outcomes ... it can help encourage those households and businesses with money to spend to do so”.
Above all, today’s low and falling inflation is potentially calamitous. At worst, the economy might succumb to debt-deflation. US yields and inflation are already following the path of Japan’s in the 1990s (see chart). The Fed wants to stop this trend. That is why another round of quantitative easing seems imminent.
In short, US policymakers will do whatever is required to avoid deflation. Indeed, the Fed will keep going until the US is satisfactorily reflated. What that effort does to the rest of the world is not its concern.
The global consequences are evident: the policy will raise prices of long-term assets and encourage capital to flow into countries with less expansionary monetary policies (such as Switzerland) or higher returns (such as emerging economies). This is what is happening. The Washington-based Institute for International Finance forecasts net inflows of capital from abroad into emerging economies of more than $800bn in 2010 and 2011. It also forecasts massive intervention by recipients of this capital, albeit at a falling rate (see chart).
Recipients of the capital inflow, be they advanced or emerging countries, face uncomfortable choices: let the exchange rate appreciate, so impairing external competitiveness; intervene in currency markets, so accumulating unwanted dollars, threatening domestic monetary stability and impairing external competitiveness; or curb the capital inflow, via taxes and controls. Historically, governments have chosen combinations of all three. That will be the case this time, too.
Naturally, one could imagine an opposite course. Indeed, China objects to the huge US fiscal deficits and unconventional monetary policies. China is also determined to keep inflation down at home and limit the appreciation of its currency. The implication of this policy is clear: adjustments in real exchange rates should occur via falling US domestic prices. China wants to impose a deflationary adjustment on the US, just as Germany is doing to Greece. This is not going to happen. Nor would it be in China’s interest if it did. As a creditor, it would enjoy an increase in the real value of its claims on the US. But US deflation would threaten a world slump.
Prof Blanchard is clearly right: the adjustments ahead are going to be very difficult; and they have also hardly begun. Instead of co-operation on adjustment of exchange rates and the external account, the US is seeking to impose its will, via the printing press. The US is going to win this war, one way or the other: it will either inflate the rest of the world or force their nominal exchange rates up against the dollar. Unfortunately, the impact will also be higgledy piggledy, with the less protected economies (such as Brazil or South Africa) forced to adjust and others, protected by exchange controls (such as China), able to manage the adjustment better.
It would be far better for everybody to seek a co-operative outcome. Maybe the leaders of the group of 20 will even be able to use their “mutual assessment process” to achieve just that. Their November summit in Seoul is the opportunity. Of the need there can be no doubt. Of the will, the doubts are many. In the worst of the crisis, leaders hung together. Now, the Fed is about to hang them all separately.
Uninformed nonsense. The plan is collapse and bring it all up in 1 world govt, 1 world currency. All else is smokin Hopium.
All the banter about hyperinflation appears to me like one thing is getting overlooked; that is the hyper part of hyperinflation which is the time component.
Are we inflating at 1% per year or per month or per day?
Folks are always looking at Weimer for guidance. Look at this:
"After July 1922 the phase of hyperinflation began. All confidence in money vanished and the price index rose faster and faster for fifteen months, outpacing the printing presses which could not run out money as fast as it was depreciating."
"From Mid-1922 to November 1923 hyperinflation raged. The table above tells the story. Seemingly Reichsbank officials believed that the basic trouble was the depreciation of the mark in terms of foreign currencies. In late 1922 they tried to support the mark by purchasing it in the foreign exchange markets. However, since they continued printing new currency at a feverish rate, the attempt failed. They merely succeeded in buying worthless marks in return for valuable gold and foreign exchange."
http://www.usagold.com/germannightmare.html
I'm not saying this article is the 'bible' on Weimer, but it does provide some clues.
It seems to me that the people and power behind the demand for reparations from Germany is of UTMOST importance, since it provides a conceptual framework with which to view Germany and Hitler. Germany did not persecute certain "peoples" for NO reason.
There were many reasons, including the reparations scheme, (and who pushed for the war in the first place from behind the scenes) and the 1933 declaration of economic war against Germany, which can be looked up in NYC Daily Newspapers.
There's a lot more to the story, all of it very interesting. And the "clan" in charge of our monetary system (to nearly the last man) just happen to be from the same tribe.
Blame everything on the Jews!
How about just vaporizing Israel and then it will be all lollipops and candy for everyone. No more crime. No more poverty. No more hatred. Everybody just frolicking down the yellow brick road.
You're a complete ignoramous!
Reading Martin Wolf today on the pink pages.
And I was genuinely shocked.
Although on a intellectual level I have long accepted that these high priests are capable of anything – it is still a shock to listen to a man who is prepared to do anything to preserve the power of himself and his peers and admit it openly.
Jesses cafe American covers this vipers threats today.
So it is ewell known to my friends that I have monstrously inflated ego. So does that mean that the velocity of my words is directly related to deflating my ego?
Hmmm.
I htink I get it!
I think I get it!
So hyperinflationary ego's can be stopped by hlating their velocity. I must tell the missus that there is hope yet
I can't wait for the needle whichs puts a locator beacon in me.
When foretell does that happen?
I've got all the gold and silver I need to feed my family, the only thing is humblle compliance to the masters.
So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.
Nothing new about anxiety induced Little Dick Syndrome...
"Girls who had stayed prim and proper awaiting some future Prince Charming now had no hope at all."
Looks like Art's missing the good (gold?) old days where slaves acted and slaves and the womenfolk were silent chattel.
In the hyperinflation some men sold their wives as whores to get food to eat. Doing that would make you look back on the old days with fondness wouldn't it?
Ah the magical H word.
Its popularity practically a guarantee it won't happen.
How exactly will the induced debt mortgage default collapse of the American financial system produce H?
Repo bitchez...
http://www.sonyclassics.com/insidejob/
Hyperinflation isn't that hard people......All you really need is a parabolic rise in the Velocity of money.....
This occurs when CONFIDENCE gets lost in said currency.
Quite simple stuff really.
This isn't Germany and we aren't going to have Hyper-inflation.
Yes, bluster and blind denial can always make the bad things go away! But it only works if you keep repeating it over and over, while simultaneously yelling "LA LA LA LA LA LA LA LA LA LA LA LA LA!" while holding your fingers in your ears.
By the way, how's the view from down there underneath the sand?
"A month later a loaf of bread was $670 million (wide spread rioting broke out)."
I don't know what is more incredible, the hyperinflation or that Germans waited for a loaf of bread to hit $670 million before rioting.
George .... The Greek .... From Canada
The "system/society" would/will collapse long before we get to real hyperinflation. Whatever honest bank capital exists would be wiped-out causing systemic economic failure - how many mortgages could one pay-off with that loaf of bread? How many fixed-rate loans? There are some good points to such a scenario. But you'll be hunkering down in your basement long before we get there.
The Fed & Co are playing on an economic see-saw; but it's just a matter of time before some crossbred critical mass of angst, anger, ignorance, arrogance, disconnect, impotence, broken marriages and homes, addictions, pollution, over-consumption, road-rage and a general needling of the Id blows the fucking doors off of the whole charade.
But there's opportunity to prove ones humanity; that's the real challenge, imho.
Yes. Pretty amazing from this perspective 90 years later.
How about gold at $35 or $1300. When do you start to riot? Gold at $1500 or $2,000 or when?
They listened to their politicians and read their newspapers and believed that they were stupid and the leadership was smart and would save them. Like "Deer caught in the headlights" or like fish trapped in a net.
I guess we're going to be finding out.
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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