Hyperinflation

Now that the possibility of a Greek exit from the euro is back to being topic #1 of discussion, just as it was back in the summer of 2012 and the fall of 2011, and investors are propagandized by groundless speculation posited by journalists who have never used excel in their lives and are merely paid mouthpieces of bigger bank interests, it is time to rewind to a step by step analysis of precisely what will happen in the moments before Greece announces the EMU exit, how the transition from pre- to post- occurs, and the aftermath of what said transition would entail, courtesy of one of the smarter minds out there at the time (before his transition to a more status quo supportive tone), Citi's Willem Buiter, who pontificated precisely on this topic previously. Three words: "not unequivocally good."

“In effect, there is nothing inherently wrong with fiat money, provided we get perfect authority and god-like intelligence for kings.” Aristotle (?2,400 years ago)

“Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” Alan Greenspan (2014)

There’s a fairly easy way to tell if a firm is a marketing firm or an investment firm. Do you see its advertising on buses, cabs and posters? Do they have a practically limitless range of funds? This is not to denigrate marketing firms entirely. But as the financial markets lurch between unprecedented bouts of bad policy, and achieve valuations that we strongly suspect are unlikely to persist, it may be worthwhile to consider the motives of the people charged with managing your money. Are they asset managers, or asset gatherers?

Perhaps it is a coincidence that a day before John Kerry's arrival in Kiev (a visit which "coincided" with a 35% devaluation of the local currency) where among other things, he was supposed to discuss the possibility of official (as opposed to unofficial) deliveries of US "lethal support" to the civil war torn and now hyperinflation country, that Russia decided to put its nuclear ICBMs on combat patrol missions in various Russian regions. Specifically, according to Tass, "About 700 units of military equipment, including launchers are deployed in the positioning areas in the Tver, Ivanovo, Kirov, Irkutsk regions, as well as in Altai Territory and the Mari El republic."

And so another central bank admits defeat to the forces of market supply and demand.

Dear 1%,

You are receiving this invitation because you live in the most expensive postal routes of Los Angeles...

In 1923 Hitler said, “Believe me, our misery will increase. The scoundrel will get by. But the decent, solid businessman who doesn’t speculate will be utterly crushed; first the little fellow on the bottom, but in the end the big fellow on top too. But the scoundrel and the swindler will remain, top and bottom. The reason: because the state itself has become the biggest swindler and crook. A robbers’ state!” Hitler wasn’t talking about hard money, he was talking about excessive money printing by a robber state. Krugman himself echoes these words, "It’s basically about revenue: when governments can’t either raise taxes or borrow to pay for their spending, they sometimes turn to the printing press." Out of control government that can’t borrow or tax enough to pay its bills? Zimbabwe, Iran, Venezuela... what country is next?

The newsflow over the past several days was progressing much as expected: any time Greece demanded a bailout renegotiation (or termination), and an end to the Troika, Germany just said "Nein." And then something unexpected happened: the socialists came to the rescue when they voiced their support to their ideological peers in Greece. First, it was France whose finance minister said that France is "more than prepared to support Greece." And now it is Obama's turn who as the WSJ reported, has "expressed sympathy for the new Greek government as it seeks to rollback its strict bailout regime, saying there are limits to how far its European creditors can press Athens to repay its debts while restructuring the economy."

“Poor performance will be most acutely felt by small hedge fund firms,” Sandy Kaul, global head of business advisory services at Citi. “These funds simply did not generate enough performance-fee revenues in 2014 to cover their gap.” In other words, "small" hedge funds, those who tried valiantly for 1, 2 or more years to generate alpha, and failed, well they can continue to manage "small" amounts of money, however it will be of the paper variety. Which they are welcome to do on the one venue which has taken over for Yahoo Finance as the sole place where everyone pretends to not only trade but certainly never have even a single losing day: Twitter.

It’s terrifying how fast the whole Swiss yield curve sank under the waterline of zero. Now even the 15-year bond has negative interest. The franc has reached the end.

2015 will be a year of shattered illusions; social, political, as well as economic. The common claim today is that the QE of Japan and now the ECB are meant to take up the slack left behind in the manipulation of markets by the Fed. I disagree. As I have been saying since the announcement of the taper, stimulus measures have a shelf life, and central banks are not capable of propping up markets for much longer, even if that is their intention (which it is not). Why? Because even though market fundamentals have been obscured by a fog of manipulation, they unquestionably still apply. Real supply and demand will ALWAYS matter – they are like gravity, and we are forced to deal with them eventually. The elites hope that this will be enough to condition the public to support centralized financial control as the only option for survival... It is hard to say what kind of Black Swans and false flags will be conjured in the meantime, but I highly doubt the shift away from the US Dollar will take place without considerable geopolitical turmoil.

The U.S. government is already bankrupt. This is old news to anyone who has been following the number-crunching of individuals such as former Reagan economic advisor, Professor Lawrence Kotlikoff. The U.S. government, the greatest debtor in the history of the world, claims that it is about to (finally) raise interest rates, which have been permanently/fraudulently frozen at 0% for now over 6 years.

"My humble thesis tonight is that the entire 20th Century was a giant mistake. And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson - a megalomaniacal madman who was the very worst President in American history... well, except for the last two."

Someday, maybe, these central banks will find that secret formula that unlocks the commanded utopia from its monetary prison, but I think it more like what led to the end of the first Gulf War, where continued air raids upon Iraqi positions amounted to destroying rubble. As Colin Powell put it, “we were bouncing rubble with billion-dollar missiles.” That seems to be a fitting, paraphrased description of the European state of monetarism, bouncing economic rubble with trillion-euro debt missiles.