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Hyperinflation Is in The U.S. Future

Things to look for - it is beginning today!

Timeline and event sequence is approximate, one should not make make exact predictions regarding a dynamic macro economy like the U.S.. "It will go something like this"

Let's skip the Orwellian Newspeak of QE and stick to the Oldspeak � printing money - 600 Billion of it. QE1, the first round of money printing was a bond buying blitz of about 2 Trillion over 2 years. QE2 is about one-third the size, delivered in one-third the time. They will also reinvest the principal of maturing bonds they own into new government debt increasing QE2 by as much as another $300 billion. The Fed will own more US Treasuries than China.(868 Billion) We are buying our own debt with money printed out of thin air. So, they have continued to print the hell out of money at the same pace and an additional 300 bill for good measure. On top of that, this year, the Fed will buy $40 billion of investment banks toxic mortgages every month. The Fed has shown now, through past history, they will print as much money as necessary to avoid a deflationary depression. The final debasement of the dollar has begun and hyperinflation is the United States future.

The prices of nearly all agricultural commodities have been moving up. In the past, cotton prices are up 54%, corn prices are up 29%, soybean prices are up 22%, orange juice prices are up 17%, and sugar prices are up 51% "you get the point, there is a lot more". The year over year price of pork is up 60%. This may be the year consumers notice that consumer commodity prices are moving up or the size of the packing is decreasing while maintaining the same price. These higher commodity prices will continue reaching the marketplace, monthly CPI will be at an annualized rate of at least 5%. Food prices will continue to move up and other higher commodity prices will begin to reach the market place. Meanwhile consumers pay checks will remain stagnant due to large corporate, government and small business cuts to maintain profitability from increased commodity prices, budget constraints and government regulations, such as Obama Care.

The Obama administration, the Fed, and the majority Keynesian economics pundits will be singing the praises, "our consumption economy is back, people are spending again, the economy is moving in the right direction, look!, the market is at an all time high!". That won't be the case, forced consumption spending through inflation and voluntary exchange are much different as are high U.S. stock market prices and the value of the U.S. dollar. Zimbabwe had the best performing Stock Exchange in the world, but the worst paper currency. Really," The Fed�s unending quantitative easing (money printing) has acted like a stimulant drug on the market. The Fed buys $40 billion of the investment banks toxic mortgages every month and some of that money has found it�s way into the stock market. Without the Fed the market would still be thousands of points lower". (Lou Scatigna The Financial Physician) Soon, the American people will begin to catch on. Real Annualized CPI could be pushing 10%. But, the so-called quantitative easing will have pushed the value of the dollar much lower. Perhaps the race to the bottom currency war, could devolve into a trade war. With the commodity prices already rising sharply, a trade war would force import prices up also.

Remember, at the end of the year we still probably have a weak economy and still have emergency .25% interest rates that don't seem to be sparking growth & investment for the past couple of years. Assuming this is correct, this will deter the Fed from raising rates if need be. There will also be a U.S. fiscal deficit that is close to 10% of GDP annually, which is probably unsustainable�especially considering that the total U.S. debt is well over 100% of Gross Domestic Product. QE (money printing) plus debt & deficits is already making the markets nervous. Wait till you see what happens when the average American get nervous about the U.S. Economy and the U.S. Dollar. "Oh!, wait, that reminds me, I have to get online and get some more silver coins, get to Walmart and pick up another ten cases of coffee and non perishable canned goods for my pantry (Non perishable food storage area). I don't' think these prices will last much longer". - Editor

More to come - as the Austrian Economists have predicted, the U.S. dollar should have already hyperinflated. What they have missed or what they fail to mention is the fact that the United States exports a large portion of their dollars. An ever increasing demand for dollars allows them to continue printing for an extended period of time before hyperinflation sets in.

Hint - After President Nixon closed the international gold window in 1971, leaving the dollar a fully fiat currency or hyperinflatable, Henry Kissinger went to the middle east and made deals to protect oil producing countries as long as they price their oil in dollars. The worlds largest oil producers price their oil in dollars creating an ever increasing demand for the U.S. Dollar. This increasing demand for the dollar allows the U.S. to export part of their inflation and slow the inevitable onslaught of hyperinflation while they continue to print. Economist Jerry Robinson (FTMDaily.com) refers to this as the Petro/Dollar System. I would refer to it as a Psuedo World Reserve currency that will eventually bite you in the ass. This is why middle eastern foreign policy is so important to the United States. The Dictator Saddam Hussein of Iraq, another large oil producing nation, began selling oil priced in Euros instead of dollars, we all know what happened to him. Needless to say, Iraq now prices oil in dollars. One would guess, both U.S. - Iraq wars were to maintain the free flow of oil at market prices, with an additional benefit of the later one being to finish the sentence, one should say, "maintain the free flow of oil at market prices and priced in U.S. dollars".

Moreover, as of right now Iran is trading oil in a basket of currencies and Russia and China have certain deals to trade oil and natural gas in their own currencies. So, the saga continues!

 

Markets Hit All Time Highs

Here is a good article from the financial physician explaining why the markets are up and the country is in relatively poor fiscal shape 

Lou Scatigna

This week the Dow hit an all-time high, erasing the losses experienced during the 2008 crash and economic crisis. Meanwhile, the economy continues to struggle. Fourth quarter 2012 growth was non existent, unemployment won�t budge from the official 8% rate (really 15%), and housing, is still depressed. So why has the stock market soared to new Highs?

1. The Fed�s unending quantitative easing (money printing) has acted like a stimulant drug on the market. The Fed buys $40 billion of the investment banks toxic mortgages every month and some of that money has found it�s way into the stock market. Without the Fed the market would still be thousands of points lower.

2. The stock market has become the only game in town for investors. Safe vehicles like bank accounts and treasury bonds offer paltry yields while money market funds yield virtually 0%. Pensions and conservative savers are being forced into the market in a effort to make some return on their money. Retirees have really been thrown under the bus by Bernanke. While the Fed bails out the banks and the stock market with a zero interest rate policy for 5 years and counting the inflation beast has awoken. Food, energy and health care have soared but the CPI is inaccurately reported to be under 2%. Savers receive no income and at the same time the cost of living has been rising. The retiree is in real trouble.

3. The market is going up because it is going up. What I mean by that is when markets are rising others want part of the action resulting in a self fulfilling prophecy. News of new market highs flash across computers, newspapers and television news reports prompting more market envy with the latecomers pushing stocks even higher. These late to the party investors are the ones who will experience the most pain when the market reverts to a level consistent with economic health.

Congratulation to all those investors who invested in the market in 2007 and early 2008, after five years you have a 0% annual rate of return.

link...

U.S. loses their AAA Credit rating?

Today the U.S. lost their AAA credit rating. Fox Business ask could we lose our AAA just a few months ago: - do these people in Treasury and the Admin know what is going on? intentionally?

Peter Barnes of Fox Business �Is there a risk that the United States could lose its AAA credit rating? Yes or no?�

Geithner�s response: �No risk of that.�

�No risk?� Barnes asked.

�No risk,� Geithner said.

 

 

Ben Bernanke Is Finished!

I love the way David Stockman, Reagan's former budget director, still tells it like it really is.

 

Mac Salvo

Never having lived through a hyperinflationary currency meltdown makes it difficult to visualize how such an event may unfold. We know from historical examples like the Weimar Republic and Zimbabwe that the end result is wheel barrows full of paper currency being used to buy basic staples like bread and rice. The following chart from the late Howard Katz provides us an example of what the beginnings of a currency meltdown look like, in this case Zimbabwe�s hyperinflation, and how quickly it can devolve into completely financial chaos:

year   rate of increase in prices
     
1999   56.9%
2000   55.22%
2001   112.1%
2002   198.93%
2003   598.75%
2004   132.75%
2005   585.84%
2006   1,281%
2007   66,212.3%
2008   231,150,888.87% (July)
     

 


The two charts below, based on market history, give an idea of what is coming to the U.S. dollar. If the path of dollar destruction continues, one must consider an immediate move to commodities and tangible assets for wealth preservation.   

 

Dollar Price Index

Gold Price Index

10 Year

 


Daily

 

Gold Dollar  Silver
Current Spot Gold Price [Most Recent USD from www.kitco.com] Current Spot Silver Price


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