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

Tyler Durden's picture




 

From Egon von Greyerz of Matterhorn Asset Management

Apres Nous, Le Deluge

Happy days are here again! Stock markets
are strong, company profits are up, bankers are making record profits
and bonuses, unemployment is declining, and inflation is non-existent.
Obama and Bernanke are the dream team making the US into the Superpower
it once was.

Yes, it is amazing
the castles in the air that can be built with paper money and deceitful
manipulation of all economic data.  And Madame Bernanke de Pompadour
will do anything to keep King Louis XV Obama happy, including flooding
markets with unlimited amounts of printed money. They both know that, in
their holy alliance, they are committing a cardinal sin. But clinging
to power is more important than the good of the country.  An economic
and social disaster is imminent for the US and a major part of the world
and Bernanke de Pompadour and Louis XV Obama are praying that it won’t
happen during their reign: “Après nous le déluge”. (Warm thanks to my
good friend the artist Leo Lein).

Moral and financial decadence

A deluge of an unprecedented magnitude
is both inevitable and imminent. The consequences of the economic and
political mismanagement will have a devastating impact on the world for a
very long time. And the consequences will touch most corners of the
world in so many different areas; economic, financial, social, political
and geopolitical. The adjustment that the world will undergo in the
next decade or longer, will be of such colossal magnitude that life will
be very different for coming generations compared to the current
social, financial and moral decadence. But history always gives us
lessons and the one that is coming will be necessary and eventually good
for the world. But the transition and adjustment will be extremely
traumatic for most of us.

We have reached a degree of decadence
that in many aspects equals what happened in the Roman Empire before its
fall.  The family is no longer the kernel of society. More than 50% of
children in the Western world grow up in a one parent home, either being
born by a single mother or with divorced parents. Children are neither
taught ethical or moral values nor discipline. Many children consider
attending school as optional and education standards are declining
precipitously.  Most families do not have a meal around the dinner table
even once a week. Sex and violence are common place on television and
in real life. Both press and television create totally false values and
ideals. Everyone must be young and beautiful often enhanced by surgical
or digital means. Old people have little value and their wisdom is not
benefitting the younger generations.

The Golden Calf or materialism is the
ultimate value that is worshipped and no means are eschewed to attain
material goals. Since most of the prosperity that has been achieved in
the last 40 years is based on printed money and debt, it is totally
false and unsustainable. A major part of the Western world has improved
their living standard, by exchanging services and swapping houses at
ever rising prices financed by printed paper and credit. The perceived
wealth that is created out of this is illusory and ephemeral. We have created a world economy which is based on debt and thin air.


The Gini coefficient of income and wealth
is now reaching extremes in many countries. This measures the
inequality between the rich and the poor. In the US the Gini coefficient
is now at the same level as in the 1920s before the depression. In
countries like the US, the rich are getting richer whilst 45 million
people live below the poverty line, 43 million receive food stamps and
over 700,000 are homeless. With a real unemployment rate of 22% and
urban youth unemployment much higher, the US will soon experience social
unrest.

But it is not only the US that will
experience financial misery, famine and social unrest. This will also
hit most European countries and in particular the UK, southern Europe,
Eastern Europe and the Baltic States as well as African countries, the
Middle East, Asia, yes in fact the whole world.

Are boom and busts inevitable?

Well if you listened to the former
British Labour Prime Minster Gordon Brown, he proudly declared that he
had abolished booms and busts and thus economic cycles. But he was
expeditiously thrown out at the next bust which of course had nothing to
do with him since he blamed the US sub-prime market for his ill-fated
destiny.

Cycles or ebbs and flows are a natural
part of both economic life and nature. And right at the point when
something could be done to limit the damage, most nations seem to have
the uncanny knack of selecting the political individuals who will put
fuel on the fire and make the situation catastrophically worse.

Greenspan was one such individual.
During his 19 years as Chairman of the Fed, he could have limited the
economic and social damage that the US would suffer. Instead he took
every single measure possible to ensure that there would be a
catastrophe with uncontrollable consequences. But we shouldn’t just
blame the incompetence of Greenspan. It was sickening to watch every
sycophantic congressman and senator licking Greenspan’s boots and
praising his wisdom. Because Greenspan’s money printing and incompetent
interest rate management created one of the biggest financial bubbles in
world economic history. But the politicians loved this. It made the
stock market boom, and house prices surge. Thus the politicians were all
loved by their voters who did not understand the dire consequences that
were looming. And Bernanke de Pompadour is continuing the same
disastrous policies of creating money out of thin air. When will they
ever learn that creating money out of thin air and running astronomical
deficits that never will be repaid with normal money leads to the road
of total ruin? When will they ever learn? The very sad
answer is that they won’t and therefore they are leading the world into a
hyperinflationary depression that will have uncontrollable and
cataclysmic consequences for current and future generations.

Empty stomachs are rioting

We have for years warned about
hyperinflation leading to famine, misery and social unrest. Well, this
is exactly what is happening in many parts of the world. The protests
and overthrowing of regimes in Tunisia, Egypt and Libya are primarily
due to a major part of the peoples of these nations having no job, no
money and little food. It is their empty stomachs that are rioting. In
addition they are protesting against the leaders of these countries
stealing from the people.

It is virtually certain that these riots
will spread to many countries in the Middle East, Africa and the
developing world. This will lead to new regimes and new political orders
that could either be far left or far right politically or religious
extremists. But the new regimes will not be in a position to change the
root of the problem which is famine and poverty.  In Egypt for example
there has been a quiet military coup. It is unlikely that a democratic
regime will take over from the military. So the people will protest
again and again. And this will be the same in most countries. Eventually
the people will take the law into their own hands since no regime will
be able to give them the food that they need.

 

The hyperinflationary deluge is imminent

Although food and fuel inflation is
rampant worldwide already, we are only seeing the very beginning.
Massive oil price rises are likely to continue as a result of the
geopolitical situation as well as peak-oil. The Middle East is a time
bomb waiting to go off. Israel is in an extremely precarious position
and the involvement or non-involvement of the US in this conflict would
both have dire consequences for Israel and peace in the world. Food
prices will continue to rise dramatically. Major parts of the world are
living below the poverty line today and this will increase
exponentially.

The lethal concoction of rising food and
fuel prices is already affecting the Western world. The Continuous
Commodity Index – CCI, (60% food, 17% energy and 23% metals) has almost
doubled since the low in early 2009 and has gone up 42% in the last 12
months. The almost vertical rise of the CCI is one of the best
indicators of hyperinflation being imminent. A catastrophe of
astronomical proportions is looming. This will hit the world at a time
when there is no capacity whatsoever to take any real measures that
could alleviate the problems.

(Click image to enlarge)

Most
countries are already running major deficits which will increase
dramatically in the next few years. The banking system is bankrupt and
is only holding together due to false valuations of toxic debt and
derivatives. This is done with the blessing of governments since
virtually no major bank could face an honest valuation of its assets.
Unemployment and especially youth unemployment is currently a problem
worldwide and it will get much worse. In 2010, the US government spent
60% more than its revenues. In order to balance the budget individual
and corporate income taxes would have to double.

Never before in history has the world run out of real money as well as (affordable) food and fuel simultaneously. But his is exactly what is happening now and it will get substantially worse in the next few months and years.

Financial misery, famine and high
unemployment combined with governments that will not be in a position to
give real help are a recipe for disaster that will lead to social
unrest and revolutions not only in developing countries but also in the
West. Hungry people are desperate people and desperate people do
desperate deeds. We could see already in 2011 food shortages, and riots
both in Europe and in the US.

Hyperinflation Watch

The following are INDISPUTALBLE FACTS:

  • The US dollar is down 82% against gold since 1999
  • The US dollar is down 49% against the Swiss Francs since 2001
  • The Dow Jones is down 81% against gold since 1999
  • The Continuous Commodity Index is up 100% since 2009

The above facts are clear evidence of an
economy that has been totally mismanaged. But more importantly most of
these trends are now starting to accelerate – a clear sign that
hyperinflation is just around the corner.

With
years of negative net worth and negative cash flow, the US is bankrupt
today. The Federal deficit is forecast to increase by at least another $
5 trillion in the next 5-7 years.  Add to this the State deficits, the
Municipal and City deficits that are rising at a galloping rate and we
have a country that is going to haemorrhage to death in the next few
years. One wonders when the totally ineffective and clueless rating
agencies are going to fathom this. Not that it will matter if they once
do.  One also wonders what Mme Bernanke de Pompadour and his court are
thinking. “She” and her courtiers should have above average intelligence
and could not possibly avoid seeing the facts that we all see today (of
course, some of us have seen it coming for over a decade). But “she”
has to please her master King Louis XV Obama and her devotion to the
king goes above all reasonable common sense, or rationale. So the two of
them will continue to crank up the printing press and drown their
people and the world in worthless paper.

Stock Market

To believe that the current money
printing liquidity boom is real and sustainable would be a very serious
and expensive mistake. The temporary and illusionary pickup that we are
now seeing in the economy and stock market is the normal initial phase
of a hyperinflationary economy. It must not be mistaken for a real
improvement in the economy.

The normal pattern at the beginning of a
hyperinflationary period is that stock markets surge. This is the
result of the increased liquidity and a flight to more inflation proof
assets. This was the case in for example the Weimar Republic and
Zimbabwe.  Just look at the chart below of the Zimbabwe stock exchange
that went from 1,420 in January 2005 to 5.4 trillion in June 2008, a 3
billion per cent increase.  That was of course in Zimbabwe dollars. In
US dollars the stock exchange went sideways with major volatility.  So
in hyperinflationary terms stock markets could continue to rise
initially thus making them a better investment than cash. However,
measured against real money, the Dow has gone down 82% against gold
since 1999 and 86% against silver since 2001 (see chart above). We are
currently seeing a dead cat bounce but we expect the Dow to decline a
further 90%, at least, against gold in the next few years. So even if
stock market investments will initially give the illusion of protecting
investors, it will be a very poor hedge against the ravages of
hyperinflation in real terms.

ZIMBABWE STOCK INDEX 2007-2008

Bond market

In January 2009, we warned investors
that long term interest rates were bottoming. Since then the 30 year
bond yield is up from 2.6% to 4.6% an 80% rise. But more importantly the
30 year is currently in the process of breaking a 17 year downtrend
line which dates back to 1994. This confirms that rates will now start a
major and rapid rise which is likely to reach the mid-teens or higher.
Governments will attempt to keep short rates low due to weak economies
but eventually the rising long rates will put strong upward pressure on
the short rates.  So the flight to government bonds that we have seen in
the last few years will soon reverse into a massive rush for the exit.
This will coincide with rapidly increasing financing requirements by the
US, UK, EU and many other governments. The poisonous concoction of
rising rates and rising financing needs will create a vicious circle of
collapsing bond markets and unsustainably high financing cost. This will
continue to drive interest rates even higher which will further
increase deficits and necessitate even faster running printing presses.
Add to that a collapsing currency and the hyperinflationary picture is
complete. It is our very strong view that investors should exit bond
markets entirely if they want to avoid a total destruction of their
assets.

Currency Market

As we have explained for many years, hyperinflation is created by the
government destroying the currency as a result of money printing to
finance deficits. This leads to the cost push inflation that we are now
experiencing. Add to that, shortages in commodities worldwide, thus
creating the perfect hyperinflationary scenario. The Dollar, the Pound,
the Euro and many other currencies will continue to decline. They can’t
all decline against each other at the same time so the market will take
turns in attacking one currency at a time. But all currencies will
continue to decline against gold. We believe that the dollar will soon
start a very rapid fall against gold and against many currencies.
Investors should exit the Dollar and also the Pound and the Euro. There
is no currency better than gold or silver but for any small amounts of
cash we prefer the Swiss Franc, the Norwegian Krone, the Singapore
dollar and the Canadian dollar.

Wealth Protection

A hyperinflationary depression will
destroy the value of money as well as most assets that were financed by
the credit bubble (property, stock market).  Wealth protection is now
critical and urgent. We see no better way of protecting assets against
total destruction than physical gold and silver stored outside the
banking system. Thereafter, precious metals, energy and food stocks are
our preference.  But it must be remembered that any asset including
stocks that is held through a bank is dependent on a sound and surviving
banking system.

The real move in precious metals is
still to come as we have outlined in many articles. Less than 1% of
investors own gold. Before this economic cycle is over we are likely to
see a mania in physical precious metals that will drive prices
exponentially higher. And luckily for investors, this is a mania which
is unlikely to end in a collapse since gold most probably will be part
of a future reserve currency.

Finally we are again quoting von Mises who clearly understood that “le déluge” is inevitable:

“There is no means of avoiding a
final collapse of a boom brought about by credit expansion. The
alternative is only whether the crisis should come sooner as a result of
a voluntary abandonment of further credit expansion or later as a final
and total catastrophe of the currency system involved.”
– Ludwig von Mises

 

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Sun, 03/06/2011 - 19:35 | 1024509 Calmyourself
Calmyourself's picture

So, ahh you don't have any gold or silver then..

Sun, 03/06/2011 - 19:43 | 1024526 sudzee
sudzee's picture

I wonder what investors in Egypt think about the silliness of having ones wealth in silver and gold. Paper buys shit when it hits the fan.

Sun, 03/06/2011 - 19:58 | 1024570 Long-John-Silver
Long-John-Silver's picture

Paper wipes shit.....

Mon, 03/07/2011 - 00:36 | 1025278 Calmyourself
Calmyourself's picture

I don't usually do this but, your stupid.. With some gold I could get out of Egypt on a private plane in virtually any scenario, by the way Mubarak took what from the vaults??

Mon, 03/07/2011 - 01:00 | 1025317 Scorpio69er
Scorpio69er's picture

Who's talking about Egypt? I'm talking about a worldwide economic collapse -- and all that that implies.

P.S. "your" should be "you're". So watch who you call "stupid".

Sun, 03/06/2011 - 19:54 | 1024558 Scorpio69er
Scorpio69er's picture

My statement was predicated on a total socio-economic collapse scenario, in which case, what, exactly, do you suppose you're going to do with gold or silver -- when the next guy has lead. Throw your gold bars at him?

 

All of this talk of "preserving wealth" presumes a functional society and functional institutions. If that goes bye-bye, what's left is only the rule of the jungle.

Sun, 03/06/2011 - 20:05 | 1024584 Long-John-Silver
Long-John-Silver's picture

You will ask him for a job and he will pay you with food.....

Sun, 03/06/2011 - 22:38 | 1025016 RockyRacoon
RockyRacoon's picture

You're an absolutist, and that will be your undoing.  Things don't happen absolutely instantaneously.   There is time enough in the scheme of things to properly execute an asset allocation to stay balanced.   Your attitude will keep you from doing anything, and that will be devastating.  

Sun, 03/06/2011 - 23:30 | 1025151 Scorpio69er
Scorpio69er's picture

re: "Things don't happen absolutely instantaneously."

A bullet to your head is pretty absolute and instantaneous. 

Sun, 03/06/2011 - 23:50 | 1025196 serotonindumptruck
serotonindumptruck's picture

You sound like you're around the age of 15, give or take a year.

Mon, 03/07/2011 - 00:05 | 1025223 Scorpio69er
Scorpio69er's picture

You sound like someone who has no real argument and must therefore resort to lame attacks.

My reasoning is sound. Yours is wishful thinking. 

 

Mon, 03/07/2011 - 00:13 | 1025239 serotonindumptruck
serotonindumptruck's picture

You advocate the murder of people for purposes of theft. Yeah, that's a logical and sound worldview.

You have the life expectancy of a mosquito.

 

Mon, 03/07/2011 - 00:20 | 1025249 Scorpio69er
Scorpio69er's picture

I didn't "advocate" anything, so let's be clear about that. I simply stated what you refuse to acknowledge and what is a plain fact. You seem to think that there can be a total economic collapse without a simultaneous breakdown of social order and the rule of law. That's not possible. When the cops aren't getting paid anymore, they'll be the first ones hunting down those with food and other vital items their own families need to survive. You'll be in their crosshairs. They won't give a crap about helping you "preserve wealth". They'll be stripping you of everything of any value that you might have.

Sun, 03/06/2011 - 19:58 | 1024565 Long-John-Silver
Long-John-Silver's picture

Study History my friend. Did that happen in Rome, Wiemar Republic, or Zimbabwe when their Fiat Currencies collapsed? Life was hard but eventually changes were made and the citizenry pulled themselves up by their boot straps and life continued. People with Silver and Gold will have an easier time of it being far ahead of the game when a new (non-fiat) currency backed by something with actual value. The great depression should have resulted in a revolution by the people of that era. They scraped by until the death of FDR liberated the people of his financial idiocracy.

Sun, 03/06/2011 - 23:48 | 1025190 Scorpio69er
Scorpio69er's picture

History cannot inform us about our present situation, which is truly unique. And, yes, simultaneous worldwide socio-economic collapse is now possible, given the tight interconnectedness of economic systems and what Taleb calls the "over-optimization" of that system, to the point where any disturbance in one part of the system can bring down the whole enchilada.

You guys crack me up. You can see the dire nature of our situation, but you stop short of seeing that your little "wealth preservation" scheme is meaningless in a total collapse scenario. You may have gold and silver, but if your neighbor has lead and he wants what you have it's going to be a matter of who has the most lead. 

The rule of the jungle is that the strongest survive -- not the one with a wall safe filled with gold and silver.

We're only in the early stages of collapse with the stuff going on in the Mideast. If the whole global economic system crashes, believe me, you ain't seen nothin' like the ugly that will ensue.

 

"Your money can't save you anymore than it can save me."

--First Officer William Murdock to Cal Hockley, 'Titanic' (1999)

 

 

Sun, 03/06/2011 - 23:59 | 1025215 serotonindumptruck
serotonindumptruck's picture

Aggression and criminal behavior will be targeted and summarily eliminated.

Mon, 03/07/2011 - 00:09 | 1025235 Scorpio69er
Scorpio69er's picture

re: "Aggression and criminal behavior will be targeted and summarily eliminated."

That's a laugh. By whom? You, or others, with gold/silver? You have it precisely backward. IF there is a total economic collapse then we will quickly revert to the law of the jungle. Those with lead will rule and they'll take whatever they want from you and anyone else.

Mon, 03/07/2011 - 00:26 | 1025260 cosmictrainwreck
cosmictrainwreck's picture

"aggression & criminal....." HA! on which planet, exactly? I gotta go with Scorpio on this. I absolutely don't get context of your statement. Dude, we can't even prosecute the banksters now, in these "civilized" envrons

Mon, 03/07/2011 - 00:39 | 1025282 serotonindumptruck
serotonindumptruck's picture

So criminals can't be killed? Immediately and with extreme prejudice?

I disagree.

Mon, 03/07/2011 - 00:44 | 1025290 Scorpio69er
Scorpio69er's picture

Killed by whom? The cops who are no longer getting paid because the economic system collapsed?

The law of the jungle is where this type of scenario takes us.

Mon, 03/07/2011 - 00:48 | 1025299 serotonindumptruck
serotonindumptruck's picture

Your entire argument rests on the erroneous supposition that nobody, aside from the criminals, will be armed.

 

Mon, 03/07/2011 - 00:55 | 1025311 Scorpio69er
Scorpio69er's picture

Au contraire. I assume most everyone will be armed. That's why it will be a bloody mess. But you can be assured that since most everyone will be armed, those who have the biggest/most arms will take from those who do not.

That's the law of the jungle.

Mon, 03/07/2011 - 01:44 | 1025391 cosmictrainwreck
cosmictrainwreck's picture

in other words, your silly argument about dealing with "criminals" is MOOT; just as it is inside any big city now - you may wish with all your might to kill the dude that you define as criminal, but if he has more firepower you are SOL, buddy. Again - your argument is moot

Mon, 03/07/2011 - 07:50 | 1025562 Snidley Whipsnae
Snidley Whipsnae's picture

Scorpio69er...member for 1 week and 6 days...

Stop feeding the trolls

Sun, 03/06/2011 - 19:12 | 1024458 Bokkenrijder
Bokkenrijder's picture

Louis XIV: "L'etat, c'est moi!"

Sun, 03/06/2011 - 20:15 | 1024628 snowball777
snowball777's picture

Cette tete, c'etait Louis L'Imbecile.

Sun, 03/06/2011 - 19:20 | 1024480 craigh01
craigh01's picture

I just saw a Peter Schiff video saying that the government spent over 1 TRILLION dollars last month.  I couldn't believe that so I looked it up, and it's true:

http://cnsnews.com/news/article/actual-federal-expenditures-topped-1-tri

So we issued one trillion in new debt last month?  Where can I find a listing of this?  How long can this go on?

 

Sun, 03/06/2011 - 20:03 | 1024580 Long-John-Silver
Long-John-Silver's picture

How long can this go on?  It can't. You are witness to a currency in collapse.

 

WTF is Math Man? ZH'ers want to know!

Sun, 03/06/2011 - 22:39 | 1025021 RockyRacoon
RockyRacoon's picture

He's got his head between his legs kissin' his ass goodbye.

Sun, 03/06/2011 - 20:14 | 1024616 baconator3000
baconator3000's picture

Whats the big deal. you can keep printing money. just take zeros off of it. We must pay our entitlements and keep up with human rights

Sun, 03/06/2011 - 20:21 | 1024650 GOSPLAN HERO
GOSPLAN HERO's picture

Please pay more taxes.  Wisconsin's socialist state workers are depending on you!

Sun, 03/06/2011 - 20:42 | 1024682 Waterfallsparkles
Waterfallsparkles's picture

You know we can all take control of our lives.  One step at a time.  I remember the question about how you eat an elephant.  Quite a perplexing problem but the answer is quite simple.  One bite at a time.

With the question about our energy usage, every one of us can do small things every day to make a difference.  When the weather gets better put a clothes line in your back yard.  Maybe you do not want to dry your clothes every day on the clothes line but maybe once a week you could. 

Every now and then maybe you could hand was some of your plates and not put them in the dishwasher.  Maybe not every day but every now and again.

You could consider turning off your water heater every day when you go to work and then turn it on again when you return.  Most water heater will retain the water heat and even if they do not most will heat the water in 15 minutes.

You could get the energy protector strips and when you are going to work or out of the house you could turn them off and back on when you return.

You could fill your freezer up with bottled water if it is not full of food to help cut your energy bills.

Everyone knows about the brick in the toilet but in many cases there is no need to flush after a simple urination.

I have worked to cut my energy usage and my monthly expenses.  I went from a premium cell phone plan to a prepaid plan (big yearly savings).  Stopped going to stores unless I really needed something.  Did not buy any 1/2 priced clothes this year at the Wall Market.  The ones I have will do.  Cut my cable service down.  Still need internet.  Cut my home insurance down.  Cut land line telephone to limited calls and no long distance.    No eating out or takeout, period.  Keep the heat at 52 at night (thanks to a warm comforter I only had to buy once).  Use a small electric heater to blow directly on me so the house can stay at a very low temperature.  Buy all food on sale.  Wait for Holidays when everything is on sale and stock up.

Just a few thoughts.  Little things can make a difference in our lives and our energy usage.

Starve the Oil Beast, one step at a time.

Always remember the less you consume the less you have to work and the lower your taxes to the Government.  Which equates to the more you have.

P.S. Do want to get a wood stove.

Sun, 03/06/2011 - 21:35 | 1024819 Dr. Gonzo
Dr. Gonzo's picture

Very true waterfallsparkles. I've don3 most of this before it was hip to be thrift. Most Americans of younger generations are wastefull spoiled pigs.

Sun, 03/06/2011 - 21:50 | 1024847 Bear
Bear's picture

The less we consume ... the more the government will. In the contraction from 2008, as we the people tighten our belt, the government expanded their waist line adding 20% to its work force.

Governement is not the solution ... government (and its money printing mentality) is the problem.

I believe in individual frugality ... but I also believe in government frugality, because it dosen't matter if we save all we make only so the government can spend spend all we save.

Sun, 03/06/2011 - 22:33 | 1024997 Yits and the Yimrum
Yits and the Yimrum's picture

if the rest of the country had your mind-set, we could cut the gov't down by 70%, collapse the junk food purveyors, and spend our time on healthy pursuits instead of just adding to some corporation's bottom line

have you ever really looked closely at the foods sold in grocery stores these days; 70% of it is overpriced, unhealthy, highly processed junk

a sign of a dying society

at least you are doing your part to starve the beast; I try to do the same by gardening and planning to be as self sufficient as possible to avoid the squid rackets

another great thing to do is stay off prescription medications, exercise an avoid vaccines like the plaque.  Basically, boycott the so called health care industry whenever possible.  These posers do not heal, they kill and inflict much damage on society

Sun, 03/06/2011 - 22:54 | 1025058 Tedster
Tedster's picture

One has to be careful about getting a little too enthusiastic about lowering the thermostat, at least in cold climes. 52F *might* be pushing it during a real cold snap - below Zero - particularly in homes that aren't well insulated. Saving money is great, but burst water pipes is a mess and expensive. And the difference is what? Heating a home is (at least for now) relatively cheap - a few dollars a day. Why shiver? Screw that.

Wood stoves are great but (surprise!) the eco-fascisti are not enamored of the smoke it produces and making great strides in quashing that as well. They sure are a miserable lot, is all I can say.

Sun, 03/06/2011 - 21:15 | 1024763 Coldfire
Coldfire's picture

Hyperinflation will wipe out debt, jubilee style, to which I can only say: fucking "A". The debt (Ber)monkey off our backs. China, Japan and Pimpco might be pissed, but what can they do? Who needs math when you've got nukes? Then again, what use are nukes when the Ponzeconomy collapses? I guess we're a gonna find out...

Sun, 03/06/2011 - 21:31 | 1024812 Seasmoke
Seasmoke's picture

serious question :

will everyone be able to pay their mortgages in full......with monopoly money.......if so, doesnt sound like a bad deal

Sun, 03/06/2011 - 22:10 | 1024914 AN0NYM0US
AN0NYM0US's picture

profound amidst the noise

debt is good in the environment EvG describes and comments above on real estate being excluded would be welcome news to those unfortunate enough to be renting but like other hard assets real estate, cotton, steel etc are better than fiat

Sun, 03/06/2011 - 22:13 | 1024918 Tedster
Tedster's picture

More than likely not. "They" would change the rules at some point and re-denominate old debts in a new currency.

Argentina is a good example. One of the world's wealthiest countries at one time, a succession of dirtbag leaders screwed the middle class folks repeatedly, stealing all the wealth. Even US dollar holders were hosed, their accounts frozen and converted to peso bonds.

Sun, 03/06/2011 - 22:20 | 1024947 AN0NYM0US
AN0NYM0US's picture

if US goes Argentina you are likely correct but ask youself how did those holding gold make out?  In general debt is good (along with hard assets) in an inflationary eviron and if you look what the hedgies are doing (anectodal) they are scooping up real estate (among other hard assets)

Sun, 03/06/2011 - 22:40 | 1025023 Tedster
Tedster's picture

It's not just Argentina, it's always the same. Always, throughout history. Argent = silver iirc. Have read a little bit by a blog guy named "Ferfal", gold is good but the problem is crime goes through the roof, among other things. Another good study of formerly civilized countries that went feral iin recent years is the former Yugoslavia. America is, in many respects, spoiled - fat, dumb, and "happy", at least insofar our basic needs have been met for so long it is unthinkable for many to have to survive at a subsistence level, obviously. While it would be nice to be sitting on a pile of gold, noone should have any illusions as to what it portends should it go
logarithmic. It would likely mean time to find a new land - but where? America is (or was) the last best place. One immigrant wrote that the US was "the best place to do business, but the worst place to raise a family";
if we're losing the former then the latter isn't likely to get better anytime soon.

Mon, 03/07/2011 - 03:12 | 1025469 Vlad Tepid
Vlad Tepid's picture

The key then is to find a place where it is the best to raise a family...business comes second in my book.  You have to understand:  immigrants don't come here because its the best place.  They come here because it's the best place that they can get into easily.  Our reputation preceeds us.

Sun, 03/06/2011 - 21:29 | 1024810 Seasmoke
Seasmoke's picture

its STAGFLATION !

Sun, 03/06/2011 - 21:55 | 1024855 chindit13
chindit13's picture

Question for Egon......

If what you say is true, then why the hell are you and your firm selling your gold?  You speak of the coming apocalypse, but you'll trade me "real money" for a stack of soon-to-be-worthless fiat paper?  If a "hyperinflationary deluge is imminent", but you'll still trade me the equivalent of 1440 paper dollars for an ounce of gold, I guess I do not understand the meaning of "deluge" and "imminent".  Are you just an incredibly nice guy, having had been taught "ethical and moral values, and discipline", and eating your dinners around the table every night with your gene pool, so you just want to help us?  Frankly, I don't think you are sincere.  I can't help but think you are taking the piss out of us and you are every bit as full of the moral and financial decadence you rail against in your early paragraphs.

Sun, 03/06/2011 - 22:04 | 1024885 akak
akak's picture

I have read people rather naively criticizing other coin and bullion dealers for the same idea, but it is a baseless accusation.

Dealers do not make money by holding gold and silver, they make their living by dealing in it --- on the buy-sell spread.  If a dealer is hedging properly, it is utterly irrelevant to their business whether gold and silver are rising or falling in price.  To imagine that they somehow stock up (or try to) when prices are low, only to try and sell only when prices are high, is, to be frank, rather uninformed of basic commodity transacting.

Is the dealer in personal flotation devices (life vests) to be damned because he is not personally out on the waters delivering them to boating passengers in distress?

Sun, 03/06/2011 - 22:51 | 1025051 chindit13
chindit13's picture

Hedging how?  With paper gold?  Again, if we are on the any-second-now verge of total annilhilation, that paper gold hedge isn't going to be worth any more than fiat.

I can appreciate "hedging" if the term is a rough approximation for "diversification", and I can appreciate the "business" of being a coin or bullion dealer.  What raises an eyebrow is when someone writes a sensational article, specifically choosing words such as deluge and imminent---which suggests he thinks collapse is an absolute certainty and not just a possibility---while at the same time being more than happy to take paper for gold.  In fact, I'll bet that if I made a bid on Matterhorn's entire inventory, they would gladly sell it to me in exchange for the very paper Egon believes will (any second now) become vapor.  Just smells funny.  Too bad he couldn't convince himself.  If his words are correct then he'll have no one to blame when all he has left is paper.

Sun, 03/06/2011 - 23:33 | 1025158 Snidley Whipsnae
Snidley Whipsnae's picture

"If his words are correct then he'll have no one to blame when all he has left is paper."

...and if he delt in any paper assets what would he have left after they collapsed?

I suspect that he has an adequate stash of gold for personal consumption.

Most gold/bullion dealers have been in their tiny niche for a long time. I know several dealers and I know that they have their own bullion set aside. Blanchard in New Orleans is one. Few if any of them ever expected to make a vast fortune in the business. I am glad they are finally making a few bucks...while still holding their own PMs for the train wreck in progress. 

Sun, 03/06/2011 - 23:38 | 1025173 Implicit simplicit
Implicit simplicit's picture

They do talk their own book, but the book is interesting and has merit. A person selling lifesavers before a forecasted flood probably saves a few for himself.

Sun, 03/06/2011 - 23:25 | 1025139 RockyRacoon
RockyRacoon's picture

Lemme ax you a quershion, dawg.   Why do the folks who hold oil sell it since it's going up so high?   Seems like they'd hold onto it since the world is going all to hell.   When you figger that out you'll know why we coin dealers buy AND SELL gold and silver coins.

Mon, 03/07/2011 - 01:54 | 1025411 WaterWings
WaterWings's picture

All your inventories are belong to me! Payment next month!

Mon, 03/07/2011 - 03:16 | 1025473 Vlad Tepid
Vlad Tepid's picture

+1

 

BTW, Rocky I owe you a solid for that tip on the ATB silver quarters...I think I single handedly caused them to "temporarily suspend sales" while they "fixed" their price.  *Fistbump, dawg.*

Sun, 03/06/2011 - 21:50 | 1024858 GOSPLAN HERO
GOSPLAN HERO's picture

Silver has touched $36.  Yeh baby!

Sun, 03/06/2011 - 22:11 | 1024915 GoingLoonie
GoingLoonie's picture

I need a little help here.  My kids are in their late 20's and want to buy a house, should they buy now before the sh__ hits the fan; or wait.  90% of their savings is in cash- the rest in gold and silver coin.

 

 

Sun, 03/06/2011 - 22:17 | 1024929 jomama
jomama's picture

don't buy, put it all into gold and silver.

Sun, 03/06/2011 - 22:25 | 1024974 AN0NYM0US
AN0NYM0US's picture

no wait! it's 1999 no, I mean it's 2000 put it into tech  this dot com thing is in its infancy Nasdaq 15.000 is just around the corner

Sun, 03/06/2011 - 23:13 | 1025107 AVP
AVP's picture

+1...short and sweet!

Sun, 03/06/2011 - 23:50 | 1025199 craigh01
craigh01's picture

Buy now.  Interest rates will never again be this low.  If we really do have hyperinflation, they get a free house!  Downside risk: if we have a deflationary depression, they'll be bummin....  I think we can count on the government to hyperinflate, though....

Try to get a house/mortgage where the mortgage is lower than what you could rent it for.  I'm getting a 125K house with an FHA fixed 30 year loan, 3.5% down, total payment including insurance and taxes will be 952/month, I could rent that for at least 1100, probably 1200. 

I'd advise them against buying a McMansion though...  heating costs are gonna soar!

Mon, 03/07/2011 - 03:53 | 1025499 headless blogger
headless blogger's picture

Since they are young, my advice is for them to buy a house in another country. If I was in my 20's I would be seriously thinking about getting the hell out of here or at least have a plan for doing so. I think it's gonna be that bad.....

Sun, 03/06/2011 - 22:16 | 1024926 Vanderdekken
Vanderdekken's picture

I might be just a novice, but here's what's bugging me. I can't quote any actual numbers at the moment but for the most part the increase in the Monetary base that the fed has created has gone right into excess reserves for the banks. It's not getting out into the market at all, which is the problem the fed faces, and which is why they continue the QE. So, until the banks start lending, there's no real hyperinflation danger, right?

Mon, 03/07/2011 - 03:22 | 1025479 Vlad Tepid
Vlad Tepid's picture

I'll try to handle this quickly in two points:

1.  You're confusing inflation and hyperinflation.  The hyper-type doesn't follow the regular rules and even breaks some...it is driven by a lack of faith in the currency.

2.  We have trillionsupon trillions of $ sitting in foreign countries as reserves.  If they were to start getting panicky, we would get a torrent of dollars hitting our shores the likesof which we've never seen. The only thing Helicopter Ben could do to prevent hyperinflation then would be to sit on the beach with a flamethrower.

Sun, 03/06/2011 - 22:20 | 1024953 phyregold
phyregold's picture

So maybe i'm just to new to all of this, but can somone simplfy what actually happens in the house cuts back on entitlements?  Or if the even half of Paul's suggestion 500bn is cut?  Do we go back to happy dollar land?

Sun, 03/06/2011 - 23:22 | 1025126 snowball777
snowball777's picture

Disinflation.

Mon, 03/07/2011 - 08:17 | 1025581 phyregold
phyregold's picture

Isn't that the best exit?

Mon, 03/07/2011 - 10:36 | 1025899 snowball777
snowball777's picture

Least painful long-term, yes.

'Best'? No...best would have been avoiding the deregulation and credit bubbles entirely.

Sun, 03/06/2011 - 23:29 | 1025027 baby_BLYTHE
baby_BLYTHE's picture

Punch me through the face... I can whistle through the empty gap left by my removed tooth.

This shit ain't worth it, folks.

Obama was very clear in his campiagn speech, "Green Jobs are cumming".

HE WANTS OIL TO GO TO THE MOON AS AN EXCUSE!

Life suck, OKAY!?!

My friends just tell me they "MONEY!". They don't care about what the FED does.

"Gas prices went up last time." "They will come down once again".

Sun, 03/06/2011 - 23:42 | 1025177 baby_BLYTHE
baby_BLYTHE's picture

Whom ever junked me... better ready their larynx removed and replaced with something most unpleasant.

 

(I AM BURNING LIVID TONIGHT!)

*ready your print screens * I am at the end of the rope here

Sun, 03/06/2011 - 23:43 | 1025183 xiantian
xiantian's picture

Greenspan may be deeper than he seems. Joubert's Dream suggests a different take:

http://www.goldenbar.com/MainPages/TheDreamPF.htm

Sun, 03/06/2011 - 23:50 | 1025194 Saxxon
Saxxon's picture

Snidley, thanks for the book reference but the title should be, 'Let us Now Praise Famous Men' by James Agee w/ photographs by Walker Evans.

Mon, 03/07/2011 - 00:26 | 1025259 msjimmied
msjimmied's picture

A must watch.

http://www.huffingtonpost.com/michael-moore/america-is-not-broke_b_83200...

Look at the size of that crowd, and it's been 3 COLD weeks...

 

 

Mon, 03/07/2011 - 00:48 | 1025274 baby_BLYTHE
baby_BLYTHE's picture

Some people take this coming Collapse stuff seriously.

case in point,

http://www.youtube.com/watch?v=efc_3BUr6RY

 

http://www.youtube.com/watch?v=QWIenEil1fc (<Yikes, snake oil from slime masters)

We live and breath it. Got it? Nothing changes. People just evolve.


I hate everyone!
I mean it.

 

No one cares about anyone, but themselves. THIS WON't CHANGE and will continue to get materially WORSE!

I respect Ron Paul and the libertarian crowd. I enjoy consuming gold, etc.

 
both the GOP and DEMS are working together (and loving IT)>>>

They are harvesting the life organs out of the Americans (literally) to pay off the debt to the folks who caused the "EVENT" in 2008. Reperations. plain englisch

The blood of Americans was pleged once prior during American history. SOme people still live as colleteral for that today. Now it is double the stakes.

 

http://www.ahherald.com/bishop/2004/gb040205_usa_bankruptcy.htm

 

Obamacare is just a wet blanket. The fire has already collapsed the system and there is no way to stop it.

Debts are always repaid.

Death camps are coming. WE KNOW IT, FOLKS. It is called Eugenics. I hope you are ready.

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

 

http://www.youtube.com/watch?v=BwVap8x64As

 

^^^Me and a few people are already understand this^^^ WE ARE ANGRY!

---------

Problem is........, no one cares! Everyone will vote for their share of the pie forever. More liberties will be lost along the way.

 

No Revolution is coming, EVER! Tattoo that through your thick f---ing skull!

 

I lost all my friends, became an alcoholic and hanging on by my current job BY A THREAD!

sometimes there is no an answer on this end... I cannot find one here.

People say the afterlie is better

 

Mon, 03/07/2011 - 01:27 | 1025370 AVP
AVP's picture

Try some "mary jane" if it's any good it should make you too lazy to kill yourself.

just sayin...

 

Mon, 03/07/2011 - 02:06 | 1025415 cosmictrainwreck
cosmictrainwreck's picture

well, you sure type & express well for an alcoholic; I'm not gonna get into all that, just to say "hi" and let you know I hope the best for you

Mon, 03/07/2011 - 02:59 | 1025460 DeltaDawn
DeltaDawn's picture

Those with the best coping skills and resiliency will do better. Exercise,meditation, prayer, healthy eating, food storage, etc. Take care of yourself!

Mon, 03/07/2011 - 04:47 | 1025511 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

I support your health too. You are worthy to live.

Not sure why, but I recommend the movie Michael Clayton to you. It looks at money versus morality and at the corporate versus the human and at least has a happy ending (but the rest of the movie is grim).

Mon, 03/07/2011 - 01:00 | 1025320 tempo
tempo's picture

The FED and Obama can't stop QE because its the only alternative.  Spending can't stop because 80%+ is for entitlements and defense.  The FED is buying all Ts and if they stop interest rates will ballon and the interest expense could reach 50% of revenues.  QEing will evenutally impact Americans but most of the instability will be in poorer countries.  So the US is exporting inflation and misery.  Nice job Ben.

Mon, 03/07/2011 - 01:12 | 1025348 Thomas Sabo Bracelet
Thomas Sabo Bracelet's picture

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Mon, 03/07/2011 - 02:54 | 1025455 pointer
pointer's picture

as the economy collapses at least there are more posts and responses about an assistant wedding planner job than there are on here:  http://www.indeed.com/forum/job/event-planner/Assistant-Wedding-Planner/...

Maybe we're all being too cynical - sometimes I wish I could go back to being clueless...

Mon, 03/07/2011 - 05:03 | 1025494 baby_BLYTHE
baby_BLYTHE's picture

married? are you kidding me?

What a joke!

Who could possible wish to bring a child into this world that is about to collapse into absolute hell?

Have you seen the Middle-East? Your government hates your guts. They don't care about genocide!

Did you hear Ron Paul talking with that wench? SHE HAS BLOOD ON HER FILTHY HANDS! Her last name is a total joke. Her+Bill is a complete fucking nightmare.
Her response to Dr. Paul is one-giant fuck you and what you represent, this country belongs to no one... BUT US. like Celente says, "Just-US" (no Justice).

http://www.ronpaul.com/2011-03-02/ron-paul-no-dollars-for-dictators-isra...



Death is acceptable to them. They have all the medicine and life extension technology available to them and ONLY THEM! They can also print the money to pay the military police happy to accept the fiat as it still "pays the bills" (My former friends always said that and I made them regret it)

We will all die and suffer. It will be a fun game for them to watch.

Bush looked cozy and comfy at the Superbowl. Dick Cheney is saved from near-death everyyear his heart gives out. Same with William Jefferson.

Good, honest and hard working people are suffering and dying today

KILLING WITH A SMILE (literally). Got that folks?

Mon, 03/07/2011 - 07:58 | 1025565 Snidley Whipsnae
Snidley Whipsnae's picture

baby BLYTHE... Member for two weeks and six days...

The trolls are really coming out of the toilet tonight. The Gov, Fed, Treasury must have increased the troll budget.

Mon, 03/07/2011 - 12:41 | 1025731 baby_BLYTHE
baby_BLYTHE's picture

So it's illegal to talk about killing youself online? (I have been arrested before, not fun!)

Just know (I am 20) it is illegal for me to drink. I will continue to do it until I cannot. Then I will do it somemore!

I have guns at my house. Anyone that attempts to come to my house is asking for trouble!

I have been reading this blog for two freaking years! I am just at the end of the line here. This shit isn't worth it!

I junked you, btw.

Tue, 03/08/2011 - 09:56 | 1029281 prole
prole's picture

BLYTHE... choose life...

Mon, 03/07/2011 - 03:44 | 1025491 headless blogger
headless blogger's picture

NASDAQ may be merging with the London Stock Exchange. Didn't the NYSE just merge not long ago with a German exchange? So even the "all-American" icons of capitalism are no longer just American.

You can't liken the coming collapse of the U.S. with the Roman empire...not entirely anyways. It took the Roman empire to collapse over a very long time (a couple hundred years I think).

U.S. collapse, when it does finally come, will be swift.

In defense of 'the family'..... Every time the economy goes on the skids there's always this increase in ridicule directed at single parent homes. Let's be real here.... A two parent family cannot possibly, without direct support from extended family, provide all that is needed to their young, either. Humans just don't work that way. Even if one parent stays home and the other works it is still not "normal". consider that most healthy cultures (mostly from past history, now) operated in a very strong community oriented situation. The burden of raising a child for 18 years was never put on one or two parents (the equivalent to modern day "families"...which are either one parent or two...or shared).

We think of "the family" as this unit of mother, father, children. I know all kinds of two-parent families that have miserable children. I also know of some single parents that actually have some fairly decent (more than most) children.

As the collapse unfolds the communities that make it will be the ones where the people become more unified instead of imploding on themselves.

 

Mon, 03/07/2011 - 03:46 | 1025493 natty light
natty light's picture

Assignats bitchez.

Mon, 03/07/2011 - 04:43 | 1025508 baby_BLYTHE
baby_BLYTHE's picture

yeah, it is not funny. Got it yet?

Innocent people dying is not fucking funny.

My older brother died in the car with me (he was driving). Drunk Driver killed him and his friend in the front seat.

Prolly has some reason to due to the fact I am bisexual and abuse drugs, maybe not of course (ALL YOU ACADEMICS NEED TO GO UNDERWATER AND THEN NEVER RESURFACE!... for us, thank you ;)

Charlie Sheen is right of course about 12-steps and therapy. But Tyler told you that already.

I am not one of those pussy that wants to take booze away from everyone. The money from the Drugwar could feed and clothe Americans!

America will certainly need all the extra $ it can get during the coming Depression.

Two Hots and a Cot will be real!

Mon, 03/07/2011 - 10:24 | 1025850 GoingLoonie
GoingLoonie's picture

Let's make cars illegal!!!!!!

Mon, 03/07/2011 - 03:50 | 1025496 StychoKiller
StychoKiller's picture

I wonder what Mexico is gonna think when millions of Gringos from los Ustados Unitos start heading south to escape the winter cold in the upper latitudes...

Mon, 03/07/2011 - 04:27 | 1025509 germanicus
germanicus's picture

Good analysis! The moral and ethical decadence is the problem.

Our colture peaked probably in 1900, now we are in free fall. Just look at music,

Compare Beethoven and pop or rap music and you know where

we are now!

I guess 1% owning gold is correct, 99% watch hollywood movies and

think they are good ;-)

Mon, 03/07/2011 - 07:06 | 1025521 baby_BLYTHE
baby_BLYTHE's picture

http://www.youtube.com/watch?v=EBqo1PjthNA

 

I heard some rumors... secrets make me sick!

http://www.youtube.com/watch?v=UyMPLiizIzg

 

thanks for the warnings... yawn!

What if 2008 was the "BIG Event"?

TIME TO SPILL THE BEANS ON WHAT IS COMING! or else prepare for more junks.

This doom is really unhealthy for me  ( and I am certain I speak for just about everyone else)

btw, here is a junk... how does that feel?!?!?!

Mon, 03/07/2011 - 08:02 | 1025571 Snidley Whipsnae
Snidley Whipsnae's picture

It's about 7am here on the East Coast of Fl...

Gold  $1441.90

Silver $36.52

Oil $106.60

Interesting overnight trade and shaping up to be an interesting week... Perhaps we do live in interesting times...

http://finviz.com/forex.ashx

Mon, 03/07/2011 - 10:42 | 1025928 Overflow-admin
Overflow-admin's picture

"Most politicians of history, aching to be allowed to use the magic elixir, did so only in defiance of warnings that it was theoretically bad"

Actually it is not only theoretically proven bad. And it's not only in defiance of warnings that politicians acted so, but on greed and personal interest. That book has good analysis, but is still too much "politicalement correct" ;)

Mon, 03/07/2011 - 20:34 | 1028021 lsjcma
lsjcma's picture

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Wed, 03/09/2011 - 16:22 | 1033932 GOSPLAN HERO
GOSPLAN HERO's picture

"Purging is at last at hand. Day of Doom is here. All that is evil, all their allies; your bankers, your leaders, those who would call themselves your judges; those who have lied and corrupted the Earth, they shall all be cleansed."  -- Thulsa Doom

Do NOT follow this link or you will be banned from the site!