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Charting The Non-Linearity Of Hyperinflation, And Predicting America's Future Courtesy Of Ancient History
A few weeks ago we presented a chart from SocGen's Dylan Grice, which promptly went viral, indicating the ongoing dilution in the Roman silver denarius over the span of two centuries. The comparisons to the purchasing power of the dollar since the inception of the Fed were missed by precisely nobody. Yet one thing that was missing was charting the corresponding reaction in price levels for a key prevailing staple commodity, namely wheat, which was to antiquity what oil is to the world today. Well, courtesy of Paul Mylchreest's latest must read Thunderroad report, prepare to be stunned by another "comparative" chart which does an admirable job at predicting the future courtesy of the past, and which is about to go viral all over again...
From the Thunder Road Report:
Let’s consider the run-up to Rome’s hyperinflation. I think this comment from jaysromanhistory.com “Good Money, Bad Money, and Runaway Inflation” resonates with what’s happening in the US today:
“Severus Alexander (AD 222-235) tried to reform by going back to the denarius but, once started, this path of runaway inflation and financial irresponsibility on the part of the imperial government proved impossible to control.”
It also seems that the hyperinflation was preceded by some kind of banking crisis, which is an interesting parallel. From “Demise and Fall of the Augustan Monetary System” by Koenraad Verboven:
“Papyri show it was common for private individuals to deposit money at a bank and to make and accept payments through bankers.Bankers in the west disappear from view around the middle of the 3rd c… A famous papyrus from Oxyrhynchus from 260 CE shows exchange bankers closing in order to avoid having to change the ‘imperial money’. The strategos ordered the exchange bankers to reopen and accept all genuine coins and warned businessmen to do the same. In 266 CE we find for the first time transactions being expressed in ‘ptolemaeic’ or ‘old silver’ as opposed to ‘new silver’.”
The chart shows how inflation remained relatively subdued until a tipping point was reached in the late- 260s A.D Monetary systems can absorb substantial abuse before there is a dramatic impact on the price level. For example, the debasement of the coinage was already accelerating in the early part of the third century A.D., before plunging in the latter part. Indeed, the chart below (apologies for the quality) only shows the trend up to 253 AD. By around 290 AD, the coins were only dipped in silver to give them a coating (<0.5%):
It is amusing that just like the Imperial decline of the Roman empire in the Common Era was matched by unprecedented fiscal profligacy, we have precisely the same thing now. As to what happens next...
“With few exceptions the Emperors of the third century pursued a policy of wasteful expenditure. Personal extravagance, donatives to the populace at Rome, costly civil and foreign wars, in which a pandering to the greed of the soldiery was a condition of success, had drained the wealth of the provinces…The conception of a national debt was as foreign to the Emperors of the third century as it had been to the statesmen of the Republic. Instead, to give an air of SUPERFICIAL PROSPERITY, resort had been had to a POLICY OF INFLATION (my emphasis).”
“The gold coinage lost all stability and regularity, while the debasement of the silver proceeded till Gallienus flooded the market with a worthless billon. The State had virtually declared itself bankrupt…In consequence PRICES SOARED TO AN ENORMOUS HEIGHT, trade was undermined and speculation flourished. Individual fortunes were lost, and in town and country alike the honest citizen was faced with untold hardships without any prospects of better days to come.”
I wanted to explore the extent and timing of Rome’s hyperinflation in quantitative terms and compare what happened then with what’s happening to prices today.
Inflation data during the Roman Empire is not exactly easy to come by, but there is a remarkably good proxy in my opinion, which is the price of Egyptian wheat. The source I used was the research paper “Another View on an Old Inflation: Environment and Policies in the Roman Empire up to Diocletian’s Price Edict” by the Centre of Planning and Economic Research in Athens. Relying heavily on a multitude of other sources, this paper contains a time series for wheat prices stretching from 18 B.C. to 301 A.D.
It’s important to explain why Egyptian wheat prices serve as a good proxy for inflation across the Roman Empire. In very succinct terms, it was probably best expressed by Lionel Casson in “The Role of the State in Rome’s Grain Trade”:
“Grain was to antiquity what oil is to the world today”
It’s worth making three more detailed observations with regard to the role of wheat in the Roman economy. Firstly, agriculture was overwhelmingly the dominant sector in the economy. Here is Paul Erdkamp from “The Grain Market in the Roman Empire – A Social, Political and Economic Study”:
“agriculture was by far the predominant sector within the economy, and in both the Roman world and early modern Europe, agriculture was dominated by the cultivation of grain…It is a commonplace that in antiquity about 80 per cent of the population were engaged in agriculture, leaving only 20 per cent for all other sectors of the economy.”
Secondly, the importance of wheat to both the agricultural sector and the economy of the Roman Empire as a whole. In “Price behaviour in the Roman Empire”, Peter Temin argued:
“Wheat is a good index of inflation because its quality does not vary much over time and it forms a large part of ordinary diets.”
And this from Wikipedia:
“The staple crop grown was wheat, and bread was the mainstay of every Roman table.”
Thirdly, Egypt was at times the largest supplier of wheat to Rome, although other important regions included North Africa and Sicily. According to Wikpedia:
“Egypt was also important in providing wheat to Rome. Normally, shipments of Egyptian wheat may have amounted to 20 million modii or more annually. This number can be found in the Epitome de Caesaribus. Twenty million modii of wheat was enough for half or two thirds of Rome.”
Having established Egyptian wheat as the best proxy we have for price levels in the Roman Empire, the chart below shows the price from 18 B.C. to 301 A.D.:
The largely predictable conclusion:
The point I’m trying to emphasize is that the relationship between the debasement of the coinage and price levels is non-linear. A monetary system can be abused for a long period, but not indefinitely. A tipping point is reached when CONFIDENCE in the value of the currency collapses, leading to a surge in inflation – hyperinflation in this case.
The corollary with today’s financial system is that the quantity theory of money is not linear either. However, the abuses are piling up in obscene fashion and we are approaching the tipping point. Today the “path of runaway inflation and fiscal irresponsibility” incorporates all manner of abuses like trillion dollar deficits, bank bailouts, near zero interest rates and Q1, QE2…!
In the next chart, I overlaid the price level for the last 223 years, i.e. 1814-2010, over the price level in the Roman Empire in a way that gave me the best fit. Please note – the price level for the last 223 years uses data for Britain from 1788-1843 and from the US from 1844-2010 – hence the term “Anglo-US 1788-2010” in the chart below.
Pretty much says it all.
Full must read Paul Mylchreest report below:
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Got To Love The Fed!
Pulling one from the "Augustan Monetary" playbook I see...well played Ben...well played!
Ways to tell if your dollar crash is for real:
That sounds very plausible.
Posted this before in a link storm, but rather appropriate for the article:
Published 28th May, 2011
"Actual trade was very thin, but it was all that was needed to push prices up by over €30 per tonne," Stuart Shand, Gleadell Agriculture's sales director said. "Prices are now at record highs for the 2011 crop, although the price at any point in time is difficult to say with very few trades being done anywhere in the EU."
At the time of writing, he said growers could still make well over £200/t ex-farm for 2012 crop spring barley and "substantially more" for their 2011 crop. This was because the unprecedented premiums were expected to encourage more malting barley plantings throughout the world this coming autumn and next spring, he said.
"UK maltsters have not entered the market as they know that there is little point as sellers have all but disappeared due to the concerns over expected yield. Growers and the trade are waiting to see what the drought-affected crops will produce before they commit any more tonnes," Mr Shand added.
"So while there is more volatility in the market, there are also bigger rewards for good growers."
http://www.fwi.co.uk/Articles/2011/05/28/127063/Barley-prices-pushed-to-...
To my eye, that looks remarkably like what is happening on the money markets - now, is this a result of CCOs modeling the agri-market into their shape, or general dismal reality which we constantly deny, or something else?
For a quick comparison from Jan 2010:
Many growers may opt to leave land fallow rather than drill "blind", having incurred heavy losses on last year's crop. Prices of around £80/t on the spot market and growing costs of £120-plus/t have left growers more than £40/t out of pocket...Mr Chalmers welcomed the structure of the Diageo contract, which offered growers flexibility on the varieties to be grown and a measure of control over price. The contract gives growers a premium of £20/t over the November wheat futures price - the first time wheat has been used as the basis of a malting contract - and allows growers to lock-in at a time of their own choice, but before August 15.
http://www.fwi.co.uk/Articles/2010/01/25/119692/Malting-barley-too-risky...
Not my area at all, but I'd be interested to know the causal links between the farmer's end and the top CCOs etc. That's information that might be very interesting, especially as these new contracts are setting precedents.
So who's tough enough to have their body constantly attacked by fukishima radiation on no food? I don't think we're gonna make it boys.
The EPA stopped testing in first week of April will resume testing of milk, water in August sometime. Why the government is the protector of the people and don't you think the President, Barak Hussein Obama, the first Mulatto president of the US, and the Governors of all the states would be telling you if it was dangerous?
Relax the government is in charge and knows best.
Get rid of those safe incandescent lightbulbs and get those new government mandated carcinogenic ones.
yes, the origins of your middle name and skin pigment are the only causation factors related to honesty.
If inflation is old as money, and it is, can anyone explain to me why the U.S. treasury 10 year is down to a 3% yield-- which incidently is below today's real inflation rate, let alone future inflation expectations?
It's the dumbest investment of all time yet it continues to work.
Doubling Down To (DXY) Zero: Has The Fed, In Its Stealthy Synthetic Bet To Keep Long-Term Yields Low, Become The Next AIG?
And answer: Yes. In fact, though my thoughts were a bit rhetorical, that stellar article and investigative work by ZH was on my mind when I posted--that is the kind of data that will continue to make ZH rise in popularity and beyond the (hyper) inflationary pace we're on.
But, yes, aside from the massive amount of stupidity and shameless shills, it really is the only explanation that makes any sense whatsoever.
To get caught long the 10y or 20y or 30y is, unlike Gross but cueing Taleb, is the definition of suicide. BTW, it's always an honor. Thx for reply.
"Of course, Ben has the printing press on his side apologists will claim. Alas, that will have no impact whatsoever, if indeed the Fed has been reduced to finding ever fewer counterparties to a synthetic bet to keep long-term rates low, as very soon, with inflation ticking up, all hell may break loose in an identical replay of what happened to AIG once the Fed's put is called against it. Only this time there will be nobody to bail out the ultimate backstopper, resulting in the long overdue end of the current failed monetary system experiment."
- one of my favorite lines of all time
Respectfully, what I think you are missing is the Fed never has a margin call it can't cover. Folks, this is not the Bank of England, which can be "broken" by a silly little hedge fund. This is a bottomless pit of liquidity. They don't need to make a profit. They don't need to EVER sell off thier assets. And most importantly, they never run out of reserves.
When you understand that you'll stop this nonsense of the system breaking because the Fed has to liquidate some day.
This is a new Fed that ain't playin by the old rules. Manipulating any market is the new rule book. They may break the middle class, and they may (or likely will) break the buck. But they will never let the banks or themselves fail.
On the other hand Tyler...since the Fed sucks so bad could this be the trade that ends up blowing them out of the water?
Ron Paul says none of this talk of Debt, Deficits, Entitlements, Health Reform, etc. matters at this point because within the next few years (probably before the elections next fall) we will have another financial crisis when the FED destroys the dollar. Consequently, this will be what brings down (ENDS) the Federal Reserve System.
Ron Paul CNBC 05/31/11
http://www.youtube.com/watch?v=dDL0sYnhEaM
I know a ton of people here are millionaries several times over and benefit from all the Benocide going on throughout the world. I am here to tell you, people are really hurting (people I know personally). A simple 10 cent increase in fuel cost really wreaks havoc on household budgets.
There is no 'care' left in this so called caring society.
Case in point, Ron Paul tried very hard to modify/tone down the Patriot Act before its Senate vote on Friday May 27.
The corporatocracy captured government passed the 4 year extension of the Act and was signed by Obama - electronically while he's in Europe!
Another 4 years. May 27th, 2015. Dancing at the TJ memorial and other sites now declared illegal/against the law. Watch for further "laws" enacted for our own "protection." Protection from whom or what?
Loss of civil liberties are proceeding at an exponential rate. Make no mistake. Those "brown shirts" in the employ of the "establishment" will fire upon their own fellow citizens. Happening all around the world at the moment. Why would we be different? Those that say the military won't, are in a dreamland of their own choosing.
That "hurt" of which you speak, will manifest itself physically when push comes to shove. Those dark clouds of rebellion are now visible on the not so far away horizon.
'captured' is an absolutely perfect description for our fascist parasitical overlords
When people ask me why I lean libertarian and support the likes of Ron Paul, Jesse Ventura, Gary Johnson, etc, I proclaim, "I want my liberty back".
People don't even realize the very foundation upon which our Republic was created- Individual Liberty.
Mitt Romney and Barack Obama's prescription for America involves more fascism via global debt enslavement, endless military expansion, inflation and complete erosion of civil liberties.
Here is a real gem. Mitt Romney loves the Federal Reserve and scoffs at a liberty loving citizen who simply wants more transparency from the central bank
http://www.youtube.com/watch?v=CCcbkHKCdxI
Hurting so bad they still get cable.....
it's all relative my friend.
I've posted a little on this before but it bears repeating:
The emperors were responsible for the food. Ex: Pompey secured the grain for Rome. Of Nero: "...the public banquets were confined to a distribution of food; the sale of any kind of cooked viands in the taverns was forbidden, with the exception of pulse and vegetables, whereas before every sort of dainty was exposed for sale." (Suetonius, _12 Caesars_, Nero)
Which leads to Vespasian: "...Amidst the joy of this success, while everything was prosperous beyond his hopes, tidings of the victory of Cremona reached Vespasian in Aegypt. This made him hasten his advance to Alexandria, for, now that the army of Vitellius was shattered, he sought to apply the pressure of famine to the capital, which is always dependent on foreign supplies." (Tacitus, _Histories_, Book 3)
The end of the Julio-Claudians gave rise to the Flavians and you can read _Acts of the Apostles_ as a symbolic mini-history of the events leading up to this. The Apostles,uhh, Legions are tired of waiting tables. They want to "Minister the Word" - that's what Legions did. The Caesars were in charge of the grain and you can find the identity of these in the list given in chapter 6. The list ends with "Nicholas, hero of Antioch". Who was hero of Antioch? Octavian, aka Caesar Augustus.
What the Romans got was a new line of emperors. What we got was a new religion. It took 200 years to debase the currency. But it was always the grain that provided the base.
CW
The whole building of the Roman empire was a Ponzi. Grain is only one way to measure the Ponzi.
Ponzi work well until they no longer.
This was all preventable but when the avenues of information are controlled by those who create the problems, well, that is why at this LATE DATE, at least ZH and the TD Group are exposing the swine for what they are, only can wonder if there is any time left to undo it, to defeat them. You have no choice, either continue to submit and DIE, or RESIST.
Yet while Americans slept some special interests were looting their wallets through government manipulation,$3 Trillion
on Tue, 05/31/2011 - 12:05
#1325594
Yet while Americans slept some special interests were looting their wallets through government manipulation,$3 Trillion
**************************************************************
ARE YOU STONED, DEAF and / or STUPID!!!???
http://goo.gl/FnxBZ Treasury Direct $14 Trillion Debt
http://goo.gl/TMl74 $15 Trillion in Loans
http://goo.gl/EXzal / ='s $29T
http://research.stlouisfed.org/fred2/series/BASE 3 Years 300% More Dollars Printed Out of Thin Air!
in 3 years.. NOT! including TARP / TALF / FED SWAP Windows.. and / or any other.. than what is sourced and sited above..
$18 Trillion in 3 years! $18 TRILLION! not $3 Trillion you fucking Idiot!
Skying Treasuries today sending REITs to 52-week highs today. SPG and VNO the strongest on the charts.
Bond vigilantes are nowhere to be found.
The bond vigilantes have been neutered by the Fed, who now is THE "market" for US bonds. Which you would acknowledge, RoboQuisling, if you had any trace of honesty or integrity.
I shall henceforth ease my compact always to comment when junking -- in your case only.
"The abuses are piling up in obscene fashion."
The United Police States of the American Empire. UPSAE
Chief abuse - loss of civil liberties. Enforced by an ever growing 'thug' based police force, aided by 'dumbed down' citizens.
Against the law to dance in the presents of Thomas Jefferson at his memorial in DC? He is now rolling in his grave!
America! Wake up! Fight back now before its too late.
Yep. Revelation had what's coming covered.
ECONOMIC THREAT LEVEL
Harmonious. :)
Content. ;)
Indifferent. :-
Discontent. :/
Almost fucked. :( --------- YOU ARE HERE --------
Totally fucked. :0
I prefer two dimensional maps to scales. http://s3.amazonaws.com/kym-assets/photos/images/original/000/127/202/ra...
I'd say we're somewhere right around "Do not want".
Finally a metric i can understand!
the academic inflation argument. I think we're headed for another downturn and a devaluation on all asset classes. "Asset stripping first by inflation, then by deflation." Central wankin' bankers will not allow a hyperinflationary event. They will run up the national debt as far as they can, then burn it out (scene from goodfellas) in the form of a depression, allowing the bankers to own everything. Afterwards relying on the patriotic americans to "pay their debt" even though a bunch of that money went overseas.
As Trav regularly points out here on ZH, the thieving usurers that run the world economy dependent upon endless debt in order to facilate interest payments to themselves.
This is why debt deflation is NOT being allowed anywhere in the world at all costs. Greece is bleeding at the seems and continues to worse, yet more bailouts, more printing and more guarenteees.
Dear Tyler--is there any way to clarify the first chart it is blurry...thank you!!!
While all bets are on the table, given our government will continue its expenditures orgy, I wouldn't count on the hyperinflation just yet. The reason, those are usually forced by high level of external debt vs total outstanding debt, or war like activity mixed in with the loss of confidence.
However what is coming might be as grave if not worse. It is a prolonged so called Financial Repression where government uses monetary tools to scale down its debt through artificially low interest rates, under-reported inflation and some mechanisms forcing ether banks or regular investors to invest in the government debt with returns not covering the rise in prices. In contrast with hyperinflation, it seems less painful however such a mechanism (SCAM) lasts for DECADES instead of lasting for a few years, the way the usual hyperinflation event lasts.
And the result of such a policy is pretty clear - a hidden tax that will lower government obligations which will be done by repressing and lowering well being of the average citizen over very long period of time.
You forgot to note that the Governments tax reseipts will also decrease therefore compounding the Government method of confiscation.
let me get my magnifying glass
Independent markets can be formed around any useful commodity. Something fungible and valuable can be kept on account using out of the box POS software. All that remains is to establish comparative values which is easy enough to crowdsource.
Consider that barter markets are the most prevalent on Earth. Currency markets are barter markets. Currency rates are ratios representing relative values of barter pairs. Easy to immagine an operation analogous to kelly blue book to creating lists of barter pairs, like salt : microwave or wheat : labor.
h-h-he said oxyrhynchus...
i think it is an interesting story of "archeology"---2 guys hiring workers to dig thru a big garbage heap in the Sahara, with OPM, no less: POxy Oxyrhynchus Online is the short version, part of the long version.
Paul Mylchreest, here, takes us about to the point that emperor constantine converted and the christian cult or cults became religio licita: legal. 313ad, ce, whatever. big changes, all around.
holy roman BiCheZ.
Et tu, Bernank?
They forgot Hadrin's (Spelling?) Wall that managed the flow of Commerce at the end of the Empire's Territory.
The Egyptians had a gauge in the Nile that they checked regularly. A certain amount of water in a month of a given year will tell them if there is sufficient for a good future wheat harvest. Otherwise, they had early warning of Drought.
There is a great difference between the Romans then and USA today. That difference lies in the Crops we are harvesting ourselves and the Ammunition/Preparations for difficult times that lie ahead. Some of which have carried us through the recent storms already. A week without electricity was not a issue.
Excellent article. Well done on connecting the Egyptian wheat data.
If the human race could just embrace 'history as a wheel' and know that we are doomed to make a mess of things, maybe we would embrace vigilance..
If you ask me BitCoin is doing just that (did not hit 'reply' to the comment on CCI being changed to Currency Confidence Index) . 1000% increase in value per coin over 14 months? Like watching Silver in the end of April -- EVERYDAY (okay maybe mostly just this last month+).
P2P w/no central bank and it is all regulated through open source.
Why no one here is bonkers for it is beyond me.
This June - when the CIA and the operators of BitCoin meet - will be VERY interesting. They are still trying to stop the Napster/BitTorrent crowd - either the internet will be shut down OR things will get even more interesting.
I'm bonkers for BitCoin. What is this about a meeting with the CIA?
BitCoins have the kleptocracy protection of PMs, and they are highly divisible and a lot easier to stuff through an ethernet cable. The number of coins is mathematically capped at 21 million. Figure in population increase and loss of coins due to shattered hard drives, etc. and this will be a deflationary currency. Good for saving, certainly much better than bonds. I wouldn't be shocked to see a $21 trillion Bitcoin market emerge if the kleptocracy gets really bad. That means an exchange rate of $1m per Bitcoin (currently $9 per BitCoin). So even though BitCoin is up 3000x since the first recorded PayPal trades in April 2010, it could easily run up by another multiple of 3000.
https://www.bitcoinmarket.com/market/tools/
There were many blocks of 10,000 that traded back in the good 'ol days. I have only a small fraction of that because I bought in last month, but there are probably hordes of crypto-anarchist geeks out there who will ultimately be worth billions of clownbux. The ones closest to the nerve center will be the richest and they will also hate the system the most.
Now, imagine what will happen after the inevitable hyperinflation, food riots and brutal crackdown. The government will have lost all legitimacy in the eyes of the people, and everyone will be looking around to see who throws the first Molotov. Enter BitCoin. It's just a matter of time until someone posts a YouTube video of a flaming cop car while holding a poster of their BitCoin address. Only shutting down the internet will stop the distributed anarchist horde from donating. Word will spread. Crimminals will target the powerful instead of the middle class. Eventually the going rate might be .01 BTC per flaming cop car, .1 BTC per flaming cop, 1 BTC per flaming federal building, 100 BTC for a Rothschild dosed with scopolamine and mindfucked into spilling all his dark secrets before he is eaten alive by maggots. Even this would only be a drop in the horde's ocean of buying power. I think we are going to have a lot of cypherpunks living in Dubai penthouses surrounded by hookers but wanking to the increasingly creative homebrew snuff porn they finance. Their combined mayhem fund might even exceed the Rothschilds' mayhem fund.
Project Mayhem is coming. This is the will of Eris, who always knows the one action which will turn any situation into a total clusterfuck. She will be an important ally in the coming years.
anyone know if Benanke plays the violin ?
Excellent post, many thanks for this eyeopening exposé.
Hello. This is your guy (text copied directly from his website). Actually, take a look at the site -- he seems to be more than a little bit nuts.....
In September, 1999, Martin was accused of securities fraud stemming from wild and unfounded allegations related to his business in Japan. After spending nearly seven years in civil contempt without a criminal trial Martin resolved his legal case with the US government in August 2006, but was not released from federal prison until March 2011. There are many more details about Martin’s legal case, and over time this web site will provide more information for your reference.
While in confinement, Martin Armstrong continued researching the world economy and typing reports on an old-fashioned typewriter with no access to a computer, Internet or email.
Martin Armstrong is now released under home confinement, where he plans to continue his research and publications.
Test
Fail
I want to appologize for some of my previous comments.
Found my meds over the weekend.
howling!
*Tips hat*
nice. this site (and a few others) are my meds. I can't look at a newspaper or broadcast news without a desperate need for pills
hate sin not sinners.
Gunslinger,
Funny how the lack of your meds made you incredibly lucid and eloquent in defense of the financial and political status-quo powers, and equally hostile towards those thoughts, those concepts, those individuals, and those movements that directly challenged that corrupt and sociopathic power elite. That was one mighty selective mental illness, I must say!
Taking too much Corruptol with a dose of Greedquil
counteracts sanity to an extreme degree! Induce vomiting and seek medical attention immediately! :>D
We will know the end is near in the US when the citizens have their chariot races (Nascar) and their gladiator battles (NFL) both cancelled.
hah, won't happen. They'll have their games as everything crumbles. You keep the proles occupied and you'll be spared the sheer force of their ignorant aggression that stems from taking away the teat.
The world doesn't have to be this way, but I don't think people will ever realize it. We're such a flawed species.
Gold standard = gold flows one way. Stop chaining gold to currency; set gold free. Freegold.
Hurp a durp. You think gold only flowed OUT of national treasuries under a gold standard? You think gold can't just be used as currency as is, with no government interference?
Freegold collapses immediately to a gold standard. Period.
Which way did gold flow? If it wasn't only one way why was the window closed? 20000 tons to 8000 in how many years? Why is your mind closed?
SURPRISE! That wasn't a gold standard. That was a gold exchange standard. If you can't tell the difference, then you are not capable of discussing monetary policy on this level.
I suggest you read the wiki articles on both subjects.
Edit: but you COULD be--you just need to learn about the various types of currency standards that have existed throughout history.
Yes, history is interesting but time would be better spent (more profitable) studying the future. Freegold is the future.
If you think the future and the past are unrelated, I have some antigravity devices I'd like to sell you. This time, they'll work for sure!
No refunds.
$1.5 trillion federal deficit. $5.3 trillion federal deficit with gse's, gaap accounting and contingent liabilities thrown in.
neither party is serious about solving the debt issues or getting to the root of the problems in the usa.
the market will solve the problems for the leadership, which is what i think both parties want. it will be painful for all except the chosen ones.
http://collegemessiah.blogspot.com/2011/05/silver-isnt-dead-but-it-is-to...
This blog has a simmilar analysis of inflation, only it uses the pay rate of roman soldiers, and even lists the cost of a female slave (in silver oz). (A bit over the top I know). Its neat to see other people investigate "real" value and not play with some arbitrary $$$$ sign.
The very worst position to hold heading into a headwind of hyperinflation is to have cash? Maybe not, Bob Moriarty, president of 321Gold, is saying.
Says Moriarty: “A $60 trillion economy cannot support a $600 trillion bucket of used lottery tickets that everyone wants to pretend still have some value. They don’t… The irresistible force is the $600 trillion in derivatives. The immovable object is the $60 trillion world economy.”
Moriarty, who says “Greece is the proverbial canary in the coalmine” also says he ”may have been wrong, totally wrong” about the hyperinflation theory now commonly accepted as how the dollar will end. He writes: “The only real question is just how much actual money is left and I suspect the answer is ‘near zero.’ That’s the ticking time bomb.”
Moriarty continues: “What is actually going on is all governments are trying to pretend the debts can be paid and all citizens are demanding the benefits continue. Irresistible force and immovable object. The citizens and all governments believe the good times will continue. They can’t. We can’t afford it.
“Spain and Greece both used non-transparent derivatives to improve their financial books so they could enter the EU. The cooked books are now pretty obvious and Germans are objecting to having to work to the age of 67 so Greeks can retire at 50. Tick. Tick. Tick. …
“Gold may well be the currency of choice to rebuild the system but to get through the chaos that is coming, I think you want the kind of cash you can hold and spend.
“The revolution may have started in Egypt and Libya and Spain and Greece but I’ll bet money, cash money, that revolution heads our way soon.”
As Moriarty puts it: “The issues are simple. The world has far more debt than it can support… Why should the citizens of Iceland have to repay the losses of the banks? It’s a good question.” The full article, The Ticking Time Bomb, is worth the read.
http://www.321gold.com/editorials/moriarty/moriarty053011.html
Interesting perspective on unquantifiable exposure. And that seems to be our issue domestically as well.
I often read people's comments regarding hyperinflation, based on currency debasement, which ignore the issue of money velocity, and the unique separation between it's domestic and overseas situation.
If (X) trillion of hedgefund dollars, collected from swaps went offshore, then an injection of < X will fail to produce a net increase in velocity domestically.
Moreover, an injection of X amount will continue to exist in a liquidity trap while it continues to be deposited in banks with toxic balance sheets.
Hence the drop in value of things we own.
And yet the inflation of things we need will rise while those that can, continue to manipulate the price of petroleum, as it reaches out and touches all things we consume.
At the end of the day, we're flying blind because derivatives are unaccounted, and without actual knowledge of the level of exposure, it's difficult to predict banks' actual positions. Not that debasement for the sake of some wallstreeters isn't obscene, but as it affects velocity, it's still an unknown.
Also unknown, is how much of that money remains here, or offshore, and whether it could possibly be reinjected into the economy... (i.e. the resurrgence of capital investors in "tech" startups)
Of course this is all short term conjecture, because in the long run, if the USD is removed as reserve currency, then this is all academic.
Brilliant and thought-provoking analysis! WWW. Thanks.
All the constraint on money creation has disappeared. The central bankers at the Fed have taken away the markets for privately-produced and costly money. They simply produce it for their own profit out of thin air with the intent to reduce its purchasing power down the line.
Each nation, IMO, needs to resume its prerogative to issue its money. This would stop dead the dominance of global financial control by a supra-national power of bankers that manipulates not only the world's money but its political structure and social order.
During a visit to Britain in 1763, The Bank of England asked Benjamin Franklin how he would account for the new found prosperity in the colonies. Franklin replied.
"That is simple. In the colonies we issue our own money. It is called Colonial Script. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers.
"In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."
Or, to quote Milton Friedman:
“The power to determine the quantity of money... is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power... Any system which gives so much power and so much discretion to a few men, [so] that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank.”
Interesting perspective on unquantifiable exposure. And that seems to be our issue domestically as well.
I often read people's comments regarding hyperinflation, based on currency debasement, which ignore the issue of money velocity, and the unique separation between it's domestic and overseas situation.
If (X) trillion of hedgefund dollars, collected from swaps went offshore, then an injection of < X will fail to produce a net increase in velocity domestically.
Moreover, an injection of X amount will continue to exist in a liquidity trap while it continues to be deposited in banks with toxic balance sheets.
Hence the drop in value of things we own.
And yet the inflation of things we need will rise while those that can, continue to manipulate the price of petroleum, as it reaches out and touches all things we consume.
At the end of the day, we're flying blind because derivatives are unaccounted, and without actual knowledge of the level of exposure, it's difficult to predict banks' actual positions. Not that debasement for the sake of some wallstreeters isn't obscene, but as it affects velocity, it's still an unknown.
Also unknown, is how much of that money remains here, or offshore, and whether it could possibly be reinjected into the economy... (i.e. the resurrgence of capital investors in "tech" startups)
Of course this is all short term conjecture, because in the long run, if the USD is removed as reserve currency, then this is all academic.
If the market dosent mind, It must be all good. Buy NFLX or GOOG and leave the important decisions to the master Ben Bernanke. To be blunt, Quit your whining or risk being biatch slapped Humphrey Bogart style by Uncle Ben.
Robo couldn't have said it better..
If Governments or regulated companies do not spend money on vital utilties then inflation in certain strategic goods will rise to the benefit of certain connected men and at a loss to society as a whole.
Begin at 6 minutes - www.youtube.com/watch?v=qMMU6_CjQtQ
+1
ZH has a well rounded and indubitably well informed readership, and reading the comments is a pleasure. (Oh, and I enjoyed the KLF post as well).
Here is why we're pushing into the end game:
Public sector employees form the largest single and most powerful voting block.
The government rewards debtors and punishes savers.
Dishonesty (kick the problem down the road) is policy.
It's all a casino.
Can anyone tell why we MUST have inflation. Why the dollar I saved when I was 25 (40-years ago) has been decimated.
Exactly. Nate on Nathan’s Economic Edge would agree. Said Nate this morning: “The total supply of the three money forms is simply too much and it has allowed the money changers to capture politics, the markets, and the productive efforts of the world.
“While their assets are soaring in manipulated value, your ‘assets’ are falling in value. The Case-Shiller Home Price Data just came in for the end of Q1 (March) and home prices not only sank during March, and year over year, but they hit the lowest point of the crisis so far…
“Following the waves, this breakout higher in the markets probably signifies the start of the 5th wave up (e). It may go on to produce new highs, but fifth waves can truncate or extend. From my perspective it’s simply the devaluing of our money and manipulation, actions that lead to nowhere good for those who are caught in the squeeze.”
It's because you are saving in money transaction fiat money, debt money.
Start saving in real values. Then when you retire, exchange real values for transaction money in small quantities.
Real things are low level basic commodities, like PMs, agraricultural land, wood. But no real estate.
My dad tried the gold thing after WW2 in Germany - he bitched that it was hard to spend because you couldn't shave "a loaf of bread" worth of gold off the bar. I have gold (not paper) and can see his concern. He said coffee, cigarette's, toilet paper, canned ham - that's what did the trick.. but I think we're still quite a way from that.
I sold financial products so know enough not to put my own money into them. I'm simply seeking a solution to inflation.
Bad news for the standards bugs.
https://squareup.com/
Tie that into EBT, and you've got your cast iron slave collar. IPad app to boot.
Gorgeous AppSimple, elegant app for your
Android, iPhone, iPad, or iPod touch.
… I saw multitudes
to every side of me; their howls were loud
while, wheeling weights, they used their chests to push.
They struck against each other; at that point,
each turned around and, wheeling back those weights,
cried out: Why do you hoard? Why do you squander?'
Is that like a frog and the boiling water story? Or is it a reference to the slow death of wealth via inflation over time?
Hope & Change in Rome.
I bet the chariot worked a lot better than the Govt Motors Chevy Volt.
So stop talking about it and DO SOMETHING you weenies! The system is incredibly easy to break. Just opt out. Stop banking with the large NY pirates. Stop buying crap advertised on Tee Vee. The banks will fold and the gov/corporations will starve from lack of taxes and revenue.
Stop feeding the beast. We can bring it down without any kind of revolution. Just opt out.