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Guest Post: Hyperinflation, Part II: What It Will Look Like
Submitted by Gonzalo Lira
Hyperinflation, Part II: What It Will Look Like
I usually don’t do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the United States, clearly struck a nerve.
It was a long, boring, snowy piece of macro-economic policy speculation, discussing Treasury yields, Federal Reserve Board monetary reaction, and the difference between inflation and hyperinflation—but considering the traffic it generated, I might as well been discussing relative breast size in the porn industry. With pictures.
Essentially, I argued that Treasury bonds are the New and Improved Toxic Assets. I argued that, if there was a run on Treasuries, the Federal Reserve—in its anti-deflationary zeal, and its efforts to prop up bond market prices—would over-react, and set off a run on commodities. This, I argued, would trigger hyperinflation.
The disproportionate attention my post garnered is indicative of people’s current fears. As I’ve said before, people aren’t blind or stupid, even if they often act that way. People are worried—they’re worried about the current state of affairs: Massive quantitative easing, toxic assets replaced by the full faith and credit of the U.S. government in the shape of Treasuries, fiscal debt which cannot possibly be repaid, a second leg down in the Global Depression that seems endless and only getting worse—people are scared. Many readers gave me quite a bit of useful feedback, critiques, suggestions and comments on the piece—clearly, what I was discussing touched on a deeply felt concern.
However, there were two issues that many readers had a hard time wrapping their minds around, with regards to a hyperinflationary event:
The first was, Where does all the money come from, for hyperinflation to happen? The question wasn’t put as baldly as that—it was wrapped up in sophisticated discussions about M1, M2 and M3 money supply, as well as clever talk about the velocity of money—the acceleration of money—the anti-lock brakes on money. There were even equations thrown around, for good measure.
But stripped of all the high-falutin’ language, the question was, “Where’s all the dough gonna come from?” After all, as we know from our history books, hyperinflation involves people hoisting bundles and bundles of high-denomination bills which aren’t worth a damn, and tossing them into the chimney—’cause the bundles of cash are cheaper than firewood. If the dollar were to crash, where would all these bundles of $100 bills come from?
The second question was, Why will commodities rise, while equities, real estate and other assets fall? In other words, if there is an old fashioned run on a currency—in this case, the dollar, the world’s reserve currency—why would people get out of the dollar into commodities only, rather than into equities and real estate and other assets?
In this post, I’m going to address both of these issues.
Apart from what happened with the Weimar Republic in the 1920’s, advanced Western economies have no experience with hyperinflation. (I actually think that the high inflation that struck the dollar in the 1970’s, and which was successfully choked off by Paul Volcker, was in fact an incipient bout of commodity-driven hyperinflation—but that’s for some other time.) Though there were plenty of hyperinflationary events in the XIX century and before, after the Weimar experience, the advanced economies learned their lesson—and learned it so well, in fact, that it’s been forgotten.
However, my personal history gives me a slight edge in this discussion: During the period 1970–’73, Chile experienced hyperinflation, brought about by the failed and corrupt policies of Salvador Allende and his Popular Unity Government. Though I was too young to experience it first hand, my family and some of my older friends have vivid memories of the Allende period—vivid memories that are actually closer to nightmares.
The causes of Chile’s hyperinflation forty years ago were vastly different from what I believe will cause American hyperinflation now. But a slight detour through this history is useful to our current predicament.
To begin: In 1970, Salvador Allende was elected president by roughly a third of the population. The other two-thirds voted for the centrist Christian Democrat candidate, or for the center-right candidate in roughly equal measure. Allende’s election was a fluke.
He wasn’t a centrist, no matter what the current hagiography might claim: Allende was a hard-core Socialist, who headed a Hard Left coalition called the Unidad Popular—the Popular Unity (UP, pronounced “oo-peh”). This coalition—Socialists, Communists, and assorted Left parties—took over the administration of the country, and quickly implemented several “reforms”, which were designed to “put Chile on the road to Socialism”.
Land was expropriated—often by force—and given to the workers. Companies and mines were also nationalized, and also given to the workers. Of course, the farms, companies and mines which were stripped from their owners weren’t inefficient or ineptly run—on the contrary, Allende and his Unidad Popular thugs stole farms, companies and mines from precisely the “blood-thirsty Capitalists” who best treated their workers, and who were the most fair towards them.
Allende’s government also put UP-loyalists in management positions in those nationalized enterprises—a first step towards implementing a Leninist regime, whereby the UP would have “political control” over the means of production and distribution. From speeches and his actions, it’s clear that Allende wanted to implement a Maoist-Leninist regime, with himself as Supreme Leader.
One of the key policy initiative Allende carried out was wage and price controls. In order to appease and co-opt the workers, Allende’s regime simultaneously froze prices of basic goods and services, and augmented wages by decree.
At first, this measure worked like a charm: Workers had more money, but goods and services still had the same old low prices. So workers were happy with Allende: They went on a shopping spree—and rapidly emptied stores and warehouses of consumer goods and basic products. Allende and the UP Government then claimed it was right-wing, anti-Revolutionary “acaparadores”—hoarders—who were keeping consumer goods from the workers. Right.
Meanwhile, private companies—forced to raise worker wages while maintaining their same price structures—quickly went bankrupt: So then, of course, they were taken over by the Allende government, “in the name of the people”. Key industries were put on the State dole, as it were, and made to continue their operations at a loss, so as to satisfy internal demand. If there was a cash shortfall, the Allende government would simply print more escudos and give them to the now State-controlled companies, which would then pay the workers.
This is how hyperinflation started in Chile. Workers had plenty of cash in hand—but it was useless, because there were no goods to buy.
So Allende’s government quickly instituted the Juntas de Abastecimiento y Control de Precios (“Unions of Supply and Price Controls”, known as JAP). These were locally formed boards, composed of loyal Party members, who decided who in a given neighborhood received consumer products, and who did not. Naturally, other UP-loyalists had preference—these Allende backers received ration cards, with which to buy consumer goods and basic staples.
Of course, those people perceived as “unfriendly” to Allende and the UP Government either received insufficient rations for their families, or no rations at all, if they were vocally opposed to the Allende regime and its policies.
Very quickly, a black market in goods and staples arose. At first, these black markets accepted escudos. But with each passing month, more and more escudos were printed into circulation by the Allende government, until by late ’72, black marketeers were no longer accepting escudos. Their mantra became, “Sólo dólares”: Only dollars.
Hyperinflation had arrived in Chile.
(Most Chileans, myself included, find ourselves both amused and irritated, whenever Americans self-righteously claim that Nixon ruined Chile’s economy, and thereby derailed Allende’s “Socialist dream”. Yes, according to Kissinger’s memoirs, Nixon did in fact tell the CIA that he wanted Chile’s economy to “scream”—but Allende did such a bang-up job of fucking up Chile’s economy all on his own that, by the time Richard Helms got around to implementing his pissant little plots against the Chilean economy, there was not much left to ruin.)
One of the effects of Chile’s hyperinflation was the collapse in asset prices.
This would seem counterintuitive. After all, if the prices of consumer goods and basic staples are rising in a hyperinflationary environment, then asset prices should rise as well—right? Equities should rise in price—since more money is chasing after the same number of stock. Real estate prices should rise also—and for the same reason. Right?
Actually, wrong—and for a simple reason: Once basic necessities are unmet, and remain unmet for a sustained period of time, any asset will be willingly and instantly sacrificed, in order to meet that basic need.
To put it in simple terms: If you were dying of thirst in the middle of the desert, would you give up your family heirloom diamonds, in exchange for a gallon of water? The answer is obvious—yes. You would sacrifice anything and everyting—instantly—in order to meet your basic needs, or those of your family.
So as the situation in Chile deteriorated in ’72 and into ’73, the stock market collapsed, the housing market collapsed—everything collapsed, as people either cashed out of their assets in order to buy basic goods and staples on the black market, or cashed out so as to leave the country altogether. No asset class was safe, from this sell-off—it was across-the-board, and total.
Now let’s return to the possibility of hyperinflation in the United States:
If there were a sudden collapse in the Treasury bond market, I argued that sellers would take their cash and put them into commodities. My reasoning was, they would seek a sure store of value. If Treasury bonds ceased to be that store of value, then people would invest in the next best thing, which would be commodities, especially precious and industrial metals, as well as oil—in other words, non-perishable commodities.
Some people argued this point with me. They argued many different approaches to the problem, but essentially, it all boiled down to the argument that commodities and precious metals have no intrinsic value.
Actually, I think they’re right. In a strict sense, only oxygen, food and water have intrinsic value to human beings—everything else is superfluous. Therefore the value of everything else is arbitrary.
Yet both gold and silver have, historically, been considered valuable. Setting aside a theoretical or mathematical construct that would justify the value of gold and silver, look at it from a practical standpoint: If I went to a farmer with five ounces of silver, would he give me a sack of grain? Probably. If I offered him an ounce of gold for two or three pigs, would he give them to me? Again, probably.
Where there is a human society, there is a need to exchange. Where there is a need to exchange, a medium of exchange will soon appear. Gold and silver (and copper and brass and other metals) have served that purpose for literally millennia, but then they were replaced by paper.
Right now, there are two forms of paper currency: Actual dollars, and Treasury bonds. One is a medium of exchange, the other a store of value.
If Treasuries—the store of value—were to collapse in price, and the Fed—as I predict—tried everything in its power to at least initially prop up their prices, would those sellers who managed to get out of Treasuries in time then turn around and invest in even dodgier bits of paper, like stocks? Or REIT’s? Or even precious metal ETF’s?
No they would not: They would get out of Treasuries—supposedly the “safest” investment there is—and get into something even safer—something even more tangible: Actual commodities. Not ETF’s, not even futures (or anything else that entails counterparty risk)—sellers of Treasuries would get into actual, hard commodities. Because if suddenly even the safest of all investment vehicles is now unsafe, do you really want to get behind the wheel of an even more unsafe vehicle, like stocks or corporate bonds or ETF’s? I mean, c’mon: If Treasuries crash, what else might crash?
That’s why people in a Treasury panic would buy commodities. This ballooning of non-perishable commodities would be as a means to store value. Because that’s what people do in a panic—they batten down the hatches, and go into what’s safest. When the stock markets tanked in the Fall of ’08, where did all that sellers’ cash go? To Treasuries—because it was then considered the safest store of value. Commodities suffered in comparison—gold took a bit of a hit, as did the other precious metals—but Treasuries ballooned as the equities markets tanked.
But if Treasuries—the ultimate store of value—now tanked? If the last sure-thing in paper-based stores of value took a hit, where would people go to both store value, and have ready access to that value?
Commodities. And this rush to commodities, I argued, would trigger hyperinflation.
Now, I said I would answer two questions—one was why commodities would outpace all other asset classes in a Treasury panic and subsequent hyperinflation. The other question was, “Where’s all the dough to feed my fireplace gonna come from, in a hyperinflationary event?”
The first wave of dollars in a hyperinflationary event will come from people’s savings accounts.
If Treasuries tank, and the markets all barrel into commodities, then prices will rise for regular consumers—this should not be a controversial inference. What would consumers do, with suddenly much higher gas prices, and soon much higher food prices? Simple: They’ll bust open their piggy banks, whatsoever those piggy banks might happen to be: 401(k)s, whatever equities they might have, etc.
But if the higher consumer prices continue—or become worse—what will happen to the 320 million American consumers? They’ll start buying more gas now, rather than wait around for tomorrow—and the market will react to this. How? Two way: Prices of commodities will rise even further—and asset prices will fall even lower.
Again, the man in the desert, the diamonds, and the water: If American consumers are getting hit at the gas station and the supermarket, they’ll start selling everything so as to buy gas, heating oil (most especially) and foodstuffs. The Treasury panic will thus be transfered to the average consumer—from Wall Street to Main Street by way of $15 a gallon gas prices, and $10 a gallon heating oil prices.
All other consumer prices would soon follow the leads of gas, heating oil and food.
In the above bit of Chilean history, I described how the Allende government printed up escudos to make up for the shortfall in nationalized businesses that was produced by their policy of hiking wages, while at the same time fixing prices.
This is a completely different way to hyperinflation than the way I envision it for the American economy—but once the American economy gets there, the effects of hyperinflation will be exactly the same: People will try to get out of assets in order to get hold of commodities. To get all eccy about it, money velocity would approach infinity, as money supply remains (at first) fixed, yet in the panic over commodities, aggregate demand as measured by aggregate transactions goes vertical.
Would there be Federal government intervention of some sort? Most definitely—people would be screaming for it. Would food rationing be implemented? Probably, and probably by way of the current Food Stamps program. Troops on the streets, protecting gas stations and supermarkets? Curfews to prevent looting? Palliative dollar printing? Yes, yes, and very likely yes.
That last bit—palliative dollar-printing: That’s the key. When palliative dollar-printing happens, it will be the final stages of hyperinflation—it’s when sensible people ought to realize that the crisis is almost over, and that a new normal will soon appear. But this stage will be fucking awful.
Palliative dollar printing will take place when the Federal government simply runs out of options. Smart economists will get on CNBC and argue that, “The velocity of money is destroying the economy—we must expand the currency base!” It’ll sound logical, but palliative money-printing will be a policy option born out of panic. The final policy option. It won’t be done for evil conspiratorial reasons—always remember Aphorism #6 (“Never ascribe to malice what can be explained by incompetence.”). It’ll be carried out because of fear and panic.
A whole boatload of fools in Washington, on seeing this terrible commodity-driven crisis unfold, with consumer prices shooting the moon, will scream for dollars to be printed—and their rationale will be perfectly reasonable, I can practically hear it now: “We've got to get cash into the hands of the average American citizen, so he or she can buy food and heating oil for their families! We can’t let Americans starve and freeze to death!”
Palliative money-printing will take place—hence the average American family will likely be using bundles of $100 bills to fire up the chimney that hyperinflationary winter.
Hoo-Ah.
Now, this fairly Apocalyptic scenario is simultaneously horrifying, and exciting as all get out. Hell, why do you think disaster movies are so popular? Shit blowing up is way cool! That's why Roland Emmerich gets paid the big bucks, God bless ‘im.
But for sensible people, Apocalypse is a distraction—it’s not the main event. For sensible people who want to be prepared, Apocalypse represents opportunities.
A true story: In ’73, at the height of the Allende-created hyperinflation, an uncle of mine, who was then a college student, was offered an apartment in exchange for his car. That’s right—an apartment. He owned a crappy little Fiat 147—a POS if ever there was such a thing—but cars in Chile in the middle of that hyperinflation were so scarce, and considered so valuable, that he was offered an apartment in exchange. To this day, my uncle still tells the story—with deep regret, because he didn’t follow through on the offer: “That Fiat was in the junkyard by ’78, but that apartment still stands! And today it’s worth nearly a half a million dollars!” Actually, I think it’s worth a bit more than that.
Another true story: A banker friend of mine manages the assets of a fabulously wealthy 70-something gentleman, whom I'll call Alfredo. In 1973, Don Alfredo was a youngish man, just starting out, with a degree in engineering but no money—until he inherited US$3,000 from a deceased aunt. Alfredo realized that the $3,000 were in a sense worthless: He couldn’t buy anything with them, and it wasn’t enough for him to leave the country and start over someplace else. After all, even then, $3,000 was not that much money.
So he took those $3,000, went down to the stock exchange, and spent all of it on Chilean blue-chip companies: Mining companies, chemical companies, paper companies, and so on. The stock were selling for nothing—less than penny stock—because of the disastrous policies of the Allende government. His stock broker at the time told him not to buy stocks, as Allende’s government, it was thought, would soon nationalize these companies as well.
Alfredo ignored his broker, and went ahead with the stock purchases: He spent all of his $3,000 on buckets of near-worthless equities.
On September 11, 1973, the commanders in chief of the four branches of the Chilean military staged a coup d’état. Within a year, Alfredo’s stock had rebounded about ten-fold. Since then, they’ve multiplied several thousand-fold—yes: Several thousand-fold. Don Alfredo has lived off of that $3,000 investment ever since—it’s what made him a multi-millionare today.
He realized, of course, that either those blue-chip companies would be nationalized by Allende—in which case he would lose all his $3,000 inheritance, which really wouldn’t change his fortunes very much—or somehow a new normal would arrive in Chile. Since the $3,000 couldn’t buy him anything, he took a gamble—and won.
What do these two true stories tell us? Simple: Buy when there’s blood on the streets.
That’s Baron de Rothschild’s famous line—but it hides a key insight, one which should be highlighted perhaps even more forcefully than the line itself:
Even in the midst of Apocalypse, things will get better.
That’s something people don’t quite seem to understand. In fact, it’s why teenagers tragically kill themselves over some girl or boy: They don’t realize that, no matter how bad things are now, they will get better later. To repeat:
Even in the midst of Apocalypse, things will get better.
I’m not repeating this insight as an empty comfort to my readers—I’m saying it as a trading strategy. When things are at their crazy worst, when everyone believes the Apocalypse is well nigh here, that’s when thing are about to turn for the better. This applies to every situation—including and most especially in a hyperinflationary situation.
Why? Simple: Because hyperinflation—by definition—cannot last. Because people need a stable medium of exchange. So if the currency goes up in flames in a hyperinflationary fire, of course there will be a period of terrifying instability—but it will pass. Either the currency will be repaired somehow (as Volcker repaired the dollar back in 1980–’82). Or the currency will be completely and irrevocably trashed—and then be replaced by something else. Because—to insist—people need a stable medium of exchange.
If Treasuries tank and commodities shoot up so high that they essentially break the dollar, civilization will not come crashing down into anarchy. At worst, there’ll be a three-four years of hell—economic hell. Financial hell. But then things will settle down into a new normal.
This new normal might well have unsavory characteristics. I tend to be a pessimist, and just glancing through history, I can see that just about every period of hyperinflation has been stabilized by some subsequent form of autocratic or totalitarian government. The United States currently has all the legal decisions and practical devices to quickly transition into an authoritarian or totalitarian regime, should a crisis befall the nation: The so-called PATRIOT Acts, the Department of Homeland Security Agency, the practical suspension of habeas corpus, etc., etc.
But as I said in my previous post, and reiterate here: Speculations about the new normal are pointless at this time. The future will happen soon enough.
What I do know is, One, a hyperinflationary event will happen, following the crash in Treasuries. Two, commodities will be the go-to medium for value storage. Three, all asset classes will collapse in short order. And Four—and most importantly—civil society will not collapse along with the dollar. Civil society will stumble about like a drunken sailor, but eventually right itself and carry on with a new normal.
During that stumble, opportunities will present themselves. I hope I have explained why.
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It's you guys who need to not only crack books but read them. Sorry to sound like Archie Bunker, but getting jobs and some experience might help, too, meatheads.
No hyperinflation has occurred anywhere except where money supply was rapidly expanding. Nowhere, never. Read up.
If the oil price suddenly doubled, by say the Saudis suddenly shuttering half their production, that would cause a one-time large upward move in prices and large downward move in GDP, not hyperinflation, which is a sustained rapid escalation of prices.
You guys seem to be imagining hyperinflation as a sort of mass hysteria, in which people lose confidence in the currency because everybody else is losing confidence, not necessarily for any intelligent reason. It just doesn't happen that way. People lose confidence for the intelligent reason that the money supply is expanding too rapidly.
Financial investors can't sustain elevated commodity prices without an increase in consumer demand or government stockpiling. The run-up to $140 oil took years and was sustained by rising consumption globally, and some stockpiling by China.
I'm not dismissing the possibility of hyperinflation, which is not short-term but is very real, and stems from the possibility that the Fed could attempt to monetize deficits and debt repayments.
Keep it real, kids.
It's you guys who need to not only crack books but read them. Sorry to sound like Archie Bunker, but getting jobs and some experience might help, too, meatheads.
No hyperinflation has occurred anywhere except where money supply was rapidly expanding. Nowhere, never. Read up.
If the oil price suddenly doubled, by say the Saudis suddenly shuttering half their production, that would cause a one-time large upward move in prices and large downward move in GDP, not hyperinflation, which is a sustained rapid escalation of prices.
You guys seem to be imagining hyperinflation as a sort of mass hysteria, in which people lose confidence in the currency because everybody else is losing confidence, not necessarily for any intelligent reason. It just doesn't happen that way. People lose confidence for the intelligent reason that the money supply is expanding too rapidly.
Financial investors can't sustain elevated commodity prices without an increase in consumer demand or government stockpiling. The run-up to $140 oil took years and was sustained by rising consumption globally, and some stockpiling by China.
I'm not dismissing the possibility of hyperinflation, which is not short-term but is very real, and stems from the possibility that the Fed could attempt to monetize deficits and debt repayments.
Keep it real, kids.
First off, I'm violating Aphorism #3—and I can predict already that I'm gonna regret it.
Second, post your comments ONCE—not three times.
Third, you wrote the following:
Wake up and smell the nightmare—the Fed is already monetizing. They've been monetizing for going on two years.
The Fed bought the toxic assets off the TBTF banks, and what did the American Zombies do with that cash? They bought Treasuries. The Federal government issues more and more T-bonds, and the TBTF banks buy them up—and everyone gets into the slipstream of this triangular trade, and makes a buck to keep quiet.
This triangular trade is what's been propping up Treasury bond prices—it's Stealth Monetization, and it's been going on since '08. I cannot say if this was actual collusion, or how things worked out—let the courts and historians figure out that question. But what I do know is, in practical terms, monetization has been going on since way before QE-lite. With QE-lite, the Fed is finally just coming out and doing monetization out in the open—but don't for a second tell me or this crowd here at ZH that "the Fed could attempt to monetize deficits". It's what they've been doing for a while now.
GL
I'd bet anything it was happening well before 08.
It's you guys who need to not only crack books but read them. Sorry to sound like Archie Bunker, but getting jobs and some experience might help, too, meatheads.
No hyperinflation has occurred anywhere except where money supply was rapidly expanding. Nowhere, never. Read up.
If the oil price suddenly doubled, by say the Saudis suddenly shuttering half their production, that would cause a one-time large upward move in prices and large downward move in GDP, not hyperinflation, which is a sustained rapid escalation of prices.
You guys seem to be imagining hyperinflation as a sort of mass hysteria, in which people lose confidence in the currency because everybody else is losing confidence, not necessarily for any intelligent reason. It just doesn't happen that way. People lose confidence for the intelligent reason that the money supply is expanding too rapidly.
Financial investors can't sustain elevated commodity prices without an increase in consumer demand or government stockpiling. The run-up to $140 oil took years and was sustained by rising consumption globally, and some stockpiling by China.
I'm not dismissing the possibility of hyperinflation, which is not short-term but is very real, and stems from the possibility that the Fed could attempt to monetize deficits and debt repayments.
Keep it real, kids.
It's you guys who need to not only crack books but read them. Sorry to sound like Archie Bunker, but getting jobs and some experience might help, too, meatheads.
No hyperinflation has occurred anywhere except where money supply was rapidly expanding. Nowhere, never. Read up.
If the oil price suddenly doubled, by say the Saudis suddenly shuttering half their production, that would cause a one-time large upward move in prices and large downward move in GDP, not hyperinflation, which is a sustained rapid escalation of prices.
You guys seem to be imagining hyperinflation as a sort of mass hysteria, in which people lose confidence in the currency because everybody else is losing confidence, not necessarily for any intelligent reason. It just doesn't happen that way. People lose confidence for the intelligent reason that the money supply is expanding too rapidly.
Financial investors can't sustain elevated commodity prices without an increase in consumer demand or government stockpiling. The run-up to $140 oil took years and was sustained by rising consumption globally, and some stockpiling by China.
I'm not dismissing the possibility of hyperinflation, which is not short-term but is very real, and stems from the possibility that the Fed could attempt to monetize deficits and debt repayments.
Keep it real, kids.
Six posts is really bad form. Any of us can have 2 or 3 happen by accident. You have to work at 6. You are not "keeping it real" kid.
The mere fact that you can say "sustained rapid exscalation of prices" is showing that you have a problem with your logic system. It's like saying an airplane with 100 lbs of fuel is capable of a sustained rapid climb from the deck to it's service ceiling of 50,000 feet.
Housing prices crash because incomes don't rise and allow them to remain elevated. Rapid escalation isn't maintained with the supply of money. People stop being able to pay for a shuttered oil production scenario you discuss. The 140 dollar run up was intentional to create the crash a bit later. To expose problems that were already there and news them and bring them out in such a way to start the emergency procedures necessary to continue on.
On target, Groucho.
There's a nice little chart that goes with the link below that I cannot reproduce here. It goes something like this: from 1920 to 1923 the value of the US Dollar in German Marks increased by
560,000,000,000%
So the question is really this: WHEN our dollar vaporizes, what currency can we be invested in to shoulder this problem? Chinese? Aussie? Loonies? Euro?
German Hyperinflation:
http://www.ingrimayne.com/econ/EconomicCatastrophe/HyperInflation.html
Isn't the Obama a big fan of redistribtion of wealth?
Money growth..and some observations..not shared by most..maybe not even me..I will try the test..
Is the United States now inexorably fated to follow the Soviet Union on the path leading to social breakdown, internal collapse, secessionism, and general chaos? This question is objectively now on the agenda. And not surprisingly, a gaggle of foundation-funded professors and other experts, led by that notorious British reactionary Niall Ferguson, are gloating in Schadenfreude and jubilation that the United States is now irrevocably doomed to imperial implosion, based largely on Paul Kennedy’s dangerous half-truth about imperial overstretch. And not only that: Niall Ferguson appears to be preparing the ground for some kind of massive bear raid against the US dollar emanating from London, some kind of a speculative thunderbolt capable of bringing the US breakdown crisis to a fast-track culmination.
The answer presented here to the question posed in the title is that, while the gravity of the US crisis is undeniable, it would be criminal stupidity to assert that we are dealing with some kind of irresistible cycle of US national decline. Quite the contrary: the historical experience of the New Deal, if properly evaluated, reliably indicates a broad array of economic reform measures which are immediately available to lead the US and the world out of the current crisis. The challenge to all serious American thinkers is to specify the needed components of a general US return to a regulated and dirigistic New Deal economic model, and to make these measures intelligible to the vast majority of the US population, and to agitate effectively for their implementation. (Need we point out that both Obama’s corporatist Democratic Party and the right-wing radical Republican Party are hysterically hostile to the New Deal?) Analysts who imagine that their role is to produce ever more dazzling or bombastic rhetorical invectives against the Wall Street collapse we see all around us are simply irrelevant at this point. Every real intellectual leader needs to have an answer ready for the question, “What is your program for overcoming the current world economic depression? Where are your solutions?” Those who do not deal in such answers can no longer be taken seriously.
Standard Tombstone for Empires: Died of OligarchyThe notion of imperial overstretch, first coined by Paul Kennedy two decades ago, is now often used to obscure the real causes of decline when the discussion of these might hit too close to home for certain vested interests in today’s world. Reactionary historians have a decided preference for explaining the collapse of the empires of the past based on military defeat and foreign invasion. This allows them to project their own militarism and xenophobia back into the past, and above all allows them to ignore the kinds of destructive socioeconomic changes in the direction of oligarchy, neo-feudalism, and plutocracy, as well as Malthusianism, which can be observed as factors in imperial decline. If they are willing to discuss such factors at all, they prefer to focus on monetary aggregates such as national debt, while giving scant consideration to such really decisive issues as technological progress or retrogression, the state of the industrial base, the standard of living, the situation of the family farm, the productivity of agriculture, and a series of related considerations which we can label real economics as expressed in terms of tangible physical wealth or hard commodity production — as distinct from the paper wealth derived from finance, banking, usury, and speculative bubbles. As we go further back in the past, the specific forms of some of these factors change, but their essence remains remarkably similar.
In other words, empires fall in reality because of internal decay. Such decay is usually a matter of agricultural and industrial decline, technological and scientific stagnation, and the misery and of the broad majority of the population — typically, the crushing of the middle class of farmers and producers. The work of destruction thus accomplished can proceed for a long time. A foreign invasion, catastrophic military defeat, or a financial panic is merely the moment in which the prevailing decadent state of affairs is dramatically revealed and the general complacency of the ruling elite shattered. The barbarian invasions of the fourth and fifth centuries A.D. did not doom the Roman empire by themselves, but unmasked the critical weaknesses which had been building up for centuries.
Neo-Feudalism Corrosive to Great StatesThe most prevalent cause of imperial decline and collapse is the growth of oligarchy, which in our time has often taken the form of neo-feudalism. In the fall of the Roman Empire, a central role was played by a secular tendency towards hyperinflation during the final phase. Under Diocletian and thereafter, technological innovation was strangled by regulations which forbade changes in the property of any guild – the equivalent of today’s green jobs craze. Trade never fully recovered from the crisis of the third century A.D., and the cities went into decline. As law and order deteriorated, regional powers emerged through civil war and barbarian invasion and became formidable enough to ignore any central authority. Ordinary members of the population had to seek protection under local potentates, soon to be called barons, who offered military defense in exchange for serfdom. Before too long, these arrangements took the form of the manorial system of the dark ages, which went hand in hand with a precipitous collapse of the population in Western Europe and the general decline in the level of civilization.
In the China of the Han Dynasty, similar changes were at work. Large latifundists emerged who were powerful enough to ignore the imperial authority even as they enslaved and otherwise subjugated peasants using issues like debt as powerful weapons. With the fall of the Han, Chinese civilization broke up into several petty states amidst a general decline in the attained level of civilization.
One of the last chances to save Rome from stagnation and decline came perhaps during the era of the Gracchi brothers between 150 and 125 BC, after the victory in the Punic wars against Carthage. This was the point where large-scale gang slavery on agricultural latifundia began to be introduced in places like Sicily. The Gracchi saw that agricultural slavery would destroy the basis of the Roman army, which relied on the independent small farmer or assiduus for its recruits. When the land reform they proposed was defeated by the assassination of both brothers, the gradual decline of the Roman Empire became almost inescapable. A similar point of inflection can be seen in the Han Empire of China in the reforms attempted by Wang Man, who was in power in the first years of the Common Era. When Wang Man’s reforms were frustrated, the Han Empire may well have passed the point of no return. The theme system of the Byzantine Empire and the equal-field system of the Tang dynasty both represented attempts to avoid yet another relapse into conditions which we today would call neo-feudal.
We may be living through a similar decisive phase today. The imperatives of our time are to shut down the zombie banks, to tax speculative transactions with the Tobin tax, to outlaw foreclosures, to nationalize the central banks, to issue 0% government-generated loans for massive infrastructural development, to preserve and expand the social safety net of health, education, and welfare, and to re-establish a coherent and orderly world monetary system devoted to the rapid expansion of world trade. If these reforms cannot be implemented in time, the civilization we see around us may indeed go the way of Rome and the Han.
Critical Role of the Middle ClassSince the first prototype of the modern state emerged under Giangaleazzo Visconti of Milan in the years before 1399, the most productive social layer in modern society and at the same time the basis of the modern state is the middle class. When the middle class is crushed, be it by the robber barons of the Middle Ages or by the private military firms and Wall Street predators of the present era, the entire society is in trouble. The era since about 1970 has been marked by the immiseration of the middle class in the United States, followed by Europe, Japan, and Russia, with the US fall in the overall standard of living amounting to a loss of about two thirds of the level attained under Lyndon B. Johnson. What is left is a super-rich elite of financial derivatives speculators who are the sole beneficiaries of the current system, and the mass of super-exploited wage workers, with very little left of the middle class in between. This social structure of elite and mass is the most essential feature of an empire, and also fulfills Machiavelli’s definition of corruption, which he defined as a wide disparity between the very rich and the very poor.
This phenomenon has gone hand in hand with the systematic demolition of the US industrial base, with declining rates of industrial employment and industrial production per capita. About 7% of the US work force is now in industrial production, down from about 40% at the end of World War II. This is translated into a weakening of the nation-state, especially in regard to logistics. The application of technology to the process of production has stagnated, while the pace of scientific discovery has slowed. The principal innovations of recent years, such as computer based on silicon chips, the human genome, and the laser, are all based on scientific breakthroughs that are traceable back to the 1950s or 1960s.
The grim litany cited by the gravediggers of modern civilization from the USSR to the US today is made up of the slogans of deregulation, privatization, the demonization of government, the demolition of the state sector, free trade, free markets, union busting, market fetishism, the negation of economic rights, and the general race to the bottom. These neo-feudal ideas have been popularized by the monetarist and neoliberal Mount Pelerin Society appropriately dumbed down to the level of an American MBA by Milton Friedman and his Chicago Boys. Thatcher and Reagan campaigned on these primitive slogans. These reactionary ideas have been popularized by right-wing extremist radio talk show hosts, producing an intellectual current of predatory right-wing anarchism in the society as a whole. These forces are undeterred by Alan Greenspan’s recent confession that his previous devotion to market fetishism as the answer to all policy questions was now in crisis, based on the US-UK banking panic of 2008.
On a world scale, the most important enforcer of these ideas has been the International Monetary Fund (plus associated central banks) with its now-discredited Washington Consensus. The IMF is an institution utterly devoid of success stories. From Bolivia to Poland and Russia, the typical shock therapy of the IMF has destroyed the sovereignty and the economic viability of its victims. There are no exceptions. All around the world today, IMF Diktats are being increasingly rejected in favor of a Beijing Consensus based on mutual advantage, real economic development, and the respect for national sovereignty.
The Anglo-American system is of course based on the axiom that the ruling elite of society should be represented by the financiers and their retainers. In the case of the former Union of Soviet Socialist Republics, the relevant form of oligarchy was the Soviet nomenklatura, the ruling elite of party, army, KGB, and government. The problems of the Soviet economy can be summed up first of all as a lack of hard and soft infrastructure, which were chronically underfunded because planning targets gave priority to heavy industry and war production. The other problem was that communist ideology ruled out the existence of small and medium industry. These types of startup firms, typically a high-tech company built around a discovery or innovation, proved invaluable in the US experience for transferring the spinoffs of military research and development into the realm of profitable civilian production.
Gorbachev’s perestroika was based on deregulation followed by nomenklatura privatization. Instead of converting the outmoded Gosplan system of central planning down to the last bolt to a system of modern indicative planning along the lines successfully employed in France, Japan (with the MITI), and the Taiwan experience, Gorbachev simply removed all central planning and let the entire system find its own path to the bottom. The suicide of the Soviet bloc came in particular when the Council for Mutual Economic Assistance (CMEA or COMECON) switched from administrative prices to the world market prices determined by Wall Street and City of London speculators.
The 1980s golden youth of this nomenklatura, people like Chubais and the late Yegor Gaidar, became fanatical followers of the IMF model. The results was a highly destructive shock therapy masterminded by Jeffrey Sachs and Anders Aslund during the chaotic Yeltsin era. The results of this criminal exercise in destruction were a decline in industrial production of 56%, and of agricultural production by about one half, combined with the hyperinflation of 1300% in 1994. This uncanny ability to combine depression with hyperinflation is one of the hallmarks of the typical schools of economic mystification. Russia has been laboriously climbing out of this abyss ever since.
The total deficit of United States infrastructure must now be somewhere between $5 trillion and $10 trillion. The causes of the current economic depression ought to be very clear. They had little to do with government spending per se, and everything to do with the deregulation and privatization. Fannie Mae and Freddie Mac worked fine as long as they were maintained as government institutions. Fannie Mae was however privatized in 1968 as part of the leading edge of the typical assault. Hedge funds are by their very nature deregulated, since they escape the scrutiny of the Securities and Exchange Commission. Derivatives were banned between 1936 and 1982, and did not fully emerge from the gray area until 1999. Within less than a decade, the world derivatives bubble had attained $1.5 quadrillion in notional value. These developments opened the door to the single most costly and most characteristic episode of the 2008 banking panic which detonated the current depression — the bankruptcy of the AIG financial products hedge fund based in London. This dubious entity, operating in a British regulatory environment which can only be considered an obscene joke, manage to issue about $3 trillion in credit default swaps — more than the total gross domestic product of France. The US taxpayer has up to now been forced to shell out more than $180 billion for AIG alone, making this case the single most costly bailout operation carried out by the US government so far. If there had been no hedge funds and no derivatives, and no British deregulated environment, these losses could not have occurred. QED: the immediate cause of the banking panic of 2008 can be found in the poisonous fruits of deregulation and privatization. To avoid future depressions and to get out of the present one, it is imperative that the rollback of all deregulation and privatization measures begin immediately.
Obama’s fascist corporate state, typified in the health bill, is the final phase of neo-feudalist development. Here powerful neo-feudal private interests commandeer the apparatus of the state and use it for their own sinister purposes – an exercise FDR branded as the essence of fascism, and which Jane Hamsher of Firedoglake has correctly recognized today.. Obama’s health plan is not a government takeover of the health care system; it is the takeover of the government by the predatory Wall Street insurance companies and Big Pharma, whose interests are kept paramount throughout. The US federal government and the IRS are now dragooned as a debt collection agency for the insurance companies under the unconstitutional individual mandate (an invention of the reactionary Republican Grassley). The regulatory functions of the federal government are perverted to exclude for all time cheaper prescription drugs from Canada, the EU, and Japan, where standards are higher than they are here. Medicare is banned from haggling with Big Pharma to get the prices down. This is the triumph of neo-feudalist predatory interest over the modern state, and it must be rolled back.
dumb me†
I assume we call these people Niallists?
Ouch! Okay, I'm sorry, Geo.
Thank you for the enlightenment on distant and recent history. This place is kind of like learning about life on the streets of a big city. If you survive the beatings, you're a lot more street smart.
"Niallists"
Funny.
Gold & Silver… How much does it weigh?
I've got a thousand rounds of 45 ACP. How much does it weigh?
How big of an army do I need to protect my gold, silver and ammo?
How many tons of food do I need for my army?
Do I need to protect myself from them?
Ask the supermarket manager if he's got change for a Krugerrand?
Paper is what works and always has and will be what works in the future. That's what happened in Germany, Chile, Argentina, Zimbabwe, etc., etc., and it will come back after a very disruptive period like the author says.
So who's got the edge? The gangs.
The globalists aren't lugging around tons of precious metals or hording ammo. They have it figured out where to hide. Macau? Singapore? Brazil? A private island? This whole thing has been engineered from the repeal of Glass-Steagall to the Fed's activity today. You can smell it. Something is going to happen and it won’t be nice. The Soros-Obama machine means to "transform America". Into what? Valhalla? Maybe for them. You're not included. And it's happening right now. When the hammer falls, it will be hard and fast. The day the US Dollar loses its position as the Reserve Currency is going to be a nightmare.
At the end of the day, you can’t have this discussion with 95% of the sheeple.
I know *exactly* what you mean. Let me tell you why you're here. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad.
-- Morpheus
Economists. What a hoot! The fallacy of scarcity. Mean people do suck, but really.
Apocalypse, yup can't get any worse, likely to stay the same or get better from there.
At around $7.50/gallon the "fools in Washington" might just go get us what we need.
Agree completely on the commodity price spikes sparking the hyper event, and the FED may be flat footed as they are geared to deal with wage driven inflation issues.
So the math (several thousand fold in 37 years) on Alfredo's investments is pretty good, but we saw an order of magnitude better than that in a few minutes today on CMT, but it was confiscated. Buy IBM at $100 today it goes to a penny during the event then goes up ten thousand fold in the ensuing 37 years : break even.
Perhaps if the lever was never discovered in the first place ....
Intrinsic value checklist. Oxygen check, water check, non-perishable food:
SPAM bitches !!!
From http://www.hormelfoods.com/faqs.aspx#can4
""What is the shelf life of a Hormel Foods product in an unopened can?
The processing techniques utilized by Hormel Foods makes the canned product safe for use indefinitely if the product seal remains intact, unbroken and securely attached to a can that has been well maintained. It is suggested that all canned products be stored in a cool and dry environment to keep the flavor adequately preserved. For maximum flavor it is recommended that the product be used within three years of the manufacturing date. After that period of time, the product is still safe to use however, the flavor gradually declines.""
There "may just" be a few other things with intrinsic value ... but its a start.
The "survivalists" here don't talk much about skills. Skills may also be good to have - carpentry, mechanical, blacksmith, etc. And don't forget about small shiny things - small jewelry, gems, coins, silk stockings, and things like that have proven very useful throughout history in times of extreme strife.
"We are here to make limbo tolerable, to ferry wounded souls across the river of dread to point where hope is dimly visible, and to stop the boat, shove them in the water and make them swim."
"them's that has the Spam have the last laugh"
Al Martin
http://en.wikipedia.org/wiki/Divine_Comedy
Gee, you guys are talking as though armed thugs are going to be roaming the streets looking for food, water, and Viagra.
If recent history is any guide then NOTHING is going to happen...everything will be fine. Ooops, 'gotta go...I forgot to TiVo Housewives of Atlanta. God, I love those bitches!
assumptionblindness wrote:"Gee, you guys are talking as though armed thugs are going to be roaming the streets looking for food, water, and Viagra."
Just Viagra for now.Milwaukee teachers fight for Viagra drug coverage
Associated Press – Fri Aug 6, 2010
http://news.yahoo.com/s/ap/20100806/ap_on_re_us/us_milwaukee_teachers_vi...
I'm assuming it will be a hard battle.
Dodd Questions Elizabeth Warren's Management Experience -- A Concern He's Never Raised Before
08-26-10 04:19 PM
"If the president wants to name her and it goes through the hearing process, then fine, he'll have my support," Dodd told the Courant this month regarding Warren's possible nomination. "But she has to tell me more than just she's a good consumer advocate or that's she's got a great campaign."
*Senator Dodd questioned Warren's confirmability in published interviews with Bloomberg News and TPMDC. He questioned her capacity to lead the new agency in interviews with American Banker and the Hartford Courant. He raised both concerns regarding potential nominees in an interview with Dow Jones."
http://www.huffingtonpost.com/2010/08/26/dodd-elizabeth-warren_n_694648....
guns -- 14 occurrences
shoot -- 16 occurrences
ammo -- ¡49! occurrences
if the fan is truly hit, unlike the thirties, we are doomed. you folks have all grown up watching rambo and mad max and blood this and boom that....
time to fill up the "airwaves" with just porn before it's too late!
Did you happen to watch any Yugoslav state TV in the early-mid 90's? That's precisely what was on, uncensored XXX at first weekends, then every night starting at 1 AM, then 11 PM. Curious, the things that happen when society becomes unhinged.
i think we've been unhinged for quite some time. you can turn on the t.v. and see a man's intestines being pulled out but 1/10th of 1% of an areola shown and america is doomed!!!
This is like kids around the camp fire speculating about what booger bear is gonna eat us up. It is true that we are in an economic crisis that few saw coming and those that did are still in shock at the severity and length. We also cant see what is coming and that may be the worst of it. We can speculate about past and other events and speculate about current situations transitioning into worse situations. HOWEVER In some of the scaredy cat posts there is some conventional wisdom that might be valid for normal life as well as upside down life.
The first thing that we need to recognize is that we still have a government that we have some control over with the vote. Make sure this next election is fair and square and is not rigged or stolen by the media or radicals of any side. Vote the bastards out and get some new ones that we can beat on so they will run the Nation rather than getting rich. Everyone needs to be active, speak out and demand your rights to a well run government that represents the people of this Nation.
Second—Water. This can go short for many reasons (like a major quake in S. California) or human tampering in N.Y. or flooding anywhere that ruins the water supply. Get a 50 gal correct plastic drum and put a cup of chlorine in it when you fill it. Change it every 6 months and store it in the shade. I keep 200 gallons. Your kids will die without water.
Third----- Food have a months supply for the humans and pets.
Forth----- Have at least one weapon that the wife can also use and 500 round of ammo per unit.
Fifth----- Expect and live for the best but plan for the worst.
Sixth----- If you gotta follow the gold thingy fad, get silver clad coins like Kennedy half dollars. They have a value of 50 cents and also a value of being partial silver. The coin guy trades in these and worst case you can buy with it at face value.
Seventh---- keep the cars full of fuel. Matches, candles, meds, Toilet paper, books, and needed expendables that may go short if things really get bad, camper stoves/lanterns etc.
Eighth----- As long as you are not dead, enjoy and live it the best you can. There are no reruns.
what if you don't have a wife, not everybody does†
=my stupid delete biutton is broken. can't get rid of the equal mark.did you make mey delete button break?
I think the article has a lot of sense about the dynamics of the treasuries crash. We know the probabilities, we don't know the timing, the combinations of actions and reactions. And the USA will play out in its own way, and in each locality. The government will flail about, I'm sure. We will likely see a decentralization that puts DC back into the Constitutional responsibilities it can handle. Who knows. I'm still betting on gold and silver for when the money's no good and when prices of valuable stuff go dirt cheap.
Already on it. Moving out of the city and into the country in the next 2 weeks. If we are wrong, so be it. I don't see any other way out of this mess without a currency collapse, neither does the fed or the government or we would know the path back to fake prosperity. We have reached peak credit and there is no turning it around. Hope for the best and prepare for the worst. shelter, heat, food, water, family, community and of course.....guns.
My question is if the dollar does implode what happens to the rest of the global economy? will the dollar's collapse be a global fiat currency collapse as people realize that paper money is simply created to steal from the people? How did we not see this coming?
Gargamel wrote:
"My question is if the dollar does implode what happens to the rest of the global economy?"
http://www.fourthturning.com/html/fourth_turning.html
http://en.wikipedia.org/wiki/Strauss_and_Howe
Thanks, on order.
This is me:
http://www.theaureport.com/cs/user/print/na/6054
MJB
The original "MiningJunkie"...
A very good explanation.
Thanks.
Thanks for your work.
Anything is possible, and whatever happens it will undoubtedly catch most people by suprise, even though everyone knows it will be related to debt.
Implicit, is it is indeed how I applaud your work will and how the CBs and the Regulators...
Damn if it is, if it is in, and other (the other getting to get dividends (legit and safe)).
Be prepared, in multiple ways, in case the STORM hits here. Especially with GOLD!
I'm staying the hell out of this one. My only comment is I wanna see some full frontal of stove-loader in part 3. Then maybe I can get my friends and family to read it. "I might as well been discussing relative breast size in the porn industry. With pictures."
That was a great analogy, GL - definitely 'might as well' last time, given all the pseudo-intellectual masturbation on show. This time, not so much - 377 comments so far, and I counted only one written by a semi-self-aware economic dictionary. I'm impressed. (And I second the call for raunchy jpegs in Part 3!)
Thanks TD. One of the best articles yet!
it's my understanding that in weimer prices were inceasing so fast that the central bank of germany gave rights to corporations to print money to pay their employees, and that's where all the cash came from that you see in the hands of people.
i don't know if the usa will see the inflation written of here, a deflationary collapse, both or neither. so my approach is to prepare for all: gold and silver coins in small denominations, guns, ammo, cash, shorts, longs, no debt, relationships and a limited supply of quasi non-perishable food etc etc
but whatever happens i think it'll happen soon. the people of the country are about ready to explode, if only at each other to blow off steam.
Remind me to keep my seeds and my shotgun in a safe place.
Goldman Sachs Received H1N1 Vaccine Before Several Hospitals
Nov. 5, 2009
http://www.businessinsider.com/goldman-sachs-received-h1n1-vaccine-before-several-hospitals-2009-11#ixzz0xlk2Z3E2
http://www.businessweek.com/bwdaily/dnflash/content/nov2009/db2009112_60...
What do you expect from vampire-squids?
NEW GONO NOTES RELEASED
http://williambanzai7.blogspot.com/2010/08/new-ten-dollar-gono-notes-rel...
To this day, my uncle still tells the story—with deep regret, because he didn’t follow through on the offer: “That Fiat was in the junkyard by ’78, but that apartment still stands! And today it’s worth nearly a half a million dollars!” Actually, I think it’s worth a bit more than that.
There are no apartments in Santiago that sell for 500000 dollars, even in Providencia. Houses, in the northeast, yes, but not apartments.
I think he meant as in the whole building, not just one unit.
no, an entire building would be in the millions. His story seems fishy to me. "You have to know where to look" for an expensive building? usually you have to know where to look to find the bargains.
There ARE apartments that sell for half a mill in Stgo.—and more. And they're not in Provi. You just have to know where to look. If you don't know, well, you don't know . . .
GL
Judging by many of the comments above, the gun nuts are out in force. Too bad the system WON'T collapse...
As the writer says, opportunities will present themselves at exactly the point where the armageddonists, survivalists, super wrap-yourself-in-the-flag patriots and Joe Public throw their hands up and start their lemming run.
I plan to have a load of cash at that time too - not USD but foreign cash and gold. So that I can buy land and a house cheap. A real estate vulture
I'm really in this only for myself. Truly! I WILL happily exploit and take advantage of anyone impoverished, beggarized, leveraged or silly enough to be unprepared.
I might even give you a couple bucks for one of your useless guns.
Kred,
The Founders were Gun Nuts too,traitors, and Right Wing extremists,you are foreigner?,maybe so, since you evidently do not get it?.
Also, what makes you think ANY FIAT will be worth a shit?.May be, Maybe not..........odds not looking too good right now.
Think Locally dude, act Globally.:>)
Clear, cogent, compelling; outstanding work, Gonzalo! Makes perfect sense to me.
The protocols only mentioned depression in the financial program, but did not mention it is hyper-inflation or great deflationary depression.
My friend follows Mish, Prechter and Rick Ackerman's deflation senario. Upon chatting with him I just tell him in order to trigger NWO only hyper-inflation can maximize wealth destruction and drive people crazy, while a deflation cannot destroy everything.
I have stockpiled ammo,guns, supplies, and I have learned - book learned - some basic infantry concepts. The tactics may be useful, maybe not- but at least I have a basic idea of reasoning - ambushes, traps. What I am now beginning to outline - is what simple things can be learned now- the kind of things that unconventional guerillas used- Vietcong type practices. Piano wire strung across roads. Are there reasonable easy ways to get basic elements from Home Depot - that you could fashion into basic launcher for forms of home brewed tear gas, mustard gas, cyanide gas? What can you use to put in a river, that would kill people encamped downstream? How can you jerry rig an ATV so that it has some bullet protection, and has mounted guns? Can you get those parachute bright lite flares that instantly take everyones's night vision away? What are simple tripwire booby traps that can be rigged? At some point, others will be thinking along these lines- if you haven't gotten your mind into this kind of thinking, you will be in danger. How about radio controlled model airplanes with C4 attached- redneck drones?
jesus had all those things and a lot more, jesus kicked ass!!
Some books I have found useful for some out-of-band ideas is one by John L. Plaster and there are several by H. John Poole.
have learned - book learned - some basic infantry concepts.
Henry Knox taught himself how to deploy artillery from two text books in his possession. He commanded Washington's artillery decisively on more than one occasion.
people continue to debate and plan armegeddon, what a waste of time. its been done daily for 20 months!!!!!!!!!!!!!!!!
and no new info has been shared., zip
l
Preparing For The Next Black Swan Is Tough08.26.10, 09:45 AM EDT - Forbes.com
"Up next could be the Treasury bond bubble, a Chinese real estate meltdown, another flash crash or a slow death by deflation."http://tinyurl.com/3yl5j5g
The term stasis (from Greek στ?σις "a standing still") may refer to
the world should be nervous. We just took the largest and easiest to extract oil reserves in the world and have all these nifty weapons. China has only benefited from our politicians foolish trade and monetary policies... all that new and shiny infrastructure sitting there ... easily destroyed. Our reichstag fire called 911, the very real potential of a collapsed currency ... perhaps world powers might want to play nice. Anyone want Lloyd Blankfeins' home addresses? "History does not repeat itself, but it often rhymes"
“Corporations have no body to kick and no soul to damn.”
I'm going to copy the idea of a couple of smart guys from Argentina - la red de trueque,a barter club. These untaxed, unregulated markets are creating real wealth for the poorest people in that country, and the idea is spreading like crazy among 'los nadies' all over South America.
http://www.youtube.com/watch?v=PDKeQ4IACJ4
Another idea worth lifting off the Argentinians is the pot and pan percussion. And smashing police vehicles with a skateboard. And the chanting. They've done pretty well down there, come to think of it. No se va, el pueblo no se va!
http://www.youtube.com/watch?v=rH6_i8zuffs
booger bear - Like it
In WW2 only about a quarter of soldiers in battle fired their weapons. They looked at another human being and just couldn't do it. After this the military worked on desensitization programs that brought up the ratio- and making vets more and more fucked up.
GL- My understanding is that all of the major recent hyperinflations were in circumstances where the country had no industrial base and had major debt denominated in foreign currencies. (Viz., Weimar and Zimbabwe.) We're kicking our industrial base to the curb, yes, but US debts are still denominated in dollars.
This kind of disaster never happens the way you expect, and happen much later. But this is a good and useful speculative exercise. Thanks!
http://www.lewrockwell.com/north/north784.html
Hyperinflation indeed is coming to America. The question, we all like to know, what will it mean to America (economically, politically, etc.,)
We learned what hyperinflation has done to Germany, Chile, Argentina, and former Soviet Union and Yugoslavia.
Wiemar Germany had a quite uniform population. The Soviet Union and Yugoslavia population distribution was very diverse. I really do not know much about Chile and Argentina.
America cultural and ethnic diversity is very high and is somewhat similar to the former Soviet Union. Consequently, I would think that America future will be in someway similar to the former Soviet Union: disintegration and civil unrest
"If Treasuries—the store of value—were to collapse in price, and the Fed—as I predict—tried everything in its power to at least initially prop up their prices, would those sellers who managed to get out of Treasuries in time then turn around and invest in even dodgier bits of paper, like stocks? Or REIT’s? Or even precious metal ETF’s?
"No they would not: They would get out of Treasuries—supposedly the “safest” investment there is—and get into something even safer—something even more tangible: Actual commodities. Not ETF’s, not even futures (or anything else that entails counterparty risk)—sellers of Treasuries would get into actual, hard commodities. Because if suddenly even the safest of all investment vehicles is now unsafe, do you really want to get behind the wheel of an even more unsafe vehicle, like stocks or corporate bonds or ETF’s? I mean, c’mon: If Treasuries crash, what else might crash?"
-------------------
If Treasuries collapse, large Treasury holders--especially foreign owners--won't give up on paper entirely, any more than they have in the past when the bonds of other sovereigns collapsed. They won't say to themselves, the way a panicked individual US citizen might, "My goodness, if you can't trust the US government, you can't trust anything." They'd say, "I have to hold some form of paper, so I'll find something else out there that's safer and not too overpriced."
In addition, it would be impractical for them to store a million dollars worth of commodities on their premises or in some shed in a U-Store-It lot. And it would be illegal for the large funds that hold most bonds to do so. Their charters require them to hold paper assets, and in some cases they are required to hold a minimum percentage in certain asset classes like sovereign bonds. If they had to get out of one country's bonds, the logical next destination for their funds would be the bonds of some other, safer, country, such as Canada, Germany, Norway, Australia, Brazil, China, etc. That's what's happening now, in a small scale, in Europe, when one country’s bonds look wobbly.
Another next-destination would be a safe haven like gold. Large funds might buy bullion, but they'd do so via paper instruments, and then hold it indirectly, via a gold-vault custodian, by means of a paper contract. It would be out of character, and illegal, for a fund manager to take personal possession of his fund’s gold, or to try to buy it directly from a coin shop or mail order supplier and then store it under his personal supervision.
Further, in the case of a one-hour flash crash, funds wouldn't have time to think of such outside-the-box practices. Confronted with a screen full of red, they'd be mouse-clicking their money to a relatively safer and less bubbly asset. That would include gold ETFs--and gold miners, immediately after the price of gold skyrocketed.
This is likely what the central bank of China (and other central banks) would do in such an emergency. Central banks hold government bonds and gold. They don’t hold commodities, and probably aren’t allowed to. (China however has already have laid out their blueprint getting into commodities, by financing acquisition of foreign gold miners, and lending money to them.)
Another thing to consider: Funds are no longer so leveraged and overextended that they will be forced to toss so much of their good holdings (gold) overboard along with the bad if a crash occurs. Also, traders' computers have surely noticed how relatively well gold withstood the crash in 2008 (and even more the Feb. crash in 2009), and how quickly they came back thereafter. So this time around they'll be looking to buy the dips, and looking even more sharply to "buy the rebound."
And don't forget, in the crash of 2008, Treasuries were there as a safe haven when stocks were being sold. This time around, with Treasuries crashing too, only gold would fill that role. Traders will automatically seek it out if it's the only lifeboat afloat. They would do so by buying GLD or gold futures, because that’s the only practical, speedy, conventional, and legal way for them to commit their funds.
Here’s an omen: in the flash crash of May 6, 2010, gold miners did not collapse like the rest of the market. Check out the candlestick charts of ABX, NEM, and SA, for instance. Those have no long lower “wick.” This indicates that there were solid bids under them, unlike the evanescent HFT bids under other stocks.
Miners did take a hit with the flash crash of May 6, but it was much less than the rest of the markets. Part of the time miners run up and down with the markets in computer trading. When things get hot, like now with silver, the miners ignore the market and follow spot prices. Lately some cut loose from metal dips for a day or so, a sign of moving money to better value.
Republican or Democrat? Yankees or Red Sox? Ginger or Maryann? Inflation or Deflation?
Enslaved forever or live in poverty?
congratulations, you made it to the end of the comments!
down the boulevard (a playlist): http://www.youtube.com/view_play_list?p=D99EC6935E5AF32A
limit down (a playlist): http://www.youtube.com/view_play_list?p=39E281A11EE2D483
thanks, steaky. your G Rrrrrrrrrrrrrrr E A T.
Trav,
Been a lurker for a year or so.,. but finally had to use my log in.. You are going to burn us out.. How do you get past my patrols and Lp's You slay me, you think we will stay home and poke 30-30's out our poorly boarded windows, ha. Your already dead on the highways leading out of the cities which we have already planned to render not so friendly.. noob..
They pass by the wrecked car you are in. There were about forty of them today. They seemed to have known eachother a few days. They were unorganized and noisy. You got out after they passed by by a hundred feet. You shot them all. A few fired at you, but not good enough. You now had some more food and guns. Where did these people come from? The nearby town - the city downriver? How could it not be perfectly clear to them that you would kill them for their food? This won't last like this- over time, only the people who know how to kill will survive and be here. Those people will kill me soon.
When the stragglers come through two or three at a time they will be paid with food and water to bury their dead comrades and then sent down the road.
Question that come to mind:
I always wonder what would be the prices of commodities if the TBTF financial institutions did not have huge commodity trading desks.
And if commodity markets only had participants that supply and use that commodity instead on participants investing in it ?
If GLD did not exist what would be the price of gold right now?
And how big can GLD get ?
And how far can commodities go if this mass madness continues ?
And how will this mass madness unwind ?
Just a few questions from an ordinary person.
There was an attempt to discuss hyperinflation here. Now its your favorite .308 rig. Anywho.
As a banker having done about a dozen serious multi-million credit workouts over the years. I can say this. If the client doesn't have the money to pay their debt, they are not going to pay their debt. With the State and its Citizens having leveraged themselves to a point of non-performance - those monthly FICA payments are not enough to float the debt - if there is no money then there is no money. Helicopter Ben and co-pilot Barry Soetero had a chance to nationalize the banks and cancel consumer debt. Think of all the consumer debt granted on a FICO score and a SSN. Its all unsecured. Think of how your life would be different if you stopped paying down/off debt. Mortgage, credit cards, car payment, student loan (yes it can't be discharged in bankruptcy) - why even bother filing for bankruptcy? The point is that the reality of not having a job will allow folks to change their life and cut out debt or other crazy purchasing choices. Here is an example in my world. Last week I was tasked with getting some tomatoes at a Rally's grocery in Central California. 3 perfect medium GMO tomatos from a Corporate chain is priced at $2.87/lbs! After that trip I will never buy produce from them again - and switched to a local grower that DELIVERS a 20 lbs box of a week's provisions for $20. The range and breadth of American choices is a deep resevoir for the hagard consumer.
The only hyperinflation is hitting the derivative desks at the central banks. At least in the USA, there are fewer jobs and last I checked all that surplus labor drives down wages. Now that laid-off customer service rep with the MA is now competing with the migrant laborer with a weedwacker and a decent pickup truck. All you traders, thinkers, and money changers sold the economy out and the Spirit of the Republic. At my local coffee shop, we aren't worried about the dollar, the Amero, China, or Basel III. We will drop out of your games and barter for things to keep it going - no thanks to the rich NY/DC scum that killed America.
Drive into my town in your BMW 3 looking for anything and we will just kick your door in.
Keep on truckin' to Spring Hill.
"I might as well been discussing relative breast size in the porn industry."
More than a mouthful is a waste, as long as the nipples are nice.
Remember that "dollars" are now primarily circulated as binary data in databases. Take down the databases and centers and your ability to circulate the currency in the current quantities stops.
As long as they can keep the databases going, the "printing" of billions of dollars can occur in milliseconds.
Does this mean that I can trade a bottle of scotch for Maria Bartiromo?
Ten-to-one she's got incredible nipples, I can see it in her face.
I'd take her over Becky Quick any day, Maria's a much more lusty Woman.
She'd probably start liking you after the first couple of weeks if the sex was good.
She's putting on the pounds lately though...
yesterday they had her looking like hilary clinton. damn, when she first started on CNBC she reminded me of a financial barbara streisand. not any more. kooky hair cut, but i haven't watched that channel for a while. squares, i bet she is quite square in her sexuality.
I just bought 10 ounces of gold today, I figured its the last options exp for the summer so fuck it.
Buying gold...
To me it seems like the easy way to mitigate if TSHTF.
ZH friends who recommend a stronger way (gardens, etc.), well those do not work for us condo dwellers...
I will (and am) stocking up on LOTS of things, inc. the guns and ammo (and meds) to defend my family's wealth...
I believe a viable solution to our current and future problems
would be a resource based economy as envisioned
by Peter Joseph and Jacque Fresco.
Check out :
THE ZEITGEIST MOVEMENT -
OBSERVATIONS AND RESPONSES
Activist Orientation Guide
Hmm, been a long time since i read catcher in the rye
Although I disagree with JB In a light heart-ended manner, it is IMPORTANT that we gold folks listen to him.
Bravo has fought against odds to help sharpen our ideas of buying & holding Gold.
JPM VP Senior Bravo has done us a favor! :)
...
"Let a thousand flowers grow".
DoChen, You've got to be kidding... sharpen ideas? It's like saying meat helps sharpen your blade as you cut it to pieces.
One upside for me personally... him and Kath-elo-zel have led me to look into a few subjects i never have before. Such as: the amount of uranium in the Colorado river and soil, how much uranium is taken in through plants and the effects on the human brain, do insane people know they are insane, and last but not least Attention-Deficit Hyperactivity Disorder.
Frank O, I like hearing the other side of issues.
Sometimes (rarely!) I am wrong. It is always of great interest to me to hear the other side of an issue.
As I guess you also follow VeloRapunzleKathy, well, I ALWAYS like to see extreme (for me) views, the more extreme the better. Personally, I think that our beloved Kathy is always worth listening to (and responding to, she is one of us) as her vantage point is very different than mine.
Sharpening the blade, why just this evening my wife and I went to a Brazilian steakhouse, I am STILL full of beef...!
As many of you know, ZH is my "second home", I value the expert and non-expert commentary here. The more you listen and comprehend, the better your life's choices will be.
Shine on JB and our elusive treasure Kathy/Rapunzle/Velo! Although, Rapunzle was my favorite name for you dear heart. merehuman a few days ago said something very nice to you, chiquitiqua nuestra! Shine on you diamonds!
I see Johnny B as kind of a mascot. I have a piece of a gold filling I'd like to give him so he can start his hoard. But he must be on an important mission to be ignoring all his fans.
U (got it frank ;-) guys are so sweet. i'm just your little pine nut†
U'all make me sweat, a lot, of various e m o t i o n s,
i feel them all, let me tell U. like this very moment.
frank can't make any mistakes, cause my delete button is broke. you never guess what my mother's maiden name is. really similar to, bike in french.
Once you fast-forward to today, paper money and precious metals are stupid. A burgeoning population approaching seven billion won't give a shit about gold, silver, or the laughable "Federal Reserve Note." What we could make with our hands and minds was what initially built this nation...I'm sorry to see that idea cut in half in less than a half a century. Now? We've become the "would you like fries with that?" nation. Needless complications heaped upon what began as a free market as a method of growth was sort of like running your ox-cart into the shit, but not really knowing where to go afterwards. LOL, since America loves to out-perform, I could almost guarantee that we'll do so in terms of declination now as we did in innovation during our rise.
For anyone that really cares...it's a rather disturbing trend that the "dominant civilization" throughout history seems to endure for a shorter length of time as history progresses. Anyone see a problem with that, beyond whether you can go long or short it?
Will plastic still be accepted? If so, cards will be maxed out immediately and that will add a ton of money into the system. Will people be inclined to even attempt to pay back the cards? Or will cash and items of barter be the only way to purchase things?
Good question. Visa and Mastercard probably have checks in place to shut off all cards if they have to. Better to get sued later than go bankrupt immediately, no?
Our highest bill denomination now is the hundred dollar bill, so the printing machine will have conniptions trying to keep up or bernbutt will have to create 500.00 dollar bills , like zimbabwe. If he stays with the hundred dollar bill , deflation for sure?
Physical notes are a very small amount of teh total money supply
Alfred E Newman would look good on the new $1000 Fed Reserve Note.
I see a lot of talk about guns and ammo, guerilla warfare, etc.
Just make sure you are doing right by the moral law and the US Constitution and don't let yourself become an animal or a bandit. Fight the bad guys (criminals, tyrannts, invaders, etc.) and not each other. Protect your neighbors even if they don't deserve it and win them to the right side. Desperate people make easy clay for a tyrannt to mold, so watch after the vulnerable even if its a pain in the arse.
Color me impressed. Very nice work here and before; very, very nicely done. Thank you, I needed that to be said in such a way to see those possibilities clearly.
That fascist U.S. government bit really gets to the point as well. Your assumtion that it's always neligence instead of malice aforethought may proove be a dangerous one occasionally. I smell a rat, or more aptly as few nests of them. Responsibility for the current collapse should preclude profitting from the crime in the future right? Though rat hunting be dirty work I'm of the thought that the sociocial/economic paradigm is going to have to evolve radically or fail miserably under our collective demands. (not to be too pesimistic but physics are at work in these problems)
Like Russians set ablaze by a solar flare powered split jet stream, we will be caught unprepared out of our climate... our element... some of us will be on fire...the rest of us won't have much of a solution. I agree great time to buy stuff if you can aford it. However, hopefully we do not also miss our chance to evolve away from fascism and such.
I've read both articles and I have to say I'm impressed by the authors ability to express this plausable yet complex scenario in a simple and straight forward way without having to resort to technicalities. Well done! Thanks!
I'll share an aphorism of my own: A person who can't explain matters so that a person of normal intelligence can understand them, doesn't understand the matters him/herself.
(Althought it doens't rule out that he/she is right, or wrong. But that goes without saying.)
"Any scientist who can't explain to an eight-year old what he is doing is a charlatan."
-Vonnegut
"Any scientist who can't explain to an eight-year old what he is doing is a charlatan."
-Vonnegut
This guy is an idiot. His "argument" is that "if treasuries collapse, people will buy commodities".
I have a question? why are treasuries going to collapse?
One of the reasons outlined is because there are rumors they'll collapse. If you want to stop the rumors, you'd better outline why they'll not collapse. Quickly now!
“Governments that want to finance their deficits through seigniorage do not simply print money but use
an indirect procedure. First, the Treasury authorizes government borrowing equal to the amount of the
budget deficit, and a correspondent quantity of new government bonds are printed and sold. However,
the new government bonds are not sold to the public. Instead, the Treasury asks (or requires) the central
bank to purchase the $10 billion in new bonds. The central bank pays for its purchase of new bonds by
printing $10 billion in new currency, which it gives to the Treasury in exchange for the bonds.” - from
"Macroeconomics" co-authored by Ben Bernanke
Money for nothing and the hard times are free...
hyperinflation in Foodstuffs , fuels .. but not mentioned -CLOTHING ARTICLES - What would you give foR thermal underwear , or A HEAVY Down coat , or snowmobile suit if you could not get fuel to heat your huvel ?
or A HEAVY Down coat. actually it doesn't have to weigh a lot, it is all in the down feather, that makes it warm. like an expensive down comforter, feather weight not heavy. snowmobile suits, s u c kt†
excellent article! the usa is irreparably and mortally wounded....the totalitarian state must ascend - indeed it already has - because juvenile, low-iq, super educated tyrants run the nation...bankster controlled losers have conspired with low rent leeches to utterly bankrupt the nation's morals....morality is indispensible to sound economy....and if you think that morals relate to blue laws you are a complete and total fucktard - you are a part of the problem not the least ofwhich is your vapid stupidity.
the problem with socialism (the fascist totalitarian usa) is that you eventually run out of other people's money.
I'll doubtless be called stupid for asking this question, but what's going to prompt a collapse in treasuries?
I don't know what will cause Treasuries to collapse.
It's a bit like a house that's been eaten away by termites—you have no idea what event will finally make it collapse: But you have no doubt that it will collapse, and soon.
GL
PS: Aphorism #2.
http://gonzalolira.blogspot.com/2010/06/aphorisms.html
GL
English novelist (1812 - 1870)
Just want to add to your argument on “Where’s all the dough gonna come from?” - based on the fed's current response rate to any significant rise in the interest rates, I'd expect that the printing will occur almost immediately upon any materialization of sellers in the market. Just like the apparent propping up of the treasury auctions at the end of last year and beginning of this year, seems the fed is set up to almost instantly absorb any kind of slack in demand for treasuries. Therefore as soon as any sizeable group of sellers appears they would be met by the fed's demand which is of course equivalent to new money being printed.
This is what would make a hyperinflationary event even more rapid in the current environment since we do not even have to wait for the fed to actually react to a high velocity of money or anything like that - they are currently preprogrammed to immediately react to any disparity in supply/demand in treasuries by "printing".
Deficient Market wrote:
“Where’s all the dough gonna come from?”
2002 - Governor Ben S. Bernanke wrote:
"What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.h...
I guess they are just not determined enough. They have failed to generate spending.
Note Bernanke's latest words at J-Hole about the need for policy changes, not fiscal or monetary changes. He is saying that he has done all he can, it's now up to the politicians to step up to the plate and start giving away money. Fat chance o' that.
I think this article presents an extreme, low probability case. That’s O.K. Looking at extremes helps to bound a problem and see lesser trends more clearly. Truth is, the economic forces described in this article are already playing out in milder form. Housing prices are still falling and stock prices are floundering. Even the demand and price of cars (an asset in the minds of many Americans) is drifting down. But, the price of food, fuel, most things in Wall Mart, and other short term necessities (some people include their Ipod in this category) are drifting up, and many remain vulnerable to a price spike. I think we’re going to see gasoline in the U.S. at $8/gal when the next oil price spike occurs. If the major economies of the world hadn’t gone into a recessive style depression, we would probably be at that level right now.
http://globaleconomicanalysis.blogspot.com/2010/08/contained-depression....
For those inclined to smoke, or who recognize tobacco's value in trade ( my dad was stationed in Europe after WWII and I can testify to the buying power of a half pack of Camels in the hands of a 10 year old boy) I recommend you check out "The Cultivators Handbook of Natural Tobacco" available on Amazon.
Growing your own heirloom natural tobacco, for personal use, sale or trade, might be part of a good survival strategy. Full disclosure - I wrote it.
I think a key indicator will be when a McDouble is either no longer a dollar, or, no longer has any cheese. The first clue was when it lost it's first slice o' cheese. Main point: follow the dollar menus at fast food places, they'll provide all the verification you need either way.
Also, it seems like the central tenant of this post is that there is going to be an unsuccessful Treasury auction sometime before the end of 2011. Given how the game is currently set up, I just don't see this happening, there is way too many very powerful people and entities who are fully locked into continued acquisition of Treasuries. Please keep in mind who is increasingly the primary buyers of said Treasuries. Bet against them at your own peril.
Meanwhile, reality check:
Yesterday when Hype II was posted, GLD topped out at 122.95
http://stockcharts.com/charts/gallery.html?gld
You're making this way too complicated. Hyperinflation will result if the Fed's monetization process to fend off deflation causes extreme dollar weakness, driving up the cost of refinancing our debt. There will never be an actual default. The Fed will continually expand its balance sheet (ie print money) to monetize debt and offset waning indirect bids, in a vicious cycle of more dollar weakness, resulting higher interest rates and more monetization. That process sows the seeds of hyperinflation, reflected in higher commodity prices (due to dollar weakness and not demand pull inflation). It's not going to start with some sudden spike in commodity prices out of nowhere, as you suggest. That type of profound dollar weakness will occur only when our trading partners stop pegging to the dollar (and using those purchased dollars to buy our debt)...they will stop pegging when we no longer matter as an export competitor or as an importer of their shit... Will it happen? Who the fuck knows?
1244 gold top today?
Next target still 1050...
http://stockcharts.com/charts/gallery.html?s=%24gold
Before firing off those arrows you've already aimed at that putative target, I would suggest first removing the blindfold from over your eyes.
This undoubtedly true. And happening in the US right now. I have been banking on it. I have been on ebay looking for a Buick Grand National and Chevy Monte Carlo. The cars have been going down in price and a large percentage have been coming out of the rust belt. Michigan, Ohio, Indiana, Illinois, and Pennsylvania are coughing up their classic cars. I have seen the prices drop from mid 20's to high 30's to teensand mid 20's. I just went to look at a Monte Carlo that had shocks clean enough to eat off of and the guy was desperate to get $10,500 for the car. It would have easily sold for $18,000 a few years ago...
speaking of cars, i just saw a ferrari spyder, california style? OMG boys, this thing was
H O T , H O T . wasn't red, a light metalic. owner was in the Spa? wanted to hear it start up or pop the hood at least. guess he was in the SPA for a while. no go. not quite as handsome as this:
Lamborghini - Wikipedia, the free encyclopedia
2009 Ferrari California Spyder - LA Auto Show - California, Here ...This undoubtedly true. And happening in the US right now. I have been banking on it. I have been on ebay looking for a Buick Grand National and Chevy Monte Carlo. The cars have been going down in price and a large percentage have been coming out of the rust belt. Michigan, Ohio, Indiana, Illinois, and Pennsylvania are coughing up their classic cars. I have seen the prices drop from mid 20's to high 30's to teensand mid 20's. I just went to look at a Monte Carlo that had shocks clean enough to eat off of and the guy was desperate to get $10,500 for the car. It would have easily sold for $18,000 a few years ago...
I think that in the end you all will be selling your guns and ammos for a loaf of bread.
All depends on how much humanity is gonna be left out there...some would argue your bread will be taken by someone who has guns and ammo.
Really hoping this isn't as bad as I think it's gonna be.
You got linked yo by Glenn Reyolds over at Intapundit.
Instalaunch launched.
thanks, big bear.
The flaw in your logic is that the Fed will not support treasuries at all cost. The Fed will not continue to buy treasuries to support the price of T-Bills because it will recognize the hyper-inflation trap. Instead of printing endless amounts of money to stabilize the price of T-Bills, the Fed will simply let yields rise to a market equilibrium. Even if the Fed did pursue the course of buying treasuries, it wouldn't happen in an hour. Although there might be high frequency traders on the selling end, the Fed does not engage in high frequency trading, so the buying side would be very slow to move. I think high inflation will happen a different way, but it won't be a complete loss of faith in the currency. I believe the trigger will be municipal debt defaults. A few municipalities will be unable to make payments on their obligations. This will happen similar to the way Greece happened. There will be a big sell-off, which will push yields on all munis up. As a result, other municipalities, which had counted on further debt issuance to fund current interest payments, will be unable to issue new debt at low enough yields to fund those obligations.
Great article(s), and great food for thought GL!
Questions:
1 - If the dollar started hyperinflating, wouldn't the stock of multi-national oil companies like XOM fare well in the long term? Granted, since oil is traded in dollars, and if gas hit $10/gallon demand would crash, the short term picture wouldn't be pretty. However, wouldn't a smart, oil-laden player like XOM would eventually worm its way out of the dollar-denominated contracts and re-value their oil (physical inventory & in-ground reserves) in the new normal currency, whatever that turns out to be?
2 - Same question for multi-national, "necessities" companies like P&G (although their period of pain might last longer)?
3 - Same question for the stock of any multi-national with significant presence & income outside the USA?
4 - What about software companies with no physical inventory, whose product are free to consumers? Think GOOG. Ad spending would be way down, but surviving companies would still need to advertise somewhere, no?
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Die of cancer, you motherfucking spam-bot BITCH.