Egon von Greyerz: "A Hyperinflationary Deluge Is Imminent", And Why, Therefore, Bernanke's Motto Is "Après Nous Le Déluge"

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Sun, 03/06/2011 - 15:40 | 1023947 Calmyourself
Calmyourself's picture

Shoot, shovel, shut up will go exponential, going long on lime..

Sun, 03/06/2011 - 17:02 | 1024185 New_Meat
New_Meat's picture

didn't during GD I.  Got focused in the "beer halls" during Weimar.  Who knows in the Zimb. - Ned

Sun, 03/06/2011 - 18:37 | 1024394 Calmyourself
Calmyourself's picture

Your right it did not and a moments reflections will make clear this will be nothing like GD1.  Culturally, economically, energy consumption as well as agricultural patterns will all change; more like RESET 1.

Sun, 03/06/2011 - 18:12 | 1024346 Misean
Misean's picture

It will go parabellum.

Sun, 03/06/2011 - 19:13 | 1024463 WaterWings
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+9x19

Sun, 03/06/2011 - 23:37 | 1025172 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

We got ourselves a WINNING here.

Sun, 03/06/2011 - 15:41 | 1023945 cossack55
cossack55's picture

You did not mention guns.

Sun, 03/06/2011 - 15:45 | 1023959 pitz
pitz's picture

Precisely motherfucker, houses (and those other items) are actually deflation, not an inflation hedges, because they are primarily financed with debt.

Bottom of the housing market will be when all the debt is removed from it and the fucking douchebags who bought more than one house, on the theory that such houses will undergo capital appreciation, are wiped out. 

Sun, 03/06/2011 - 15:46 | 1023970 toto
toto's picture

Some assets might fall relevant to something else but eventually all goes up.

Sun, 03/06/2011 - 16:17 | 1024065 Spitzer
Spitzer's picture

Not might, they will fall.

You might be able to trade your car for a house if somebody is trying to get out of town and move in with some other family members that live far away.

 

Sun, 03/06/2011 - 17:07 | 1024200 toto
toto's picture

you mean value im talking about price.

Sun, 03/06/2011 - 18:31 | 1024388 Spitzer
Spitzer's picture

No

I mean value. In the middle of a hyperiflation, before a new currency is adopted in the area, before people actually figure out what is happening, house prices will fall hard.

The house to gas price ratio will not stay the same like you are asserting. If it did, then you would be able to sell your house and buy years worth of gas. Thats not how it plays out.

Sun, 03/06/2011 - 18:13 | 1024352 toto
toto's picture

probably the one who junked me doesn't realise the difference between value ant price.

Sun, 03/06/2011 - 18:41 | 1024399 Calmyourself
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Most of us understand you perfectly.  The man with surplus tractors, diesel fuel, welded plate wood stoves and other hard, tough to replace assets will be king..  Those of you that think modest gold holdings alone will get you through the first brutal months of the reset may wish to rethink the gold cost of a wood stove the first December..  I am sure few here are this foolish.

Sun, 03/06/2011 - 20:21 | 1024636 Real Estate Geek
Real Estate Geek's picture

If that December is one of those brutal months, then you may want to think twice before using a wood stove.  Desperate people will probably do desperate things to get warm and fed.  Why attract their attention?

A more prudent course might be to get ALMOST as cold and thin as everyone else.  Warm blankets instead of a stove; 1,200 calories a day instead of 2,400; etc.

Mon, 03/07/2011 - 00:20 | 1025247 Calmyourself
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Your right of course kerosun heaters, blackout curtains, roadblocks, barbwire and other toys are your real friends the first winter.

Sun, 03/06/2011 - 19:03 | 1024439 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

While you don't even know the difference between exponential graphs and parabolic graphs.

Sun, 03/06/2011 - 17:24 | 1024246 OldTrooper
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...eventually all goes up.

Unless it is consumed, stolen, lost, burned to the ground, made obsolete or a central bank loses it's ability to create inflation.  But don't worry - I'm sure it's going up!

Sun, 03/06/2011 - 18:39 | 1024404 disabledvet
disabledvet's picture

exactly.  "what's the price of something that no longer exists."  let alone the "price" of something that doesn't exist in the first place but may?  this is "the penalty box" for the lunacy at not only the Fed but the entire Federal Government.  Talk about a "foreclosure crisis."  Only this time "it is the future that is being foreclosed on."  And who believes in tomorrow anymore?  So "90's" i guess.  Anywho...this article should be summed up in a single sentence:  "this is the plan."  banality of evil...move along.

Sun, 03/06/2011 - 15:50 | 1023983 silvertrain
silvertrain's picture

 Yes sir...And thus the stories of past hyper inflated economies such as the man that bought the Hotel with 1 gold coin etc.etc.etc...

Sun, 03/06/2011 - 16:45 | 1024146 naughtius maximus
naughtius maximus's picture

Can you elaborate or give more information? This I gotta hear!

Sun, 03/06/2011 - 17:09 | 1024205 New_Meat
New_Meat's picture

http://www.gold-eagle.com/editorials_00/morgan120800.html seems to be gold-bug land <not that there's anything wrong with that ;-) >

 

Sun, 03/06/2011 - 17:34 | 1024271 naughtius maximus
naughtius maximus's picture

Thank you much!

Sun, 03/06/2011 - 18:04 | 1024335 DeadFred
DeadFred's picture

Had a co-worker tell me he bought his house in Yugoslavia then a few years later after inflation hit (now Croatia) he decided to to skip lunch one day so he could pay off his mortgage.  Once stayed with a friend, recently retired from being head of the biology department at the Central University, in his nice middle-class house in Quito, Ecuador.  He told me his mortgage payment was 500 sucres/mo, about the cost of a burger.  Down side was his retirement pay was 1500 sucres/mo.  Inflation does crazy things.

Sun, 03/06/2011 - 15:59 | 1024013 Ray1968
Ray1968's picture

At least you'll be able to pay off  your old mortgage with a postage stamp.

Sun, 03/06/2011 - 17:51 | 1024305 razorthin
razorthin's picture

Not with an income of $0.  But I'll gladly jam a silver eagle down their throat and grab the keys.

Sun, 03/06/2011 - 16:26 | 1024086 fragrantdingleberry
fragrantdingleberry's picture

How much for a jet ski? I always wanted one of those.

Sun, 03/06/2011 - 16:41 | 1024132 flattrader
flattrader's picture

For me it's a jetpack.

Oh, wait.  We don't have those yet.  (The kind that don't blow-up.)

...they promised there'd be jetpacts...

Sun, 03/06/2011 - 19:45 | 1024527 Captain Planet
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http://vimeo.com/troyhartman/jetpackskiing

 

What would happen if you threw these on with some water skiis?

 

Sun, 03/06/2011 - 16:38 | 1024119 cxl9
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House prices will fall from 3 or 400,000 to 50 or 60,000

I assume you're talking real (not nominal) prices, then. If you believe the hyperinflation thesis, then the thing to do is load up on debt, purchasing assets that will retain their real value in a crash (gold? silver? vacant farmland? small working farms? modest, single-family rental homes? small-businesses providing necessary products/services?) and then wait for the debt to be inflated away. Essentially, borrow money at negative real interest rates and purchase things now that are likely to still have value when we cross over to the Other Side.

 

Sun, 03/06/2011 - 18:04 | 1024337 IQ 145
IQ 145's picture

 The thesis has merit; but careful investigation reveals that the only thing you should buy with your borrowed funds is Silver Bullion. For many reasons. In that case, the concept is very good. It will be easy to pay off the loan, and you can retain real value; ie. "excess" silver.

Sun, 03/06/2011 - 18:15 | 1024357 Spitzer
Spitzer's picture

No Im talking about nominal house prices falling. They will fall to a marketable level. Think about it, there is a huge glut of houses on the market, more then people need.

The whole dynamic of the market changes.

Sun, 03/06/2011 - 19:38 | 1024513 cxl9
cxl9's picture

How does the nominal price of anything fall in a hyperinflationary environment? Do you know what hyperinflation is? It's not a just a whole bunch o' inflation; it's a loss of faith in the currency which brings about a total collapse in its value (purchasing power). I am not saying this is or is not going to occur in America; but I believe I do understand its implications.

Some common sense and basic math does not support your assertion that nominal prices of real estate will fall in a hyperinflation. Right now I own a small 3BR rental home in Oregon which is supposedly worth around $220K [Zillow]. Let's call it 150 ounces of gold. The market price of that home has been drifting slowly down for several years, as it loses value in both nominal and real terms. At some point the future (according to the thesis) we will have hyperinflation. At various points along the hyperinflationary curve, the dollar will have lost 90%, 95%, 99%, 99.9% of its value. Even if my house loses 50% of its real value, its nominal price will still be far above what it is now. At an 80% real loss and 99% currency depreciation, my house is nominally priced at $4.4M. Gold in this environment presumably would be around $150K/ounce and my house would be worth 31 ounces, reflecting its loss of real value.

Of course, if this were to occur, and I had had the foresight to borrow heavily and purchase gold prior to the hyperinflation, I would then be able to pay off the debts rather easily in debased dollars. This was really the point I was orginally making: if you really believe that hyperinflation is imminent, the rational thing to do is borrow as much as you possibly can in fixed-interest debt and purchase assets which will hold their value through the event, and let depreciation effectively cancel out the debt. It's essentially an opportunity to purchase at near-infinite leverage.

Sun, 03/06/2011 - 21:59 | 1024882 Spitzer
Spitzer's picture

First of all, your idea about borrowing heavy and buying gold is allot easier said then done. If the Comex price of gold crashes, your bank could margin call on you even if the dark pool price is much higher.

Your house will not have a listed nominal price in the middle of a hyperinflation. Bartering against your house will discover the nominal price. The things your house has a market against will determine the nominal value of your house. It is not simply a calculation that you could make. Nobody really knows.

Sun, 03/06/2011 - 23:49 | 1025193 cxl9
cxl9's picture

If my house "will not have a listed nominal price in the middle of a hyperinflation" then how can you claim that nominal prices of real-estate are going to fall? It's got to be one or the other. Which is it?

Second, borrowing cash to buy gold is as easy as taking out a HELOC or other secured loan. Even I, with my modest assets, could do that. And I wasn't speaking about gold exclusively. I mentioned other possibilities such as purchasing real-estate on leverage.

You're silly. I've had enough of this discussion.

Sun, 03/06/2011 - 17:33 | 1024260 bob_dabolina
bob_dabolina's picture

No you're wrong. The value of those things wont change. The value of our currency will fall vs. those things.

Commodities will rise faster in % terms then that of say, a house.

The value of my home will be the same in 10 years as the intrinisic value of my home is the shelter it provides to my family and I. The intrinsic value of the dollars in my pocket are worth about how much fire I can produce with them, they are just perceived valuable and operate as a medium of exchange.

Sun, 03/06/2011 - 18:21 | 1024372 Spitzer
Spitzer's picture

No

The intrinsic value of your house will fall very much compared to essentials.

So you are saying that  the diffrence in real values of gas and food compared to houses and cars will stay the same ? So, no matter what, you will be able to sell your house and buy years and years worth of gas and food ?

Thats bullshit.

Sun, 03/06/2011 - 19:19 | 1024476 bob_dabolina
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I didn't say anything about real value.

There are differences between real value, nominal value, and intrinsic value.

Sun, 03/06/2011 - 19:30 | 1024498 Spitzer
Spitzer's picture

Yes and what I am saying is that your house will buy allot less gas and food during a hyperinflation, so even the nominal price will go down.

A $500,000 house will fall nominally to $50,000 while gas only went up half as much as your house went down.

Mon, 03/07/2011 - 04:45 | 1025510 1984
1984's picture

You don't need to OWN a house to live.  Do you need to EAT to live?

Edit:  You don't even need to RENT a house to live; can always move back to your parents' basement. 

Edit:  There's no such thing as intrinsic value, you foolish child.  The value of a thing only depends on how much other people want it.

Sun, 03/06/2011 - 20:44 | 1024707 akak
akak's picture

Cars, motorcycles, boats, motorhomes, houses, TVs, clothes, pretty much every non esenctial thing will fall in value during a hyperinflation.

I tend to consider clothes to be 'essential'.  But then, I live in Alaska.

Mon, 03/07/2011 - 05:34 | 1025518 1984
1984's picture

"One thing that allot of inflationists even get wrong is that SOME ASSET PRICES FALL DURING HYPERIFLATION"

 

Absolutely!  Survival stories from Argentina only proved your point.

When SHTF, people will discover what the value of a thing really means.  For all those who bought only gold to prepare for hyperinflation, you're fools.  Owning gold is preparing for the after.  You must be ready for the actual hyperinflation phase first, or you will very soon part with your precious metal only to get the "common" essentials.

While it's fun to talk about hyperinflation, I don't think it'll come any time soon, simply because "people" are still full of hope that the US will do the right thing eventually.

 

Sun, 03/06/2011 - 15:32 | 1023927 falak pema
falak pema's picture

corporates operate out of tax havens for 50% of their revenues. Not the individuals. Period. No self respecting major corporate pays more than 10-15% "optimised" corporate tax rate.

Sun, 03/06/2011 - 15:35 | 1023929 dick cheneys ghost
dick cheneys ghost's picture

Earths Limits..........why growth wont return. we are doomed.

 

http://nakedempire.wordpress.com/

Sun, 03/06/2011 - 16:12 | 1024052 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

I like you and I like your blog.

Isn't sad that we have to grow or we self-destruct?

I think it's a definitely a product of our monetary paradigm that the economy must grow or else it collapses (i.e. it's the bank balance sheet that must either boom or bust and that contributes boom-and-bust in business).

I fear that Man himself is characteristically suicidal and will either evolve or devolve but not stay as he is. But that's just a "fear" in that I'm not positive of it; it merely seems to be that way to me.

Open letter to Americans:

Stop swallowing the television (smartphone) culture Kool Aid and think about real life, right now, before you die.

everybody... is a bastard

my world is... like plaster

crumbling apart from pressure from a blaster

waiting for a sign

 

and the momentary pleasures take their turn

as a wistful boy runs out of things to learn

the episodes of yore are never to return

 

scare up some hope

you're gonna need it just to cope

you are the decision

numbers don't lie

 

when you bite the dust

was it for purpose or for trust?

you'll never relive it; think before you die

 

yeah THINK

THINK BEFORE YOU DIE

–Bad Religion

Sun, 03/06/2011 - 17:10 | 1024210 spinone
spinone's picture

Its a factor of a biological species out of balance with its environment.  Most populations are held in check by constraints on population known as 'density dependent factors of population'.  They are brutal population controls, but what happens to control human population.  Disease, famine, wars over scarce resources.  Clever humans have been able, with massive inputs of energy (oil) and debts, finance, etc, to forestall the Four Horsemen. But they are still waiting behind their seals.

Sun, 03/06/2011 - 15:36 | 1023932 Bicycle Repairman
Bicycle Repairman's picture

If these markets do not behave properly, then it's total command economy, bitches.

Have you hugged your Commissar today?

Sun, 03/06/2011 - 15:40 | 1023939 baconator3000
baconator3000's picture

zimbabwe is rich

Sun, 03/06/2011 - 15:39 | 1023942 Calmyourself
Calmyourself's picture

Before I hear that hyperinflation is not possible as the $ being produced are nothing more than computerized entries, remember loss of faith precedes printing.   Printing is the "solution", it is the "cure" for loss of faith not the other way around..  Feeling lucky about your dollars, punk?

Sun, 03/06/2011 - 23:59 | 1025216 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Before I hear that hyperinflation is not possible as the $ being produced are nothing more than computerized entries

Anyone promoting this meme is either an idiot or testing to see if other people are idiots...

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