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John Williams Sees The Onset Of Hyperinflation In As Little As 6 To 9 Months As Fed "Tap Dances On A Land Mine"
John Williams, arguably one of the best trackers of real, unmanipulated government data via his Shadow Stats blog, has just released a note to clients in which he warns that hyperinflation may hit as soon as 6 to 9 months from today. With so many established economists and pundits seeing nothing but deflation as far as the eye can see, and the Fed doing all in its power to halt the deleveraging cycle, both in the open and shadow economies, what is Williams' argument? Read on. Incidentally, even if some fellow bloggers disagree with Mr. Williams' assesment, we believe it is in our readers' best interest to have them make up their own mind on this most critical economic development.
SUMMARY OUTLOOK
Systemic Turmoil is Unthinkable, Unacceptable but Unavoidable. Pardon the use of the Aerosmith lyrics in the opening headers, but the image of tap-dancing on a land mine pretty much describes what the Federal Reserve and the U.S. Government have been doing in order to prevent a systemic collapse in the last couple of years. Now, as business activity sinks anew, much expanded supportive measures will be needed to maintain short-term systemic stability. Such official actions, however, in combination with global perceptions of limited U.S. fiscal flexibility, likely will trigger massive flight from the U.S. dollar and force the Federal Reserve into heavy monetization of otherwise unwanted U.S. Treasury debt. When that land mine explodes — probably within the next six-to-nine months, the onset of a U.S. hyperinflation will be in place, with severe economic, social and political consequences that will follow. The Hyperinflation Special Report is referenced for broad background. The general outlook is not changed.
What does this mean for US financial markets? (take a wild guess)
In these circumstances, the financial markets likely will be highly unstable and volatile. Looking at the longer term, strategies aimed at preserving wealth and assets continue to make sense. For those who have their assets denominated in U.S. dollars, physical gold and silver remain primary hedges, as do stronger currencies such as the Canadian and Australian dollars and the Swiss franc. Holding assets outside the U.S. also may have some benefits.
Source: Shadow Stats, where the full piece can be located
h/t Justin
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I don't doubt that this will happen, but 6 to 9 months may be a bit ambitious. I will tend to go with the good folks at National Inflation Association with a time frame between 2014 and 2015. Although John could very well be right. Only time will tell and it is evident to anyone paying attention that cash is trash.
"I will tend to go with the good folks at National Inflation Association"
ROFLMAO
The most important statement in the article is what I also believe:
Hyperinflation is caused by a loss of confidence in the scumbags who issue and control a fiat currency... and the economy attached to it.
This is fundamentally different from "inflation" or "high inflation", which are more or less strongly related to money supply [and velocity].
Thus, predicting when hyperinflation happens is an estimate of when people around the world "head for the exits" (dump the fiat currency in question, dump bonds in the fiat currency).
Thus, predicting when hyper-inflation starts taking off is a bit like predicting when a mountain climber with wet, slippery shoes will "lose it" while trying to walk up a slope that slowly gets steeper and steeper. Once he loses the necessary degree of traction, the climber enters a feedback loop that cannot be reversed, and he quickly gathers speed in is slipping, sliding and tumbling down the hill. That's how hyperinflation works. Such predictions are inherently very difficult to make, and the onset is almost always much quicker than anyone expects.
In other words, he might be right. I mean, really. If the world had even one-part-per-million of a brain, it would have abandoned the US dollar long ago. Finally they may be waking up. What's happening with gold and silver lately tends to imply they are.
Get physical gold, silver, platinum, palladium, seeds, water-purifiers, and productive equipment you can operate to produce real, physical, basic goods (not luxuries).
In gold we trust. The dollar is toast.
I'm posting this question here because I think that zerohedge has some of the smartest people in a real practical sense that I've run across in many years. Yeah I know theres a couple of folks that are running on one cylnder, but overall the brainpower and experience is extraordinary.
I understand the Wall St. philosphy of never leaving a dollar on the table, but I don't understand the current endgame. The system is obviously unstable and in need of collapse back into a more sustainable and stable system, yet it is being propped up by "heroic" efforts. I understand the status quo has a vested interest in prolonging the machine as long as possible, but they also have the abilities to acquire the means and instruments to preserve their wealth or capitalize on a structured collapse.
Why then continue to try to sail a sinking ship while bailing it out with a champagne bucket? Its like there is some date or event that they need to get to before they will let it collapse.
Can anyone provide a rationale as to why they are wasting so much effort on a doomed venture that is merely prolonging the ineveitable? I originally thought the effort was a chance to inflate the market to allow the smart money and the connected to reinflate their assets so they could bail out, but the time for that has passed and yet the madness continues. Why?
Perhaps because the federal reserve doesn't want to get audited. Perhaps because they worry that being so obviously and egregiously wrong with their multi-trillion dollar bailouts of the rich gangster bankster predators, they worry that so many people will be so utterly pissed off at their criminal activities that they might even vote someone like RonPaul to be president. I'm sure the predators-that-be (central banks) would have him assassinated before he was sworn in, if not before the election if he was polling well, but surely they prefer not to be pushed that far with so many people catching onto their 100 years of criminal activities. It is fairly widely known now that they had JFK assassinated for the preliminary steps he was taking to restore honest money.
Yes, the predators-that-be know perfectly well how to make massive fortunes on a market crash. But staying in power, and increasing their powers, is by far their first priority, and they do risk a small chance of being tossed in the gutter (or prison cells) where they belong if the disaster gets too far out of hand. And given the fragile nature of the economy now, and the increasing levels of distrust and outright hate for the predators-that-be, they must worry some that their powers could be damaged before they have fully implemented a full-bore, balls-to-the-wall police-state that could protect their totalitarian system no matter how angry the population gets. Oh, and it isn't "WallStreet" (in general) that decides such things - it is the ownerns and closest collaborators of the central gangster banksters (GS, JPM, etc).
That's my best guess (off the top of my head).
My theory is that the they believe in their kool-aid. The goverment and Fed PHDs in economics are so wound up in their own pseudo intellectual abilites that they believe they can cheat fate by complicating the simple dictum-too much debt is bad.
It goes back to the old saying "It is not what you don'tknow that hurts you. It is what you think you know that just ain't so." (Can't remeber who said it);
Or as Taleb would say they just don't know that they don't know.
I believe I will stop reading this site now. I have been a faithful follower for too long. I just don't see any value to any information posted here. Hypeintflation? Really? And then the stupid commenters want a response from Mish and dont even speak of hyperinflation. I dont know if blogs can jump a shark but if they could this one did. No one will even remember this site in two years time. Last year everyone said gold would be at 5000 now and the miltray would be on the streets. Never going to happen.
trying to improve my spelling.
History hardly ever travels in a straight line.
Every time we get close to the meltdown, the enemy changes tactics. Why wouldn't you expect them to? Just look at the graph for gold, but make sure you zoom in and zoom out for the big picture. Gold is heading strongly in the direction that it must.
All the things zerohedge's best posters have been saying will happen, ARE happening. In any random rabble like we have here, there a random number of views. Everyone sees the truth from their particular position on the ground -a perspective unique to them.
In the big picture, the dollar will fall; there won't be much starvation or blood on the streets because the peeple are too scared of the unknown. The US, the UK, France, Italy, the PIIGS will just become a lot more like Third World countries, with a huge re-alignment of wealth to the greedy and obsessive.
The unknown variable is what %age of us will decide that the rule of law doesn't deserve to be respected, since it has been hijacked by a corrupt Lawyer/Bank/Gubbmint cartel.
Ricky, keep reading this website. It is fantastic value, and you get the nutters and infiltrators for free.
- you gotta "separate the Wheat from the chaff" Rick.
yet the madness continues. Why?
World events connect the total decline of Amerika....subordinate timelines,,,It's over
With all the chaos in Bangkok, and around the world, 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 Oligarchy
The 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 States
The 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 will go the way of Rome and the Han. And Rome was a pay as you go EMPIRE...
"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." - my favorite line. Maybe you said it already but I always wonder about the chicken and egg concept of govt corruption vs economic. As you said, the oligarchy growth usually precedes it. Seems to be our natural state. Free markets, free societies are a helluva struggle and the only fight worth fighting. Our laziness is perhaps our greatest enemy
"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"
Yes at the hand of your Federal Reserve (read European) Central band, who -during the largest economic crisis in world history- chose to defend banking institutions outside of the country at the expense of the US domestic economy. You are going to have to look in your back yard first to realise the extent of treason in your midst.
great now we have fucking nutbars threatening to blow up other countries with nukes. Sad to say but the Chinese tyook them last year as colateral on your fuckin tbills bullshit paper.
Get a grip shithead, there are more fucking countries and men than you have nukes. We'll fuck you up more than you can imagine.
In fact I'd venture to say the Chinese would indenture your daughters and wives in some less than sporting house slave bedroom activity. So cool it.
Now back the flationists. This argument is truly mesmerizing. You have inflationista bitchez saying it'll cost me a fuckin trillion for a blowjob and the deflationistas saying it'll cost me a nickel. (awww the good ol' days).
Anyway, the way I see it one has to guard against both. These parties want tof uck us bad either way and are ont he other side of the trade so I say we fuck'em both.
Buy gold, houses, land, guns, bitchez for hyperinflation
Buy gold, rent houses, rent guns, rent bitchez for deflation
Whadya think?
The beginning of the end of America... The 9/11 Myth which has a deep connection to the financial environment..
COULD ATTA, SHEHHI, HANJOUR AND JARRAH PILOT LARGE AIRLINERS?
In addition to whether they were US agents or not, the big question regarding Atta,
Shehhi, Hanjour, and Jarrah, just as it was in regard to Lee Harvey Oswald and Timothy
McVeigh, is still: were they physically and mentally capable of carrying out the criminal
actions ascribed to them? Patsies can always talk the talk – but can they walk the walk,
meaning, is it within their power, above and beyond all criminal intent, to create the
effects observed? If not, we have a case of physical impossibility – as we had in the cases
of Oswald and McVeigh – and we must look further for the true culprits. Here is an
account from the mainstream press:
Atta, the alleged hijacker of Flight 11, and Shehhi, alleged hijacker of Flight 175, both of
which crashed into the World Trade Center, attended hundreds of hours of lessons at
Huffman Aviation. They also took supplementary lessons at Jones Aviation Flying
Service Inc., which operates from the Sarasota Bradenton International Airport.
According to the Washington Post, neither experience was successful. A flight instructor
at Jones who asked not be identified said Atta and Al Shehhi arrived in September or
October [2000] and asked to be given flight training. Atta, the instructor said, was
particularly difficult. “He would not look at your face,” the instructor said. “When you
talked to him, he could not look you in the eye. His attention span was very short.” The
instructor said neither man was able to pass a Stage I rating test to track and intercept.
After offering some harsh words, the instructor said, the two moved on .... “We didn’t
kick them out, but they didn’t live up to our standards.” (Washington Post, September 19,
2001) Could these substandard pilots execute the difficult feat of hitting the towers at
high speed, flying by the seat of their pants?
HANI HANJOUR, MISFIT
So far we have heard little of Hani Hanjour, who is accused by the FBI of piloting
American Airlines flight 77 into the Pentagon. According to press reports, Hanjour had
visited Bowie’s Maryland Freeway Airport just north of Washington DC three times
since mid-August 2001 as he attempted to get permission to use one of the airport’s
planes. But Hani Hanjour was simply too clumsy, too inept. The question is crucial,
because the plane that hit the Pentagon performed a stunning maneuver of which many a
seasoned pilot would have been proud. But instead, Hani Hanjour turns out to have been
a pathetic misfit. The following account is from The Prince George’s Journal
(Maryland), September 18, 2001:
Marcel Bernard, the chief flight instructor at the airport, said the man
named Hani Hanjour went into the air in a Cessna 172 with instructors
from the airport three times beginning the second week of August and had
hoped to rent a plane from the airport. …Hanjour had his pilot’s license,
said Bernard, but needed what is called a ‘check-out’ done by the airport
to gauge a pilot’s skills before he or she is able to rent a plane at Freeway
Airport, which runs parallel to Route 50.
Instructors at the school told Bernard that after three times in the air, they
still felt he was unable to fly solo and that Hanjour seemed disappointed ...
Published reports said Hanjour obtained his pilot’s license in April of
1999, but it expired six months later because he did not complete a
required medical exam. He also was trained for a few months at a private
school in Scottsdale, Ariz., in 1996, but did not finish the course because
instructors felt he was not capable.
Hanjour had 600 hours listed in his log book, Bernard said, and instructors
were surprised he was not able to fly better with the amount of experience.
Pete Goulatta, a special agent and spokesman for the FBI, said it is an ongoing
criminal investigation and he could not comment.
Hani Hanjour is supposed to have executed a breathtaking 270 degree turn while
descending from an altitude of 7,000 feet to below treetop level to hit the Pentagon,
probably the most difficult maneuver performed by any of the kamikaze planes on 9/11.
But he was not considered capable of flying solo in a Cessna! And what of Jarrah, the
accused suicide pilot of United Airlines flight 93, the plane that was destroyed near
Shanksville, Pennsylvania? He was not much better as a pilot. Arne Kruithof later
explained that, when Jarrah arrived to start taking lessons, “We had to do more to get him
ready than others. His flight skills seemed to be a little bit out there.” Jarrah did succeed
in getting a pilot’s license, but he was never able to qualify as a commercial pilot, despite
200 hours of flight time logged. According to Kruithof, “he was a guy who needed some
more.”
Jarrah’s roommate was Thorsten Biermann of Germany. Although Biermann got along
fairly well with Jarrah, he soon refused to fly anywhere if Jarrah was to be at the controls.
This was because of Jarrah’s foolhardy refusal to refuel before a flight in bad weather.
When they landed, the tank was almost empty. Biermann: “I decided I did not want to fly
with him any more. Everyone I knew who flew with him felt the same way.” (Longman
91-92)
AL QAEDA STALWARTS: DUMB AND DUMBER
Alleged hijackers Nawaq al-Hazmi (Flight 77), Khalid Al-Midhar (Flight 77) and Hani
Hanjour (Flight 77) all spent time in San Diego, where they sought flight training.
According to published accounts, “Two of the men, Alhazmi and Al-Midhar, also briefly
attended a local fight school, but they were dropped because of their limited capabilities.
As always, thank you. I always sit up straight and rub my hands together whenever I see you post.
Me too, right before I print it out on my epson and wipe my ass with it ...
brilliant intellectual comeback
That's the thing about 911. You can take any number of isolated factors, Atta, Norad, tower architecture, air defense exercises, tower 7, the pentagon, etc and each one, on its very own, is incredibly powerful evidence that requires very little analysis of witness credibility because most of it is based on undeniable factors. The psychology of denial is the most amazing aspect of this event but like I've said before in criminal law, the more disgusting the crime, often times, the more powerful the denial.
“How did you go bankrupt?”
“Two ways, gradually and then suddenly.”
Hemingway, The Sun Also RisesAn economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
Laurence Peter
Question for the masses with regards to hyperinflation... I have two 401K plans. I have one at work that has limited investing options. Can't do much about that one. I also have a 401K through etrade that I manage myself. I currently have it all invested in GLD and SLV. It's done quite well. However I'm always reading about how I should own PHYSICAL gold and silver. The only way I know of getting physical metal is to take a hardship on my personally managed 401K, withdraw all of the money, pay the penalty and THEN buy the metals. Any thoughts or suggestions as to whether or not this is sensible?
Buy PHYS (gold) and CEF (gold and silver). Both back your stock with physical in Canada.
dude, you gonna be toast with GLD and SLV, they're both "unfunded", and this is coming from big hitters on the street
Don't do the 401k withdrawal if your not eligible. You'll regret it. Taxed as income, figure 30% FED, 10% State (California is 10) and 10% Penalty. So you lose half right out of the gate. Think of an IRA or talk to an accountant.
Thanks. I think I'll follow your advise.
You people are all crazy! Maria Bart-a-whore-a just told me not to worry. Buy buy buy!
ok, SPX goes to 1400.
No complains here
Fuck that shite:
http://www.youtube.com/watch?v=Yhlx0-LLDE0
What would you say is the best currency, currently, to hold? the 2nd best?
Wheat, rice
Are you kidding me, the yellow shit is owned by EVERYONE, even the HVAC guy fixing my broken A/C unit at the 5 star resort in the Mountains. When he found out what I did for a living, he started off on his monologue about gold and how he sold everything and bought physical blah, blah, blah.
That said however, I truly doubt we see hyperinflation, China needs us to by their shit! That simple. Don't belive it, look at the last 50 years with Japan, they need us/we need them.
Hyperinflation...take another bong hit dude, and I'll make money for me (and my clients) on the long end of the curve and short SPX until it comes in another 20%.
and by the way, geopol, you're a fukin' loon!
If we are to gauge intellect by words typed, your eight words compared to Geopol's.... well you know.
and this is because you've studied this case, investigated the evidence, interviewed the witnesses, hired the experts, done the forensics and have your own report to share.
Inflation And Hyperinflation Aren't Really The Same Thing7 Sep 2010 - What's worse is prospect of STAGFLATION - stagnant economy coupled with high inflation. Last stagflation in late 70's was caused by oil price hike and ...
www.businessinsider.com/inflation-is-not-hyperinflation-2010-9
That 70's show best scene ever
http://www.youtube.com/watch?v=ZlTOPjcyQLs
Hyperinflation is a misnomer. Instead it is death spiral to default. No, you wont' get wage inflation as your fucking high school econ book says, you ass.
And when someone says that everything is Ok because we are still funding fucked up programs in Africa then that really speaks volumes about a) how fucked up the government is as I scream all the time on this site - WE ARE FUCKING BANKRUPT and b) how people, even on this site, are still thinking the government is not insane....
Wow, PSTFU...
Can someone please explain to me how the hyper-inflated currency actually reaches the masses? The government may monetize the debt by printing money, but how would it actually get to the masses? Mabey I am missing something, but unless the government give massive amounts of money directly to massive amounts of people or if there are massive amounts of loans made to massive amounts of people, because currency is created through debt or printed, I fail to see how it will happen. I can understand run on banks and distribution channel problems, but this would be a result of bank failures from liquidity problems and a decrease in the money supply. And, if other countries do lose faith with the US and stops buying treasuries, where would they put their money? Afterall, most other countries around the world are printing money and living beyond their means too. The last thing they need is the gold standard to limited their power. And, for those countries that do go back to the gold standard, do you think they really want or need foreign debt?
inflation deflation hyperinflation..... I don't care... all I care about is Snookie... will she find true love one day? snooks...I....I...I love you!
+1 How can you have Capitalism without capitial formation ?
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