Shadow Stats

What's Next: Deflation, Inflation, Or Hyperinflation?

Almost all serious analysts see a Terminal problem developing - "We will go from deflation to hyperinflation without seeing inflation." But hyperinflation is a political phenomenon. It is caused by those same authorities the masses think they can trust. When they are threatened, they will protect themselves by printing money on a scale we haven’t seen since the War Between the States (consumer prices in Richmond, Virginia, had risen 6,700% by the end of the war).

Peak Empire 2.0

Based on the lessons of history, all empires collapse eventually; thus, the probability that the US empire will collapse can be set at 100% with a great deal of confidence. The question is, When? (Everyone keeps asking that annoying question.)

Guest Post: Top 7 Reasons To Buy Silver Now

When considering the catalysts for silver, let’s first ignore short-term factors such as net short/long positions, fluctuations in weekly ETF holdings, or the latest open interest. Data like these fluctuate regularly and rarely have long-term bearing on the price of silver. We're more interested in the big-picture forces that could impact silver over the next several years. The most significant force, of course, is governments’ abuse of “financial heroin” that will inevitably lead to a currency crisis in many countries around the world, pushing silver and gold to record levels; but here are seven more...

Is Inflation Understated?

It’s ironic that in a day and age where Keynesian economics is the “accepted view” we still don’t pay enough attention to what Keynes said about inflation: "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some..." The problem today is that some people believe inflation is lower than it actually is. The Consumer Price Index CPI is used to measure the cost of maintaining a certain standard of living. Now it measures the cost of maintaining a certain level of satisfaction. You can argue the magnitude of the inflation understatement but you can’t argue that the official numbers are accurate. Under reporting inflation has led to many predictable outcomes.

Guest Post: Its A Dead-Man-Walking Economy

In an interview with Louis James, the inimitable Doug Casey throws cold water on those celebrating the economic recovery. "Get out your mower; it's time to cut down some green shoots again, and debunk a bit of the so-called recovery."

Guest Post: Is Gold Still The Answer For Investors?

Though late to the party as usual, the proverbial man on the street – along with members of mainstream media and Wall Street heavyweights – is finally waking up to the decade-long, 700% increase in the price of gold, joining a growing buzz around the monetary metal. From questions whether gold is in a bubble to predictions that soaring prices are just around the corner, one thing is clear: a new phase of awareness for gold is upon us. How far might it move before these troubling times are over?

The G20 Was A Dud, So What Now?

Treasury futures' behavior was a bit peculiar today. After going vertical off of the the H&S neckline/support, the market reversed quite abruptly in the afternoon following the TIPS auction which was the first ever negative yield print. While I really like the idea of owning TIPS in case the Fed cannot manage the impossible task of successfully creating inflation without it being hyper, one thing occurred to me: the coupons are based on CPI which is the most manipulated data series out there or close enough to a tie with NFP. According to shadow stats reading were north of 6.5% during the last Fed hiking cycle if one used the definition prevalent in the 80s (stated from memory, facts might not be absolutely accurate but definitely the idea is there, apologies for the slight lack of precision). However your coupon would have paid you based on the much lower official reading of the CPI. While in the case of hyperinflation it would be hard to use enough gimmicks to mask the extent of the robbery taking place, you're still getting robbed of a solid 4% on your coupons... And to believe the Fed and the Treasury have input as to how the CPI is calculated when it precisely impacts the interest paying burden of the country or the credibility of its policies is of course a wild assumption made by ill-advised conspiracy paranoids... or is it? Food for thought. Even though you will probably get robbed owning TIPS, it could turn out to be a lesser evil if the dollar starts moving below the key 74.90 support and if anything today's auction's results might have made the longs of Fixed coupons a bit more uneasy at these yields levels. - Nic Lenoir

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.

The Truth Behind Today's BLS Report

The confidence game in turbo boost mode. The market is oblivious of the underlying data behind today's "better than expected" BLS computer model output. Yet for the few remaining who do care about the increasingly irrelevant fundamentals, we provide some observations.