Hyperinflation Started On The 25th Of July 2012 !

Yves Lamoureux's picture

Gold’s recent move down is tracking our forecast.We saw an initial shock to gold as the pressure of higher rates moved through the system. What is perhaps lost on most market observers is the slowing pace of global liquidity flowing into the system. You could call the current situation a problem of velocity synchronicity.

Printing piles of money that banks sit on does nothing to money velocities. The multiplier effect pushes money forward and the US, in this respect, has been successful at getting velocities up. Japan, after many years of trying, is almost standing still concerning velocity, and Europe is actually going backwards because austerity is negating the huge increase in the monetary base. This global phenomenon is responsible for dragging gold down.

Our view for 2013 is for investors to use the coming pullback as the last chance to rotate out of bonds and move to stocks and gold. I submit this video link for your consideration.We like to think that gold and stocks are tied at the hip. Consider what it does to gold if the german DAX doubles in price ? http://t.co/bbRdyMmc

Our work shows two windows of weakness before embarking on the great ascent.

The principle we use long term is the mismatch of financing needs to savings. The central banks will be forced to fill this void but this will not prevent rates from rising. It will pressure housing in a second leg down. This resumption will in turn put pressure on the commercial banks as collateral values sink again. In our opinion, this is where we go hyperdrive as the rate of money creation is increased to sustain the illusion, to float what needs to be floated.

Studies of Weimar have clearly shown the variability of stocks and gold on the way up. At times, gold performs better, but at other times, stocks do better. In a two horse race, why not own both? So it is with this in mind that I put the following warning about gold's coming volatility: Prepare to be tested and realize that it is part of a very long process.

I use the 25th of July as the start of hyper-money creation. It represents the topping of the bond market. The recent move to 3% on the long end of the curve has giving us confidence that we have seen the turning point.A pre-condition to hyperinflation is about having higher rates.

The US is showing the best money velocity and the best pick up in economic numbers. By our money measures, rates should have normalized higher already. Problems in Europe did prevent this from happening but no more as mean reversion can happen more quickly than anticipated. In a recent commentary to our subscribers we even went as far as underlining the possibility of a bond flash crash.

Investors will never sell on the first shock but they will on the second. The last 3 years had us frontrunning demand of bonds. We will be now frontrunning supply.

Enormous financing needs await us in the future. The lack of future savings assures us not only rising rates but rising real rates!

In our view, the coming lost decade will be for bonds. We also holds that retail investors leaving bonds will not return to stocks. The re-allocation of large institutions from bonds to stocks is already a fait accompli and suggests how flows can move to stocks.

Yves Lamoureux  

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
DowTheorist's picture

Long-term bonds have violated an important trend line, thus hinting at bearishness (higher interest).

The straw that will break the camel's back will be stronger gold.

Thus, a vital ratio to know when gold will be ready to shine and bonds to fall is the BLV /GLD ratio.




However, gold for the time being, is weak and is buying time for bonds. More about gold's temporary weakness here:




orangegeek's picture

Hyperinflation?  Try deflation.  Remember deflation is not a popularity contest.  It carries characteristics and outputs indicators like falling real estate prices.

devo's picture

I actually think PMs and Bonds are the buys right now. Stocks are jacked given the looming profit collapse. If the Dow dips into the 10,500 range it might be worth looking at, but right now it's feeling very Nasdaq circa 1999.

Eventually we're going to see the historical Dow/Gold ratio again, too. This implies a huge downward move for stocks. I don't really understand why people are buying stocks right now near all time highs in one of the all time worst economic growth environments.

Bonds suck in theory, but they have a perma-bid so they wind up being decent. I think Silver and MBS/bonds are the best buys. I bought some BAC at 8.90 since I want some of my money back from this theft scheme. Not sure how that will play out but it's the only stock I own.

Likstane's picture

It sounds good to me...but I think I'll stick with the 99.9% au/ag to .01% equities ratio.

pbppbp's picture

Oh. I thought it was manipulation.

mkkby's picture

So this Yves dude is the latest fool to try shorting treasuries against unlimited QE.  What a fucking JOKE.  How do I short his company?

And what does he want to buy... stocks.  Wow, what a great thinker.  I assume he means aapl, nflix and all the other over owned paper.  At least he mentions gold.  1 star out of 5.  I'll stick with Kyle Bass and Hugh Hendry.  Give me nickels or give me death.

strannick's picture

And I thought it was the after hours million ounce not for profit market sell orders cascading the stops. Silly me.

Pejorative Requiem's picture

Man that's just a load of hooey. Nothing even to get my science fiction interest piqued.

chump666's picture

We will be at war before all out hyperinflation, inflation is here now (check your bills/rates/fares/gas/food etc).  Japan knows this, as does China.  Round one will be those two. To save the bond markets from inflationary destruction you'll need to start a war, get the drums beating and sell bonds to the people.

History is repeating.

mkkby's picture

Not this time.  Constant war over 70 years is what got us in this mess.  That and rising socialism.  Broke ass countries can't go to war on any large scale.

hannah's picture

"Enormous financing needs await us in the future. The lack of future savings assures us not only rising rates but rising real rates!"


ok so how can rates go up when the fed issues and buys everything...? what is a 'real 'interest rate when the fed issues and buys everything and there isnt any one else lending money. pawn shops or loan sharks maybe...?

can interest rates go up when no one lends money...?

SAT 800's picture

The Fed does not "buy everything" nor can it or will it "buy everything". As Kyle Bass noted, the Bank of England now owns apprx. 30% of the outstanding long Pound Bonds, (a far larger percentage than the Fed and the USB, long), but it has not had any effect on un-employment. the academics are laboring under a delusional system, but they will never admit it. The external market bids on the US Dollar bonds constantly, they circulate in the world; China buys and sells them, Japan, the Euro Central Bank, etc. etc. Rates will go up and they will not be controlled by the Fed. The metals markets will go through a period, of, "oh, it's 1980 again" and sell off a lot; but it's not 1980; there's is not solution and the problem will run out of control.

Seer's picture

" but it's not 1980; there's is not solution and the problem will run out of control."

Yup...  There is no future to pull growth from.  Like I've been saying: "economies of scale in reverse is going to be a bitch."

mkkby's picture

With Africa and S America largely undeveloped?  How do you explain that?

SAT 800's picture

a rising real rate is simply one that is higher than the real rate of inflation. this is a standard definition. some-times like now, the interest paid on a bond will be less than the loss due to inflation; so it is not a "real rate" of interest; it is only subtracted from your losses.

LawsofPhysics's picture

Wrong so many points. However, you can never have deflation in a fiat currency that is printed out of thin air. The currency dies as people begin holding on to all assets of real value. The plastic shit that isn't essential for survival will appear to "deflate" because there are less buyers. People and corporations are hunkering down. What you need to be concerned about is what happens when no one is willing to sell those essential goods and services. Tell me dumbasses, what is the "price" then?

SanOvaBeach's picture

When money dies, what is at value?  Water, food, shelter, perhaps the air we breathe.

steve from virginia's picture




Where do these dudes come from, the drunk tank?


Almost everything in this article is incorrect or misleading. How about some analysts who have some idea what is going on outside ...?


Good grief!

wtlf555's picture

I'm not buying the hyperinflation argument. Two things are always missing in the belief that hyperinflation will occur in the near future. One is mistaking monetary base for money and the other is to not consider electronic banking.

As for monetary base (MB) there is no evidence that at any level of increase in monetary base will cause an increase M2. In other words the Fed could create a gazzillion dollars in electronic debits to the primary dealers and money supply could still remain normal. With an independent central bank money supply (M2) is still dictated by demand for money from the public. Two things could change this. First the government could take over the Fed and actually print money (M0) that no one wanted - the classic hyperinflation.

The second is that demand for money could go up because of fears of the stability of the fractional reserve system. This could create a classic bank run that would lead to freezes, bank holidays or a parabolic increase in M0.

Here's where I find electronic banking interesting. Never before has there been a medium of money like debit cards. People no longer need currency or bills in their possession for commerce. This doesn't change the fact that in a reserve system if everyone wanted their bank money there would not be enough. But it does give a sense of security that didn't exist before.

I think with an independent central bank and a policies that guarantee zero growth we could have status quo and no hyperinflation for decades and the more likely outcome is revolution as it becomes more and more apparent that the status quo policies have drained every last resource from common people and directed it to government and the financial system.

I think it takes another factor to create hyperinflation. One possibility is the takeover by the government of the central bank. This is difficult because the Fed can threaten to sell all assets on the way out which is end-game for the government. Or the possibility exists that the electronic banking system could be compromised. It would probably only take one small pocket of EFT transactions that didn't work for a period of time to create a bank run on actual cash. The cause at that time will probably be insolvent banks and a partial govt takeover. I think then that instead of bank holidays to prevent runs you'd see free electronic debits. Something like the government saying everyone gets $10,000 during this crisis and we'll figure it all out later. This could effectively transfer the governments pushing of MB over M0 from the primary dealers to the public as a last ditch effort to stave off true parabolic demand for M0


Seer's picture

Toggling bits = REALITY.  ROFLMAO!


Dialing up the digits results in inflation.  Jobs?  Oh, a steady decline of jobs means that those digits have nowhere to land for circulating.  People will increasingly scoff at the fucking things (USD) because it's of no use to them because they don't have any AND because the numbers are WAY to big.  So, the masses get restless...  Stuff their "mailboxes" with a bunch of cooked up digits.  Everything just increases in "cost."  No change.  Except, people start to see that it's bullshit.

The System is a Ponzi, it requires continual buy-in, and without it it will fail.  Cranking up the digit machines does ZERO.  And, really, people are going to embrace the banking sector, one of the few that's still bilking?

Wallstreet is dead.  The govt can create a look-a-like, but without PHYSICAL to back things up people are going to turn away.

No fiat has survived.  Ponzis always collapse.  Perpetual growth on a finite planet is NOT a premise on which to base humanity (and any "economic" system).

SAT 800's picture

It's very unfortunate when people use this word hyperinflation; and then when they refer to the Weimar Republic; they reveal their ignorance. If you haven't studied the 900page textbook on the Weimar Inflation you really shouldn't comment on it. It was a singularity. What we can confidently expect, is significant, headline, inflation. Brazil had very severe inflation for many years only a couple of decades ago; but no transition to hyper-inflation occcured; and they changed some big things that basically put them back in the ball game again. We should expect to still have dollars for many, many, years. we should also expect to have a lot of inflation; and we already know that the metals markets are primed and waiting for the "headline inflation"; or public awareness, inflation; and we already know how small the silver market is; and little physical is available; so it's not very difficult to figure out what to do. What the author is doing that's useful, is warning people about Bonds; fixed income; which is now like a hand grenade with a loose pin. Not a good thing.

tradewithdave's picture

Your points on electronic money and especially a "debit card jubilee" are well-taken and provide a relief valve.  As an extension of the debit, what about this concept of "pre-paid as the last big thing?" 




stocktivity's picture

Yeah...ok...Yves. You're the only one who spotted hyperinflation at the exact date it began.

SAT 800's picture

Not exactly. We had an article on here a day or so ago; wherein the atuhor was attempting to ponitificate on the possibility of an end to the thirty year bull market in long US Bonds; I pointed out as I have on many other occasions that the high price, (lowest yield), had already occured in July; and we were now in a new bear market for USB, long. This is what Yves is referring to. Serious, game changing inflation, (we could debate the use of the term hyper-inflation), began on that date; the reason that is true is that it signals the beginning of the repudiation of the USD, (federal reserve note), by serious, well-informed major players. The devaluation of the dollar, (inflation from another perspective,) will occur outside the control of the FED; and is now occuring. Normalcy bias is very strong in human beings, and "it can't happen here" is practically a see-proof shield to prevent the recognition of events in reality; nevertheless reality is a bitch. And it will happen here. And it did start in July. High bond rates are actually attracting buyers in Europe; as difficult as this is to believe. Everyone wants, desperately, to believe in normalcy, and things will be fixed, etc. things will not be fixed. Basically, we are shaking out the fools in the metals markets who are chasing interest rates; interest rates which will fail to price inflation. Chasing interest rates is a very, very, serious mental failing for a money manager. This man, and Kyle Bass both understand what is happening; human psychology is a problem; but when your train runs into a brick wall, most people do get the idea. It's just surprising that they refuse to see anything coming.

Never One Roach's picture

"Our view for 2013 is for investors to use the coming pullback as the last chance to rotate out of bonds and move to stocks and gold."


That's my view also.

SAT 800's picture

rotate out of bonds and into Silver; no stocks or gold; please.

Seer's picture

Who the hell thinks that stocks can run anyway?  It's all about contraction, and companies don't do so well when things contract.

Bonds will make for a great game of Hot Potato.

PMs will be a parking spot, but for?

Food, Shelter and Water.

bigkahuna's picture

Someone has to hold the bag when the stock ponzi hits the dirt. If enough regular schmucks are convinced to get in, the banksters can get out. 

SAT 800's picture

IIt's always important to check the size of the factors involved. Mom and Pop put something like 375$B. with a B; into fixed income funds and direct bond purchases in the last 6 or 9 months, (I forgot which). When they are dis-appointed in the results; and they will be dis-appointed in the results; only a fraction of this money will return to the new "artificially priced" stock market; as they are now very wary of this. A certain, (un-knowable), fraction will flow into silver and gold. This is the donut; rather than the donut hole. this is what we're interested in. By this time next year, the present $30/oz. price for silver will seem quaint and historical. This is a good time to put your IRA and other funds in Silver Bullion, in a depository. that will be much better than Gold. The process to do this is described all over u-tube.

SmallerGovNow2's picture

And you said it a hell of a lot more ...

Succinctly !!!

dlmaniac's picture

HI starts only after enough foreign nations ditch US$ as the reserve currency.

Jonas Parker's picture

which will happen in ...5 ...4 ...3...

madcows's picture



OutLookingIn's picture

Buying more worth less paper (stocks) with more worth less fiat paper - you end up with?

Worthless paper! 

SAT 800's picture

Yes. I don't reccomend buying any stocks; including ETF's, and/or miners. It's your money; it's a serious subject; Silver wll appreciate in the next 12-24 months; what kind of result you have from your stocks depends on too many factors to guess at. If you want to make a big profit just buy a Dec. 2014 silver contract on the Comex and then do nothing. But you must have $40,000 in your trading account when you do this; then you won't be bothered about anything. This way you can easily make 100% nominal; and probably 60% after inflation. The Comex exists to make bets that pay off in dollars, which is what I'm suggesting; it's not the silver store. What you get at the Comex is margin; bigger profits. The silver store is bullionvault.com. And no, you don;t want it in your back yard; that's just stupid.

New World Chaos's picture

How much will that contract be worth when the COMEX defaults?  Probably less than what you paid for it, and you will get a margin call on top of having your original investment stolen.  Or maybe you will get a million Zimbabwe dollars as a forced cash settlement.  By the time the lawyers sort it out you could buy a roll of TP with it (two rolls before paying capital "gains"). 

BullionVault allows your metal to be stored in Switzerland but the company is partly owned by Lord Rothschild, and it is based in London, so it is doubly vulnerable to plundering by the NWO.   

Northeaster's picture

This post faked me out when I saw "Yves".

Clowns on Acid's picture

Rehypotha_inflation ?

augmister's picture

I just love shiny metal on sale during the holidays!  Puts me in the spirit of buying more for ME.

Freddie's picture

Don't forget brass and lead.  They are much harder to find.

SafelyGraze's picture

2012 Dec: "The recent move to 3% on the long end of the curve has given us confidence that we have seen the turning point."

2013 Apr: "The recent move to 2% on the long end of the curve has given us confidence that we have seen the turning point."

2013 Jun: "The recent move to 1% on the long end of the curve has given us confidence that we have seen the turning point."

2013 Aug: "The recent move to 0% on the long end of the curve has given us confidence that we have seen the turning point."

2013 Oct: "The recent move to -1% on the long end of the curve has given us confidence that we have seen the turning point."

2013 Dec: "The recent move to -2% on the long end of the curve has given us confidence that we have seen the turning point."

EnslavethechildrenforBen's picture

They are controlling hyperinflation by stealing the money back away from us. They weren't smart enough to do that in Weimar

jeff montanye's picture

rising interest rates and volatile/falling demand didn't help the stock market much in the '70's (or the early '30's).  

gold went from 35 to 800 before 20% short term rates stopped the gold bull in the '70's.  22 to 35 in the '30's for gold if you didn't turn it in (no one who was careful was caught).

homestake mining went up over 500% in the six years following the '29 stock market top.  for comparison, aapl was up about 250% from late 2007 to the recent top around 700.  of course it may double from here and make that 500%.

economics9698's picture

The labor force participation rate, money in circulation, is going down as money is printed for the banks, is at all time highs.  Pretty fucking ingenious and fucked up.  That’s why no inflation.

M-2 money velocity.