John Williams of Shadowstats has repeatedly warned that our economy is not doing as well as some would have you believe. From unemployment to GDP to current and future liabilities, there are fundamental problems that will not be resolved anytime soon – in fact, they’re likely to get worse.
The end result according to Williams?
A hyperinflationary depression.
(Video available below excerpts and commentary)
Eventually it’s going to be a hyperinflationary great depression in the United States.
We’re already seeing food and energy prices rise significantly – with price jumps of 30% or more year-over-year. We can argue about deflation or inflation, but we will not be sure of exactly what comes next until it actually happens. John Williams provides some recommendations, all of which we’ve discussed before, for preparing yourself and loves ones for the possibility of a complete meltdown in the US dollar. Williams is a respected economist who has a high level understanding of the fundamental numbers behind our economy, so his forecasts and recommendations should not be taken lightly:
In terms of maintaining the purchasing power of your assets and wealth – and this is primarily a problem for people who live in a US dollar denominated world – Canada is not going to necessarily have this problem – you look to put your dollars in hard assets like physical gold and silver, getting the dollar into other currencies such as the Canadian dollar, Australian dollar, Swiss franc.
In the US we don’t have a back up system. Zimbabwe had the worst hyperinflation anyone’s ever seen. But, they survived. They had an ongoing economy. That was because of a black market in US dollars. We don’t have a black market in the US. There’s no backup to our system.
It gets very difficult when food starts to disappear from food shelves. What happens? You can probably use common sense. It’s probably a good idea to store goods that you would normally consume for several months, just to protect yourself, your family and to have goods for barter.
That four pound bag of rice, roll of toilet paper or bottle of Jack Daniels you have stored up in your prep closet may very well be worth it’s weight in silver if and when goods start flying of the store shelves.
One of the primary concerns for people who know a major collapse is coming is how to identify it when it is happening. What are the signs?
Sign number one is what governments do before a hyperinflationary collapse. If history is any guide, then the monetary actions of our Federal Reserve are a clear indicator. As Jon Stewart humorously pointed out recently, the Fed is “imagineering” money out of thin air. This means more money in our overall money supply chasing fewer goods, which inevitably leads to higher prices. We’re seeing this the world over in commodity prices, as well as other assets. One of the big complaints coming out of China is that the policies of the Federal Reserve are leading to the US exporting inflation to China, as evidenced by significant increases in their own domestic stock market prices and real estate values. The Chinese are already taking steps to curb this inflationary bubble in the making. Another sign of coming fiscal problems, which ultimately leads to more monetary quantitative easing policies is the continued uncontrolled spending of Federal, State and local governments. As they waste more money, more needs to be printed to “monetize” the debt that no one else wants to buy.
We’ve warned about it before, and we’ll say it again because it is going to be the trigger that sets the whole thing into a complete collapse. When our creditors start offloading US Treasuries and stop buying new debt issues, the game is over. John Williams confirms this view and provides some more insights as to what you should be looking for as telltale signs that hyperinflation is upon us:
This is not good news. Weakness in the dollar is what will kill the system, it’s what will trigger the early signs of hyperinflation. Which, as you mentioned, could be as early as the next six to nine months. Down the road that remains to be seen as to the timing.
Watch the dollar. Watch for panic there. If it gets out of control you’ll see massive dumping of dollars. The Fed will be intervening even more than it does now. People will be turning dollars over as quickly as they can – they’re not going to want to hold them. Prices will sky rocket. We’re going to see this in the next couple months starting with gasoline and food prices.
We have yet to see the ramp up in commodities hit the store shelves and gas stations. But be assured that it will happen (unless stocks and commodities crash in the near future). This price increase simply cannot be avoided. It’s already happening. Most of us have seen small percentage rises in grocery store prices already, and media outlets are reporting $3 gas by Christmas. These price bumps are nothing compared to what must happen as a result of price rises in commodity markets over the last year.
Thus, in the next 1 – 3 months, we should start seeing the early signs. Mr. Williams’ forecast in this regard falls in line with those made by Gonzalo Lira in Hyperinflation Tipping Point By Early 2012, an insightful article that provides some more technical and economic signs to look for. Both forecasts suggest that 2011 will see the beginning of our hyperinflationary spiral.
Keep in mind, however, that it is not likely you’ll see prices jump 100% from January 2011 to April 2011 (unless of course the Chinese stop buying our debt in the next 4 months which probably won’t happen just yet). What we’ll see is a progressive and sustained increase in food prices over many months and several years. Eventually, the dollar’s tipping point will be reached – perhaps a year, two or three down the road – and then the fireworks will really start.
Here is a chart of the acceleration of hyperinflation in Zimbabwe – this was a multi-year breakdown and we can expect something similar here:
Chart provided by Howard Katz
| 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) | |
As a country, we might be able to handle the price increases for the first 2 – 4 years, but even that is a stretch considering that one in eight people require food stamps to keep food on the table and roughly one in four are out of work.
Even if we do survive those first three years intact, they will have taken a toll and probably altered the average American’s way of life for the worse. By year four or five however, we’d be looking at a total breakdown in our economic system that may very well include disruptions to food supplies and the normal flow of commerce. The majority of people in America would be financially destroyed by that point, or be very close to it.
This is the Zimbabwe time line, and they did not owe trillions of dollars to foreign creditors, nor were they the reserve currency of the world. Given our status as the world’s super power, it is possible that a currency breakdown in the United States may happen on a much more accelerated time line.
Perhaps Mr. Williams’ forecasts are wrong, and we’re willing to admit that we might be wrong too.
But this isn’t about who is right or wrong. It’s about identifying the many possibilities – because it is clear that we’re not going to see recovery until maybe the end of this decade – and taking steps to protect yourself and your family as best as you can.
The signs are all around us. Would picking up a a few hundred dollars in bulk rice, wheat, alcohol, tobacco, or other good susceptible to hyperinflationary price increases be such a bad idea?
Watch John Williams on BNN – December 2010:
Related Reading:
Hyperinflationary Depression – No Way of Avoiding Financial Armageddon
Shadow Stats Founder On Hyperinflation: Disruptions to Food Supplies, Normal Flow of Commerce
What is Money When the System Collapses?
H/T Zero Hedge
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Which (safe) jobs would be spared during a full blown hyperinflation Mac?
You will see the hyperinflation. It is destructive to the people. Deflation is destructive to the banks.Â
The banks own the government and make the rules. Figure it out.
Tom,
The only job that will be spared is the one you create for yourself.
But you have to agree that’s a damn good question! I believe cash & credit would dry up even more with less jobs.Â
Would healthcare jobs be safe to an extent?
Also, what is the best thing for a young couple, broke and just starting out, to do to prepare? If you have to choose between paying off debt and buying up food and such, which should you do?
Tom, great question and one that certainly needs to be answered. I am sure our community will have some excellent feedback on this. Here’s an impromptu list of some ideas. Note that I am thinking only hyperinflation here – not a deflationary depression or even a somewhat inflationary environment.
When we talk hyperinflation, we’re talking complete currency collapse – so this is going to mean that commerce as we know it today will essentially come to a halt. This would occur on a domestic and international level. The real problem is that no one would be able to put a price on goods in terms of US dollars – not even our foreign food suppliers. Thus, there would be a complete and total price disconnect in ALL assets – and it would be highly volatile changing significantly from day-to-day or even hour-to-hour, especially at the onset.
However, unless we experience an all-out-collapse a la Patriots, I think there will exist some level of commerce – even in a complete societal collapse, the free (black) market will be operational. Thus, in the initial stages, I’d say look at hard-asset related skills and services – many of those might be feasible in a complete collapse scenario as well:
These are just a few I could think of off the top of my head. I am sure there will be much more input on this in the comments that follow.
Thanks for the great question Tom. It’s one that should be considered by everyone preparing for a possible SHTF hyperinflationary environment.
@Marie – that’s a great question. In my view, health care jobs are safe for the most part unless we go total collapse. If there’s one thing the government is going to be spending money on it’s Obamacare. You may make much less than you make now five years hence, but you’ll still be able to put food on the table.
In regards to your questions about preparedness, my answer, and what we did, was pay down debt with half of your monthly allotment, and acquire hard assets with the rest. With the “hard asset” side, I’d look at picking up a few silver coins each month (you can get junk silver like pre-1965 quarters, halves, and dimes on ebay for near spot and in small denominations), and also stocking up on food when possible. Depending on your monthly budget for this, you could look at either acquiring 5 gallon buckets of rice, beans, or wheat, or, even buying in 5 – 10 pound bags (rice, beans, salt, sugar, etc.) and then vacuum sealing those with an oxygen absorber for longer term storage.
Even with $50 – $100 a month on foodstuffs, you’d be putting away roughly 2 – 3 weeks worth of emergency food each month. (Pinto beans and rice are very cheap, and staple preparedness products).
So, you can prepare for worst-case even with a very tight budget, in my opinion.
Thanks for another great question.
Mac
I told my sister 3 years ago to get her license to cut hair. I see her business outlasting many others before it follows her home. She has customers that barter now.
That was the first time I ever saw John from shadow stats. It was cool.
I think he is right also,, but man I sure wish I knew when??
As always I watch the dollar, gold, oil, everyday. When I saw oil go past $90 the other day, I thought it might keep going, but as usual,, not.
I am prepared as I can be rite now. At the moment I am trying to figure out how to get back to having a life again and getting back to my hobbies. But every time I spend a few hunderd bucks I am always thinking that could have got me a few more silver rounds or some preps.
I’m working on it. I am trying to find the rite balance of preps(insurance) to have. So that if nothing happens I don’t lose that much. But if it does then I get to set up a lawn chair outside Walmart and watch everyone fight over toilet paper and spam.
http://www.survivalblog.com
Google “ferfal” and read up on his experiences.
Tom,
I do agree it is a great question. The problem is that everyone is looking to preserve their current situation. That is not a bad thing in and of itself, but if the situation totally changes nothing will be the same.
Look at 9-11. All of those people who worked in the towers and building 7 were not and never will be able to go up those elevators again, even if they survived the attack or were not there for it. That is the kind of change everybody should expect. You will have to start from scratch AFTER it happens.
We have a service economy and in a hyperinflation no one would be able to pay for the services. Including going to the doctor every time they have a cold. Just that fact will put a lot of medical personnel out of work who think they are secure now. 90% of all doctor visits are unneccessary and a waste of money. Those will stop. Doctors offices will close down. Millions of secure feeling medical people will be put out of work. Doctors would no longer be able to take insurance because by the time they got paid the check would be worth nothing.
Mac is on the right track with his suggestions, but I think you should prepare for having NO job, and no job available.
An internet business can function anywhere. If there is hyperinflation here, you can focus your marketing in foreign countries and take other currencies. And even if only half of the people have jobs, you still have 50% of the population as potential customers.
I have tried to encourage people here to learn the basic steps in making at least some money through internet marketing. If the grid goes down or the internet goes offline, we are all screwed anyway. If not, my job is safe because I created it, it depends on no one or government, and it can sell products all over the world just by doing what I do now.
It is easier than most people think. Consider it. It could change your life like it has mine. And I am surely not much different from you.
no velocity, even according to his website and his m3 Â chart their is a giant drop in the money supply. we are in deflation!!! what happened in 2008?- credit tightening,it almost choked us and caused a collapse.the fed’s printing has done very little,yes trillions have not caused inflation.unemployment high, housing in the toilet,debt from all sectors is unpayable. what will cause you to push the weimer republic wheelbarrow?? Â high food prices and basic consumables have increased in cost due to them using oil in their production. gold& silver up because of lack of faith in U.S. ability to pay our debt. utilization capacity is low= wharehouses are full, where is demand?? if trillions are dropped from a helicopterit will merely go to pay down existing debt. we have DEFLATION with signs and symptoms of BIFLATION. look up biflation
The lady on the video laughs about wanting a bomb shelter & hoarding canned goods? I don’t have a bomb shelter. Do you have a bomb shelter? So long as college tuition doesn’t go up over here we’ll do just fine. Just ask turbo tax Tim & B-52  Ben. That’s the 69 trillion dollar question sittinguy!  Another question is: Regular Spam or 30% lower salt Spam. Just remember Noah was the greatest investor, he kept his core holdings together during a fluid environment. They laughed at him too until it started raining for the first time.
I don’t fully understand the hyperinflation scenario. For a country like the USA where 70% of GDP is dependent upon consumer consumption it seems that as prices go up, people’s money will buy fewer products, which would force retailers to cut prices to draw in enough customers to keep their heads above water. Seems that the upward pressure of inflation would  meet the downward pressure of deflation at some point. Deflation would keep inflation from becoming “hyper”.
I’m a news junkie. I have been previously taught by paid experience to sift through the news shoveled out now days to look for the real story while asking what caused it and why. We all learn from each other. When is the first reunion after the internet “light switch” gets turned off?  Now that is power.Â
Sittinguy
law of diminishing marginal utility Economic rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased. I have that problem too, but it’s not a problem.
Â
Greg…..what is wrong with your thinking is that retailers are trapped as well…..they can’t simply “lower” prices if the price from the wholesaler is rising…..or they go out of business…..for the most part ( at least in things you REALLY NEED, like food/fuel ), the margin of profit is already razor thin…..there just IS no excess for them to trim.
And the wholesaler/manufacturer is in the same boat. IF the supplies ( like OIL ) are rising that it takes to make a product, they either have to pass it along, or die.
And the REASON the cost of materials/energy/etc is going up is because the value of the currency is decreasing compared to other currencies. IF I’m OPEC and you want my oil, you have to pay me in a currency that will hold it’s value, OR you have to give me MORE of those pieces of paper.  The FED has elected ( about 100 years ago ) to make the value of the paper less and less…..actually loosing 95% of it’s value over that time period.
Real things don’t change much in terms of REAL money.  In 1964, you could buy a gallon of gas with two 1964 dimes. Well, guess what ?  Today, you can STILL buy a gallon of gas with 2 1964 dimes…since they are ‘worth’ 2 bucks each in paper notes.  Gas didn’t change…..silver dimes didn’t change……what changed was the paper got crappier.
All you’re gonna see now is the last 5% loosing value in accelerated time.
Gresham’s law & Don Stotts law.
I don’t know about you all, but I don’t think those piles of money will just sit there for long while nobody touches it.
In the meantime, perhaps this bears repeating:
“…In spite of what Bernanke says, whatever the sellers of the securities do with the new dollars deposited to their accounts – even if they leave them on deposit with the Fed because the Fed is now paying interest for excess reserves – it still frees up other money the sellers can now use for other purposes. And because of the fractional reserve system, there’s a multiplier effect on the added liquidity. Bernanke says that all he’s doing is keeping interest rates down to stimulate the economy, but the way he’s doing it adds to the money supply.â€
– Doug Casey on Bernanke: Be Afraid, Be Very Afraid (Part 1)
Also consider that creating debt is now a form of creating money.
Gary North has some good questions in his article, Bernanke Fibbed His Way Through ’60 Minutes’:
“Since we know that the Big Four banks – Morgan, Citigroup, Bank of America, and Wells Fargo – have over 50% of the nation’s assets, what did they do with the FED’s bailout money, which enabled them to make record-setting profits?
Technically, the FED is not printing money – currency – but that response is deliberately deceptive. The M1 money supply has not changed in any significant way. Over the last year, the monetary base also did not change. The FED says it will increase the purchase of T-bonds by $600 billion. Where will it get the money to do this? Not a printing press, but its functional equivalent: the legal right to create digits in a computer. If this is not the functional equivalent of a printing press, then where will the FED get the money to buy all that debt?”
From my understanding, when The Fed stops buying, that creates the infamous Crack-Up-Boom.
john(i will eat your spam) williams is only predicting hyperinflation based on his assumption the fed will print endlessly. he says himself the debt cannot be paid , meaning there is a shortage of$$$, thats deflation. IOU’S are in great supply , IOU’S outnumber dollars. Â ron paul and others can tie the hands of the fed and cap the limit on the debt ceiling. americans are the largest holders of IOU’S , trillions more than the chinese. americans are also the largest group who are “owed” debt dollars: thru social security; local,state ,federal pension; medicare,medicaid…. History shows central banks print, it doesnt mean they will.we can default ,cash will be king , no one gets paid .the chinese yuan is now the world currency and people in india will be pissed at the stupid americans in customer support answering the phones.
Greg, lowering the price equals no profit, meaning you go out of business. The rest of the world is competing against the U.S. for goods, they will pay the higher prices and act as a floor on prices. And or the rest of the world will buy up resources which creates scarcity causing the remaining resources to go up in price.
TnAndy said it so well.
Hey guys,
Where do I get a list of items that I would most need in order to prepare myself? I’ve been thinking of doing that on vacation for the next few weeks before the new year starts.
Thanks!
kingkang- first read the book by “ferfal” about the collapse in argentina and how things really played out . an awesome book that can save you a lot of $$$ before you start your preparing. also be informed for you you will need to be prepared for .
END THE FED, Till this happens, nothing is going to change.
it will only get worse and the skrewz will keep getting tightened.
kingkang,, I would be so happy to give you a quick list of basic preps. BUT you will have to listen to ALOT of plans, think about what you really believe could/will/might/possibly happen. Think about your area.
For instance, I’m in my late 30s with 2 kids, a hot wife, an acre of property, in central Florida.
I dont need heat! So thats not in my plan.
My plan might not apply for you.
BUT
I would like to know what recently provoked you to think about getting prepped?
Thanks guys for your help on this! I don’t mind listening to everyone’s thoughts. I’ve been reading alot/listening a lot for the past 24 monmths since the recession began. Losing a lot in the market and watching the news caused me to reconsider how this whole world works. Everything is run by incentives. Plain and simple. Well, I won’t go into my diatribe and opinions on gov’t b/c people on this site are good on how to do that. I just want to prepare for the next 3 years in terms of survival. Hope that helps. If you want to discuss further sittinguy, email me at [email protected]
kingkang – you might start at survivalblog.com. go back in the archives and look at the lists available there. great idea over vacation.
KingKang…you have come to the right place. There are many very wise people that have been doing this for years. You will find people in every level of prep and every level of intellect here. While I do not aways agree with everyone’s political, economic and religious views…..I do agree that you always need to be prepared for whatever life throws at you. ….just be careful because prepping is habit forming.
Here’s what I did, and recommend, just for the basic insurance for your family. If you do this you will be so far ahead of the sheeple, it will NOT be funny, it will be sad.
1 year supply of Freeze dried food
3 month supply of food you eat
gravity water filter (s) And water source. (well)
propane grill with side burner.
10 bottles of propane. (at least)
trifuel generator(runs on gas/nat gas/ propane) I got a 3200w yamaha for $800. Yea its alot, but its well built.
Guns and ammo.
Bikes with extra tubes and tires.
Big first aid kits, and burn kits. (a few)
Full set of camping supplies. Backpacks Ready
Household supplies.
Lots of toilet paper.
20-30 gals of gas( rotating sucks it sucks)
Alot of silver rounds.(to bad its $28oz rite now :(Â )
Long story short
Start daydreaming about what it would take for you to NOT leave home for a few months.. EVERYTHING. If you wear contacts, get a years worth, with solution. Medicine,, get a a years worth. Rubbers, get a years worth. You get it 🙂
I treid to keep a years worth of Jack around,, but that didn’t work out?
True that. And one thing I like about this site is that though everyone may have disagreement, they all do have one thing that they DO have in common which is to prepare when SHTF. And that’s why I keep coming back to this and listen to everyone’s thoughts.Â
Williams is wrong on many fronts – and here is why:
http://seekingalpha.com/article/222054-why-hyper-inflation-is-a-low-probability-event
http://seekingalpha.com/article/241219-was-bernanke-lying-about-printing-money
Speaking of hyperinflation, John Williams better not sit on a tack.
Credit is contracting, and people are still deleveraging. That is deflation. As businesses see their profit margins getting squeezed to zero, they will have no choice but to close down. That means more people without jobs, who can’t go out and spend, which will put more businesses at risk of seeing their profit margins getting squeezed to zero, and they will close down, etc., etc. That, unfortunately, is a deflationary spiral that will be very painful for the country. If peak oil is real, then it’s a downward spiral that won’t ever let up.
kingkang,
Start with the basics. Food, water, toiletries, protection, and training. Prepping is habit-forming, so welcome to your new addiction!
I am doing what Sittinguy has done. It is only me and my 2 German Shepherd but food, transportation, medical supplies, guns and ammo are a must in this situation.  I have chickens, rabbit, kill a deer or two each year and a large garden so I am use to providing for myself and my dogs. I already store staples because of where I live but I will add to this. I use wood for heat so no problem there but I would miss the electric for my computer.
Times are scary and I am glad I live in a hard to find area. In the ten years I have lived here I have never had a stranger come up to my home. No one can find it unless I take them here. It is out in the middle of nowhere and hidden by trees. 12 mile off the main road so I feel safe here and my dogs would never let anyone get close to the house.Â
Good luck to everyone and prayers for all.
I respect and usually agree with John Williams, but I think he’s just wrong here.
The housing bubble (and all it entailed, down to the mortgage-backed securities, credit default swaps, and derivatives) WAS the hyperinflation. True, it didn’t look the same as Weimar Germany, with people carrying wheelbarrows full of money. Our hyperinflation had people taking out $500K mortgages to pay for what should have been a $75K house. There’s your wheelbarow full of money: CREDIT. The result, however, is the same. Collapse, and people waking up poorer, not richer. (By the way, Canada is still in their housing bubble, so if you want to invest your hard-earned money into their hyperinflation, go ahead. I’ll find something safer.)
Then he goes on to say that we (unlike Zimbabwe) don’t have a black market. I disagree. We have ebay and Craigslist, for starters. Okay, those aren’t black markets, but they are mostly second-hand markets which illustrate that we in the US have more STUFF per capita than any other place on earth. We are the only nation on the planet (other than perhaps Canada) that has storage unit facilities in every town. Our garages, basements, and attics are full as well. We could have a black market/barter system up and running in days if we needed to. Again, it would be deflationary, as people would certainly not be paying 300% markup for retail goods.Â
I think food security will be an issue, and prices are going higher. Not everything will deflate as far as prices are concerned. Deflation brings prices to their natural levels. We are in a deflationary spiral, IMHO. It will be very painful for the nation, and you can expect government to make it much worse. We’d already be on our way out of this if government had allowed all the failures to fail back in 2007-2008.
I trust this conservative economist. John Williams makes an honest attempt to give us his best shot at what he thinks will happen. Only the most ignorant person wouldn’t take notice and listen to what this man has to say.
Something else one might want to get is a crossbow. Just in case something happens to your guns or ammo. It is a good backup for hunting for food.
One thing , we Americans have going for us is,  after a 50+ year  buying spree,  if the economy collapses,  we will become the worlds largest garage sale.
Everyone has rooms full of stuff, Â that we need….or will need. Â Â What we once considered old and trash, will be on the rack for sale!
And, if the economy has failed,  the good ol’ boys,  who know how to make alcohol,  for  fuel and drink, will not  have to worry  about Uncle Sam,  stopping them.  Many people know how to make stills and cook mash.   Small engines and even large engines can run on alcohol.
Our infra structure will still be here….there is a lot of stuff  we can/will  make.  Think pioneer.  We did it before,  we will do it again.
Sittinguy, you need to get your wife an air conditioner if your wife is HOT! Fuel (gas) rotation sucks! The light blue fuel extender @ West Marine is higher quality & uses less than the red stuff at Wally or Home D. Marine quality is much better or it wouldn’t sell with the boat crowd. My Honda marine tech buddy swears by it. I rotate about 60 gal. once a year for the Smart car for the boss (42mpg). Throw in an inverter & work your way up to a HEAVY gell battery & large pv panel for quiet time.
Comments…..
Greg says:
which would force retailers to cut prices to draw in enough customers to keep their heads above water.
I don’t think so—today the same Libby’s beans, corn, and peas  I bought two weeks ago 3/$1 are ….80 cents for one can.
I’m smiling…I bought had bought on sale 12 cases.
Where was this you say?? both events were at Dollar General.
Comments…..\
Hey guys,
Where do I get a list of items that I would most need in order to prepare myself? I’ve been thinking of doing that on vacation for the next few weeks before the new year starts.
Thanks!
John, your state surely has a prepper network..some, better than others…here’s a start..
http://www.preparedsociety.com/forum/
tell them JayJay sent you.. and this one is for my state…
http://kentuckypreppersnetworkforum.com/portal.php
and another…
http://www.americanpreppersnetwork.net/
And John, smart move…but it’s advised to not tell your neighbors what you store..shhhh..just let family and far-away friends know.
Comments…..
sittingguy…you’re funny!!
same here with M & Ms!!
I left the biggest one off the list.
Pay off your house,, the rest is easy.
Comments…..check your checklist many times and do something about whatever you have not done. i have my food supplly built up, i recently bought and restored to working order a treadle sew.machine, i have land for a big garden and already have collection of seed. the back porch is sagging from the canning jars waiting to be filled. and the propane tank is ready to be filled any day now. got bullets and guns. have fabric of many colors stashed away. got med supply and a really good homemade first aid kit. these lists seem awfully long but you will be much more comfortable if you prepare now.
I am a BIG fan of John Williams but believe he has missed the boat here. Also, note that initially he spoke of this DECADE and that was lost in the conversation.
Jaream, you are correct! You noticed (as I have been saying) that the money helicopter Ben has been imagineering has to make it to the marketplace to create hyper-inflation. That has not and will not happen as those funds are earmarked for loan losses.
Serious inflation for the poor, yes. Hyperinflation no. Deflation? Maybe as demand for many things will also drop. People do not fear! You can and will meet the challenges that present themselves. For warned is well armed!
Hey Tim! Read your blog. Finally someone who “gets it”. No hyper-inflation. But hey people don’t stop prepping! The financial crisis is just the tip of the iceberg, literally.
Don’t be afraid people.  The major guru’s calling collapse are all highly invested in commodities. Its a chicken egg scenario. Which came first?
Get a chicken and you’ll have eggs. Get the point?
sittinguy said, “I treid to keep a years worth of Jack around,, but that didn’t work out?”
That was funny, but there’s some truth and a lesson to be found there.
Temptation and such, the fact that people tend to use something more when they have a lot of that something around, it all requires discipline or will power, and often that’s not enough.
Serenity Now seems to think the housing bubble WAS the hyperinflation.
Hardly. If it was, rents would have gone up just as much as house prices, but they didn’t.
Why Deflation Is Not Inevitable (Sadly)
Part 1: John Exter’s Mistake
by Gary North
“There is a debate going on within pro-gold circles: inflation or deflation. The deflationists predict that price deflation is inevitable and imminent. The inflationists insist that mass inflation is inevitable, but maybe not imminent…
A newcomer to this debate may imagine that this is a hot new topic. It is in fact an old topic in which one side — the deflationists — have been wrong every year since 1955…
The main promoter of the deflationist position in the hard-money camp after 1970 was John Exter, a free market economist who had been a senior banker with Citibank and an economist with the Federal Reserve…
I am one who thinks the Federal Reserve will attempt to stabilize the money supply in order to avoid hyperinflation. I say, “mass inflation, yes; hyperinflation, no. Then deflation.” I hope. But all Austrians argue that the outcome is a matter of central bank policy. Deflation will not take place unless the central bank stops creating new money…
Exter said that the debt burden of the financial markets would soon get so large that nothing could stop a collapse of these markets. He said that central banks do not have the power to create money fast enough to keep this mountain of debt from collapsing…
Exter’s theory of price deflation applies only to the credit markets, not consumer prices. Consumer prices are governed overwhelmingly by the money supply, specifically M1. I have provided the evidence here.
Exter thought his theory applied to the CPI, but he was wrong, given the existence of central banks. The money supply does not shrink merely because capital markets’ various price indexes fall. His theory has to do with the capital markets, not retail consumer markets.
Allow me to explain the difference…”
You should read the rest, it’s very enlightening.
oops, here’s the link:
http://www.lewrockwell.com/north/north798.html
P.S.
A lot of people in SHTF situations say, “matches, have some matches”
Eat the boomers…they caused all this.
Let me explain what I mean when I say the housing bubble was the hyperinflation. When we talk about hyperinflation, we are talking about the government printing money like there’s no tomorrow. First, our government doesn’t print our money; the Fed prints the money. Second, credit spends JUST LIKE MONEY, so it must be considered money. So, we could say that hyperinflation is the creation of money, rather than just the physical printing of money. During the housing bubble, trillions upon trillions of dollars were created through mortgages, CDOs / mortgage-backed securities, and derivatives. This money was created out of thin air (i.e., printed), and some estimates put the value of all these creations between $500 trillion and one quadrillion dollars. Just because it was created through a derivative rather than physical printing doesn’t make it not exist, does it? That derivative is on a balance sheet somewhere in the world, listed as an asset, just like cash is listed as an asset. It didn’t take wheelbarrows to carry the printed cash around; we have digital money now and don’t need wheelbarrows. But created it was!
That was the hyperinflation.Â
It wasn’t a currency hyperinflation, it was a CREDIT hyperinflation. But again, since credit spends like money, it was still hyperinflation. (Incidentally, that’s why rents didn’t increase along with housing prices. People don’t pay rent with credit.)
Now, the flip side of this is that credit might spend like money, but it has to be paid back! Now we have a quadrillion dollars of debt out there, and the so-called assets are mostly worthless. We aren’t having a currency meltdown, which is what most people think about when talking about hyperinflation. We are having a credit meltdown, and the past two years have been spent (and wasted, IMHO) trying to cover it up.Â
We are in a deflationary spiral. That doesn’t mean that all prices will come down. Prices aren’t just a function of the money supply.
So that’s my basic theory. It looks different than Weimar, Germany, or Zimbabwe because it IS different. But catch me on a different day, and I’ll argue that currency hyperinflation is right around the corner. ;)Â
Serenity Now: You are right on target today! Credit is money. Clark has neither the education nor the experience to make an economic analysis on his own, show the reasoning, and make his point.
All he can do is point you to a link to someone else. Most of these people he points to have a stake in spreading fear to sell their commentary.
Food and fuel will inflate, because they are linked. Housing will continue to fall and there are still 10 million forclosures to swallow. Loan losses for bad loans. Rents will begin to increase as vacancies diminish: former homeowners now renting.
Precious metals, unlike American real estate, has a global marketplace. PM’s will continue to rise as demand increases. Econ 101.
Hyper-inflation? In the words of that truly great sage: ‘”Show me the money!’
Yes, people Do pay rent with credit, happens all the time.
The biggest one is a hotel room.
The prices of those have not soared along with the cost of the building.
“Now, the flip side of this is that credit might spend like money, but it has to be paid back!” And the banks will print/create electronic digits in order to pay it back. Deflation hurts the banks and the banks won’t allow deflation,… for as long as they can kick the can down the road they will, that’s why everyone’s talking about QE3, QE4, QE5 and on and on. The motto is, “Whatever it takes!”
Did you even read the link I posted above?
Thanks for the Ad-honium, Durango Kidd, real smooth.
I post a link to save space and the author says it perfectly.
The author is not selling fear as you say, just providing some truths and facts based on as much and using history as a guide.
What’s the matter? You don’t like Austrian Economist because they predicted the Stock Market crash in the 1990’s, The Housing bubble crashing and the Financial Crash in 2007?
They’ve got a better track record than anybody else.
Check them out for yourself.
clark,
Yes, I read the link. The Great Deflation-Inflation Debate of 2010 has been fascinating, and both sides have good points. Don’t take it personally if our views are different.
The credit expansion that I wrote about earlier could be as much as one quadrillion dollars. That will take a lot of QE to overcome that debt, much less get the credit party started again. Ben Bernanke announced QE2 of $600 billion, and interest rates went up 1%, if I recall correctly. The bond market is not going to allow Ben to print to infinity. We won’t be able to pay the interest on the debt if interest rates get too high. If that happens, it’s full on collapse.Â
I agree with you that deflation hurts the banks, and they will do everything (in their power) to avoid deflation. I just believe they have less power than they think they do.
I think the system would collapse before Hyperinflation. So I guess I don’t believe it will ever REALLY show up either. And I am in the inflation camp. Like alot of you, my views of what I think will happen change weekly.
It wont take hyperinflation to strangle most Americans.
All it will take is $4-5 gas for an extended period of time, and it will suck people dry in no time.
Useless stuff like flat screens will deflate,,,, BUT gas and food could jump up 50 -100%. I’m not sure that is considered Hyper,, But in my book it would be.
I think we could have both
I’m with you sittinguy. Welcome to Wally Mart. Spam & tp on aisle dos. Can’t wait for Ron Paul’s gavel & fwd lessons on economics to BB.
some here need to  review definitions of inflation and deflation in regards to monetary supply , not asset prices ! also check the definition of biflation by osborne brown.
john williams- SHADOWSTATS-very respected. Durango KIDD – correct me if i’m wrong but i believe the upturn in his M3 chart is newly reported  and this is why he is coming out w/ this inflationary  prediction
I believe we are still paying when the price of oil was over $140 barrel. When I hear about the chicken or the egg I compare it to energy or food. Energy is the life blood to most unless you can produce your own food. Are they paying you yet TN on electric bill? Any electric/hybrid car in your future?
My question for all those on this site. What doyou have to gain if your view point is correct? Having an opinion and a forum to present your opinion is truly a wonderful thing. Reading another’s opinion, looking at the information provided in an objective manner (without the personal attack), is the path to gaining knowledge. It is okay to be incorrect or have “tunnel vision” on a subject, it happens to all of us at some point in our lives. The personal attacks do not make your argument more effective, your information more accurate, nor does it help with the overall flow of knowledge. Come on Man, it’s Christmas!  Â
I know I’m correct. Just ask me. I don’t agree with you. I feel better. LOL
Today is Madoff Day. We could soon have BB Day. I’m still waiting on the book from BB.
Comments….. SD Mule said: The personal attacks do not make your argument more effective, your information more accurate, nor does it help with the overall flow of knowledge. Come on Man, it’s Christmas.
———————————
While I agree with you about the personal attacks, using “Come on man, it’s Xmas,” is a bit of a stretch. Xmas has nothing to do with people’s attitudes, nothing changes just because it’s Xmas. None of the hurts in this world goes away. Just read where Bernie Madoff’s son committed suicide. He left a 2-year old son. Should he have waited until Xmas was over? People are people–can’t change them regardless of what day or season it is.
/just saying
Congress & the President delayed unemployment benefits & tax rulings until Christmas.  Madoff’s son didn’t want to take the tax hit with your 401K.
Christmas is a season of joy, happiness, giving, and LOVE. This season is a reminder, as we sometimes forget throughout the course of a year, of what is truly important in our growth process. Come on Goldenfoxx, it’s Christmas! Â
I cannot say what will transpire, I only know I seek to cover as many scenarios as I can. As with many here, a years supply of food, as much water as possible, filtration, heirloom seeds, meds, generators, the whole ball of wax.  I’m in a small town in a farming area. And five pounds av of silver rounds.  I want to get more soon. Money is tight. As with so many, I just wish I knew what was coming down, for then my silver holdings would rise and savings would drop radically. One friend of mine commenting the gov’t would tax the hell out of me if I ever sold it as a gain, given an astronomical rise in price.  Then I pointed out to him that if TSHTF the gov’t would never know about it, for it would be used to barter, trade, you name it. Many people would accept it, I certainly would. PM’s speak their own language, after folks have food, shelter and basic needs handled when events stabilize. Sadly, may people do not even know what they are, meaning a silver round.
My guns I will never sell……….but I would give one to a friend.
There really isn’t anything to fret over, when the dollar crashes, we can just use Zimbabweian dollars on a black market.
Hey bufguy…don’t blame the boomers, that’s what they want you to do; intergenerational blame, interclass blame, whatever, don’t fall for it. This got kicked off in 1913 with the creation of the Fed. I think they had a 100 year plan.
Clark; QE2 is bailout number two and before those 10 million additional mortgages are wiped out and the losses absorbed, there will probably QE3. Imagine the up roar if Bernanke admitted to another bailout. His first priority is the member banks of the FED. Thats what QE2 is about. He is protecting the banksters from another wave of losses.
jaream; haven’t checked his chart yet, beeen looking at my own.
sd mule: It is important for everyone to express their opinion. free speech is more important in My America than blocked speech. There are a lot of people here looking for accurate information from the many people who have real knowledge and experience from which they can benefit .
But there are some people that have neither the education, training, or experience to comment on things for which they have an opinion but of which, they have no real understanding. These people spread a spirit of fear and insecurity. They must be corrected so that spirit of fear does not spread and people can have a true understanding of the events that are shaping their lives.
Clark: I understand, and agree with the Austrian School, but the money has to be injected into the system to generate inflation that is not yet happening. and thats the difference between real, serious inflation which we will have and hyper-inflation which we will not have.
Hyperinflation is a loss of confidence. I & many of you are feeling inflation already. Most didn’t feel it before because most of the people were spending big.
Comments….. As long as everyone is throwing out an opinion on the inflation-deflation debate, here’s my 2 cents. I think we will have both inflation, and deflation at the same time. as far as it being hyper-inflation, that depends on how far you are down the food stamp chain. When you’re broke, everything is hyperflation.
    another point, I like reading the different opinions expressed by all, as it helps me decide what I think the most accurate logical reasons behind all the economic problems are. Plus, as many would probably confess if pressed on the matter, do any posters on here really care what the other guy thinks???  I certainly don’t care. I have my opinions, and  if they’re right or wrong, they’re still my opinions. I do respect everyone elses opinion, but I really don’t want to waste my time trying to condradict someone else. it just isn’t worth the effort in most cases. But, in some cases, if I think someone is a dumbass, I will usually say it, and sometimes pay the price for being  opinionated.
  I have been reading you guys postings for a while now. The same folks over and over.  I enjoy reading what you folks have to say. The back and forth stuff is interesting sometime. But as I have read many times, the best thing about this website , is the same likemindedness that is shared about prepping.  Of that, there is no argument.Â
    Keep it up guys, I enjoy the ride more everyday.
I enjoy the different opinions as well. My theories are just my attempts to figure this all out….I certainly don’t have any inside information. It is frustrating trying to plan for the future with the uncertainty of inflation vs. deflation. I am trying to prepare for both. I know most of you are, too. Good luck.
SD Mule asked, “My question for all those on this site. What doyou have to gain if your view point is correct?”
It’s not about being correct, it’s about correctly anticipating the actions so you know how to defend yourself.
A blitz?
A pass?
A run up the middle?
A flea flicker?
What you anticipate defines How you defend and what offense you choose.
A successful defense is the gain.
Freedom and liberty are the gain.
Posterity gain from the efforts.
Durango Kidd, What do you mean by saying, “but the money has to be injected into the system”? Do you not see banks as being, “the system”? The injection has happened already. At least your Ad-honium is not as direct, it’s a start I guess. You certainly make no sense when you say you agree with the Austrian position yet attack me, for my position is Austrian:
Ben Bernanke: Juggler of Digits
“”Then there has to be an entry for each loan. How were these entries concealed? Where are they recorded today?”
“Helicopter Ben” of his November 21, 2002 speech promising to print money. (http://bit.ly/HelicopterMan) No, no, no: the FED will merely buy T-bonds.
With what?…
It will buy them with newly created digital money, of course…
When the digits start falling, you had better be out of the way.”
I would prefer that more people do well so that the odds increase for everyone to do well.
Except for the banksters and their buddies of course.
P.S.
I’m watching Ben Hur right now.
The more things change, the more they stay the same.
LOL “food starts to disappear from food shelves”
That only happens locally after a major natural disaster. The only way that will happen nationally is if the truckers stop hauling, or the manufacturers stop, or the farmers stop, or the law and order breaks down.Â
An oil stoppage, a Yellowstone event, or a mile wide meteorite would do it.
Most people on Wall Street feel the economy will be booming by summer of 2011. They say the consumer will be back replacing old items with the new.  With the Manpower employment reports, they think unemployment will fall below 8% and the DOW could breach 15k.
I am in the deflation death spiral camp brought on by the ever decreasing amount of cheap easy oil being produced.Â
Enjoy your metals now, they will soon be in my vault for pennies on the dollar during the mother of all metal price collapses.
Cash is king when cash, employment, entitlement and credit become scarce.
One thing that IÂ haven’t seen on here yet is after you’re preped for your self, family ect, you have to draw the line on who will be allowed in your place or who you will take care of, your preps will noty lias tvery long id you let all the jonny come lates eat and use them, you’ll starve right along with them eventually.
Survival Tips:
Remember to visit http://www.beefjerky.com to get a year’s worth of beef jerky.
Build or get an alcohol still – that is the way to be printing money! Don’t worry about the law, they will be trading with you for booze, just like everyone else.
Breed Rottweilers and German Shepherds – those pups will be in high demand for security. And you will be secure too.
15 gallon blue plastic barrels hold about 100 pounds of dry food, like beans, wheat, rice, popcorn. Put 1/2 pound of dry ice in the bottom, then fill with food. Put the lid on loose for 2 days, until all the CO2 has turned to gas, then seal. This keeps the insect eggs from hatching and the beans or grain will keep for more than a decade.
Remember to visit http://www.beefjerky.com to get a year’s worth of beef jerky.
Comments…..something to remember. Most everything that happens on the news front is a method of distraction. If you’re fighting for your share of entitlements, fighting for an extension of unemployment benefits, going to political meetings, pissed about our troops overseas, pissed at the waste of government programs, on and on, you tend not to notice the foxes are guarding the hen house. actually, they have eaten the chickens, and are looking for hens to replace the ones they ate. that’s us. if we fall for the blame game, the one party or other is to blame game, we’re falling right into their well laid trap.
      They are ALL GUILTY.  Both parties have screwed us good, my party, and your party. That’s why nothing ever changes. I find it amazing that the first thing either party does when cutting costs, is to screw  the very people paying the taxes, instead of going after the corporations that pay virtually nothing, and claim to be American companies, when in fact, have moved the vast majority of their work overseas.Â
     These jackoffs have the balls to come on tv, and act like they are working for your interest, and want to save our country, when in fact, they are doing everything they can to support the thieving bastards (the FED) that did this to us. What a bunch of douche bags they all are.
     So get over this blame game thing and focus your energies on protecting yourself by prepping while you have time. We are on autopilot to total collapse. it will happen fast, and it will take no prisioners.  This idea of changing things by voting people out is a farce.  We  are way past that doing any good. The good that would come from doing this is real, but the time to do this is way past being usefulll for change.  Our scumbag representatives are just playing a game of who can out talk the next guy to make Americans really think they care. They know what’s coming, cause they were complicent in the whole plan. What they do is all for show and distraction.
     Prep, prep some more, and prep some more. Food , water, weapons, and precious metals. I call them the four major food groups-ha ha. we at least have an idea of what’s coming.  These poor saps we have been trying to convince will just be on their own. a sad fact of life. if you want to be a humanitarian, go ahead.  That will keep them away from me. I have my own dis-believing family members to worry about. Good luck guys, time is short.
Comments….. As for the subject of precious metals. I’m sure one day the bubble will pop and the price will come down, but the facts say it’s going to be a while. The demand is increasing, and there is a known physical ammount available that decreases each day. I’ll choose that bubble any day. As far as cash goes, i agree that in many cases cash is king, but as i watch the daily price of goods go up, cash is being demoted more to a prince than a king. metals have been around for thousands of years, and have stood the test of time. every fiat currency ever made has failed sooner or later. Do the math.  I like to have both, but I’ll take a silver bubble anyday.
I was in the peace corps back in 1985 and was taught to work with the people on planting food everywhere. That is what I am doing where I live, planting food, blueberry bushes, apple trees, grape vines, food everywhere so there will be something to eat for everyone here. I have been working to get my neighbors on board with it too. Anyway, it is comforting.
Comments…to TOM @ 11:24.  To add to G.C. @ 11:28, and Mac’s list. You will need to be prepared to operate a business using trade skills you have: carpenter, plumber, sheet metal etc. You might also have to operate without a car or truck bucause of limited or very high price fuel. You may also need to operate without electricty be cause of distruptions. You will need to be able to advetise your name and skills.  You will need to understand bartering your skills. What would you be willing to take in exchange for your skills as the situation changes; i.e. 90% silver, rounds, food etc. Your preparations in this area start now.  Be Well
“Most people on Wall Street feel the economy will be booming by summer of 2011.”
Most people on Wall Street seem to be out of touch with reality too.
“They say the consumer will be back replacing old items with the new.”
With what money? The home equity withdraw game is over and done.
“With the Manpower employment reports, they think unemployment will fall below 8% and the DOW could breach 15k.”
Unemployment rates will fall, because people will stop looking, go under the table or no longer qualify for unemployment benefits causing them to no longer be counted and included in the government charts.
“I am in the deflation death spiral camp brought on by the ever decreasing amount of cheap easy oil being produced.”
An ever decreasing amount of oil?
A decreasing amount suggests higher prices, it’s called scarcity.Â
I agree Greese, I like the way you put it together Clark. M Mike. Am prepared with the skills & tools already. Have even been looking at the electric small trucks last 2 yrs. One offers an AC motor where the other is DC. Mounting small Honda 2K gen in back with bed rack of 72 volt pv’s mounted overhead. No cold weather here. The miltary base in my town have them already but they will only do 25mph. Not sure if that is fast enough to run from trouble.
Clark: The money has been injected into the banks; first the 800 billion dollar bailout out and now 105 billion as the first bite of the 600 billion for QE2. But it has not been injected into the economy (system), because the banks have not used that money to make loans. And they will not. It is intended to cover the losses of MM2 coming to a home and bank near you soon.
All of that money is sitting in the banks to cover these anticipated loan losses. The banks will use this money to replace (cover)Â their losses as they occur, just as they did in the bailout.
If we were going to have hyper-inflation, it would have started with the $800 billion dollar bailout. It hasn’t. And hyper-inflation is much more than just a “loss of confidence” as Tom suggested.
75% of Americans are working, about 25% are not. The economy is still chugging along. Only the people on the bottom and those that have been displaced from their jobs and homes are going to get hurt, and have been hurt, unless things go from bad to worse.
And it will for some. So keep prepping folks, but do it out of wisdom and prudence; not fear.
“We’re not printing money. What we’re doing is lowering interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster,” he said.
Sorry about that grease.
According to college economics texts.
Inflation – increase in money supply
Deflation – decrease in money supply.
No ifs, no ands, no buts, and no valid arguments for anything to the contrary. Keynesian economics is just a gimmick for temporarily gaming the system.
Fractional banking inflates the effective money supply. Ergo credit is inflationary.
The FED does NOT print money: the US Mint prints money at the request of the FED and Congress. Treasury Bonds are sold to primary dealers aka banks. The banks deposit the bonds with the FED who credits the dealer with “excess reserves” and pays interest to the dealer in excess of the interest on the money borrowed that was used to purchase the bonds. The reserves are used to inflate the bank’s reserves and make it appear more viable. The FED then credits the government with the income produced by the transaction. One piece of paper generates two incomes due to QEI and QEII (money lent to banks). We loaned money to buy our paper and then pay interest on the paper and spend the money we got for the paper while the bank uses the paper as collateral for further investments and create the public perception that the banks are solvent.
So in a nutshell, we loaned the buyer the money to buy our paper. The paper is the collateral for FED crediting the bank with excess reserves. This credit is the collateral for further investment by the bank. The bank will always invest in perceived profitable ventures. The bank and banksters pay hefty taxes. This makes the actions appear profitable for the US government. First, last and always, the business of the US government is tax revenue enhancement.
If this reserve were to remain internal, no serious problem. However these reserves are invested outside the US. An example is Brazil screaming bloody murder about US investments in Brazil. If you have reserves, you can borrow against these reserves to invest. No different than borrowing against a life insurance plan.
We can claim that the monster from Jekyl Island (Federal Reserve Act) is the beast, but we are mistaken. Just months prior to the meeting, the XVIth Amendment was passed. Income tax made the FED possible by insuring a nice revenue stream for the government to be capable of paying back the loans.
The interesting part of this is that ignorant people continue to harp about corporate taxes being too low. ALL CORPORATE TAXES ARE PAID BY THE CONSUMER. Now are corporate tax laws designed for the stockholders? NO! A big share of the profits get funneled into the business as an expense and not transfered to the stockholders.
Some examples? Advertising, R&D, M and A’s, etc. These expenses rarely increase the dividends, but often increase the stock price. The irony is that these possible taxable items aren’t taxed means that these revenues MUST BE replaced. Enter the consumer. The consumer carries almost ALL the tax load.
Inflation is the norm. No escaping it. For a healthy economy, inflation is mandatory. Think about this. This year we have 100 workers chasing $100. Next year we have 102 workers chasing $100. You try telling the original 100 workers they must take a reduction in pay so the 2 new entries into the workforce get paid.
Which leads to the problem with capital gains taxation. Capital gains is NOT conducive to the “velocity of money.” The faster money is exchanged in commerce, the greater the tax revenue stream. Long-term investments remove this velocity. Speculative investments aka buying and selling increases the velocity of money. Hence we permit legalized gambling, in fact we promote it as a mechanism to increase tax revenues.
The populace demands inheritance taxes for the wealthy. Is there a valid argument? Yes and no. Multi-generational wealth accumulation does shift wealth away from the masses. It’s the old “it takes money to make money” issue. However the masses refuse wealth accumulation in favor of debt and spending. The question becomes one of investments vs spending. Spending increases the ROI of the investments and increases the velocity of money (tax revenue). The wealthy invest in commerce. The whiners want freebies by taxing the most productive sector. These same whiners fail to realize that the bills are being paid by the ROIs of the wealthy. Shame on you wealthy people. Why don’t you convert all your assets to PMs and go away? Liquidate the businesses and sell the equipment overseas where there are investors. Force the masses to foot the bill on their own.
Coming full circle to the inflation-deflation debate, the consumer will experience deflation on income and discretionary buying. This same consumer will experience inflated prices on mandatory purchases. Profit margins will be cut to the bone to keep companies viable as long as possible. Food and fuel are pretty fixed in quantity and already are priced with a minimum profit margin. Prices are already increasing. Fuel is being held low only by virtue of disposable income available vs production. Demand has dropped, but supply has remained fairly fixed.
We eagerly bought into this Ponzi scheme. We can hold pricing down by off-shoring manufacturing. Enter “Free Trade.” Lower capital and labor costs off-shore produced lower shelf pricing. Increased corporate profits increases tax revenues. This is what hid the true costs of inflation. Now the balance of payments has transfered monies to foreign countries who buy our debt. This will continue to work as long as we are the reserve currency AND the buyers continue to buy our debt.
Based upon what is happening, here is my take on the future. Service-based jobs will decrease due to loss of disposable income. This reduces employment and tax revenues. Small manufacturing will fail due to lower demand and profit margins already strained. Operational loan availability will continue to decrease. Currently, agriculture is targetted for increased government loan programs. Without the loans, food production will decrease. An additional storm is on the horizon and Dept of Agriculture is fighting it. Our nation’s youth refuse to enter the field of Ag.
We put all our eggs in the inovation basket. We are running up against technological constraints. Go to the Dept of Commerce and see what our exports are.
My analysis is, we are circling the drain. We owe, we owe, it’s off to the employment office we go. No jobs today, our good jobs went away. The end of our hopes, the end of all our dreams.
So hyperinflation or not? Does it matter if the result is the same? I will continue to assert that the politicians will do everything they can to continue kicking the can down the road.
The world view?
Everything is connected to everything.
Everything has to go somewhere.
There ain’t no such thing as a free lunch. TANSTAAFL
The world’s reserve currency is inflated through fractional banking. Nobody is willing to let garbage be garbage. Watch the linking of the Saudi Riyal to the USD. Already several of the OPEC countries are looking to the Euro for pegging oil. If the Saudis follow suit, we are toast. Our reserve status will go away leaving the US biting the bullet in our ass. The BRIC countries are NOT the problem. Our entitlement programs as well as our politicians are the problem. Oops, we voted for this. Therefore I have met the enemy and it is us.
Every country will shape their economic policies to do what they think is best for themselves. Themselves includes the careers of the politicians making the decisions. You can bet that many of these decisions will NOT be in the US best interests. Our politicians will blame the other countries. Put a name and face on the enemy and the masses will follow.
So, is John Williams correct? His timeframe might be off, but sooner or later the law of entropy will manifest itself as the law. Pay down the debt or face bankruptsy. Tangible inputs are the only mechanism for generating tangible outputs and profits.
Money is only a transactional currency. It is NOT a tangible but rather a representation of tangibles. It works only so long as there is confidence in it. Transactional currency exists only to aid and abet commerce; never as a means of wealth accumulation. It use to work because it was intimately tied to PMs. This tie no longer exists and this permitted inflation without attendant productivity. Good for government spending, but bad for the consumer. We chose and continue to choose consumerism beyond our needs and far beyond our earning potential.
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So what can we look forward to in the meantime? Wage and price controls. Rationing and shortages of goods. Increased QE and escalating costs of imports. One thing to bet on is the foreign countries demanding that all our exports to them take US treasuries in payment. Effectively, our remaining manufacturing base will be forced to accept national debt instruments as payment. With wage and price controls, the manufacturer absorbs the losses in exchanging the debt instrument for USD. At least for awhile. World productivity isn’t static but rather dynamic. Any economic policy changes by another country can and will affect our economic picture. We are no longer driving the economic bus. We sold the seating and now we no longer own a majority stake in the bus. It’s gonna be a helluva ride downhill.
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So what to do? You already know. Did I miss anything in this synopsis? If anyone must argue, please use a logical argument with evidence supporting your argument. I have no beliefs and I don’t accept yours. Beliefs are all in your head and do not constitute evidence. Beliefs require that any and all evidence contrary to the belief be refused, discounted or fought vigorously. My opinions are subject to change as new data becomes available. Believe what you will.
>Williams is wrong on many fronts – and here is why:
>http://seekingalpha.com/article/222054-why-hyper-inflation-is-a-low-probability-event
>http://seekingalpha.com/article/241219-was-bernanke-lying-about-printing-money
Tim, John Williams is correct. The links you posted are simply laughable as they are full of anemic and fallacious argumentation. Let’s look at what he says:
“Those bullion dealers are idiots that they would take dollar bills that are about to collapse”
This claim is specious. In any trade, it is ex ante true that both parties think they will benefit; otherwise, no trade would have been made. Hence, each party to the trade can view the other as an “idiot” for receiving the worse end of the deal. But this is only a subjective perception. The author acts as though this were objectively true, errecting a straw man to be knocked down.
“The US dollar gets its price and value based on the prices and value of other fiat currencies such as the yen, pound, Canadian dollar, Swiss franc, and euro.”
This statement is meant to mislead the reader by suggesting a similarity in the stability of the US dollar and that of other fiat currencies. But the statement is only true insofar as dollars can be exchanged for the isted things. The statement loses its relevance when one realizes that the US dollar gets its value from salable dog poop jewelry.
“reserve creation is not money printing. It is only potentially inflationary”
This is analagous to saying “Slashing one’s arteries is only potentially fatal, it is exsanguination that causes death”. Ceterus paribus, inflation of the monetary base will clearly cause prices to rise. Also, the attempts to belittle the Fed’s ability to increase the money supply are misleading; in theory, there’s no limit to how much the Fed can increase the monetary base.
“The monetary base is exploding, but the money supply is not.”
This is highly debatable. It is a fact the M1 and M2 money supplies published by the Fed are increasing. Which data is your author using??
http://www.federalreserve.gov/releases/h6/current/
Percent change at seasonally adjusted annual rates    M1                   M2
—————————————————————————————————————————————————-
 3 Months from July 2010 TO Oct. 2010                  14.7                  7.6
 6 Months from Apr. 2010 TO Oct. 2010                   9.2                  6.5
12 Months from Oct. 2009 TO Oct. 2010Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 6.2Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3.2
An ever decreasing amount of oil.Â
Production has been on the decline now for over four years.
An ever decreasing demand for oil. China industrial bubble bursts when the west runs out of credit and stops buying shit. Many Chinese will return to their rural life.   America and Europe, like the old days, there will be people that rarely leave their location of birth, not because the cost of fuel will be high, it will be cause there will be no money or credit even if gas became 10 cents a gallon.
The price of oil will not skyrocket, with production down and demand down, and the amount of consumer cash and credit down.Â
This is deflation.
The push to increase prices does Not have to come from bank lending:
Are the Excess Reserves Finally Leaking Out?
April 22, 2010 by Robert Murphy
“For a while I have been warning that one way the (price) inflation genie will get out of the bottle, is that banks will take some of their incredible excess reserves and buy Treasury debt (as opposed to granting new loans to customers). The trillion+ that Bernanke has injected into the banking sector would then start trickling out into the “real economy†via federal government spending.
So you can imagine my alarm when I read this story from CNBC:
Surprisingly strong Treasury auctions in March had help from banks, which normally stay away from such events.
Banks snapped up $5.7 billion of the total $34 billion auctioned in 10-year notes and 30-year bonds, providing demand for auctions that many analysts thought would flop…
“The pattern suggests that banks have been starting to put their large cash balances to work, but is not an indication that bank balance sheets as a whole have started to grow,†Deutsche Bank said in a research note.
The suggestion is that banks are using Treasurys as a way to get some return on their money that they might otherwise reap from making loans.
…
Yet combined with their purchase of agency-backed debt such as mortgages and student loans, banks bought a total of $40 billion from the Treasury in March, according to analysts at Deutsche Bank.
But there’s also another less-obvious reason banks could be stepping in to the Treasury market: A type of tacit quid pro quo with the Federal Reserve to keep short-term rates low by helping the government finance its debt through Treasury auctions…
While there’s disagreement among analysts whether the actions are part of an explicit pact between the two sides, some suspect a gentleman’s agreement in which both sides benefit.
Now here’s the really interesting thing: Excess reserves fell about $41 billion in March. I don’t have the time to check all the possibilities, but it looks to me that my doomsday scenario is starting to play out.”
The Federal Reserve’s Reserve
by Gary North
“The increase in the commercial banks’ excess reserves offset the doubling of the monetary base… This will enable the FED to increase the monetary base at some point by purchasing Treasury debt in the midst of a rise in interest rates…
So, if price deflation really is the threat, what can the FED do to prevent it? It can start buying assets — any assets. This will increase the monetary base. It will put newly created fiat money into the economy.”
overtheedge said, “Pay down the debt or face bankruptsy.”
Many people say paying down the debt is mathematically impossible, so that leaves the one option,… or expanded war?
Article is totally flawed since it is based on the economic model of Zimbabwe? More than just ludicrous! ie insane.
we best find us some magical cure for rated living
prescribe some tough medicine and move to michigan to smoke that shit. 9 plants per person? up to 5 people? i might have some pounds to contemplate.
Comments….. Wow, one thing I see clearly. You guys know a lot about the FED, and economic policy. I’m not smart enough to figure it all out, but there are some things I have learned. I raided my retirement 401k, and paid off my house, my car loans, and my credit card debt. The dollars in that fund were shrinking almost daily in buying power, and the lure to get out of debt was too much to ignore. I paid my penalties, got out of debt, and then bought gold and silver. After a year and a half, that move was the smartest thing I ever did. The PM’s have appreciated greatly, and the feeling of not owing anyone anything is truly a great feeling.
      I have since removed most of the rest of the money, as I see our cheating, low life, scumbag representatives in congress getting ready to confiscate the rest of it. it’s coming guys. Remove your funds now, or kiss them bye-bye.
      Now, I just deal with rising prices by buying quicker before they rise. It’s doesn’t take a genuis to figure out that prices on what we have to have to live, are going up. Some things like real estate are being deflated by too much product on the market, and too few dollars to buy them. I think we will be living with infaltion and deflation at the same time—whatever is the cause, for a long time.
     My economic policy—keep some cash for buying preps, and put the rest in gold and silver. it works for me.
Obama to Asia: Don’t rely on debt-laden U.S. consumers – washingtonpost.com http://www.washingtonpost.com/wp-dyn/content/article/2009/11/15/AR2009111500761.html
Washington knows the clock is ticking on the U.S. economy. They, like the rest of us, don’t know exactly when or where the event that crashes our economy will take place. Nor do we know what will be left after the dust settles.We only have to wait 6 to 9 months to see if he’s right. That would be sometime next June at the earliest. Lets hope he’s wrong.
Tom: Yes, that is what he said, just remember when his lips move he is lying. Rates have bounced up unless I am mistaken. So forget about lower rates: just a bigger spread for the member banks to increase profit.
Everyone believes that QE2 is to stimulate the economy and they are mad about it. What do you think would happen if the American people understood that QE2 is just another bailout of the banks; two years later? And QE3 which will do the same thing, may loom in the shadows?
Neither of which will stimulate the economy or create jobs; let alone spark hyper-inflation. Its going to take a decade for the banks to sort out their losses; just as it did the Japanese banks. You are probably old enough to remember how “afraid” Wall Street was of the Japanese banks.
Ten years from now Wall Street will be claiming that the Chinese banks have the edge, etc, etc. and they will need new special powers or less regulation. And the sheeple will buy into it for national security reasons, I am sure.
No hyper inflation people; but inflation by a thousand cuts, and primarily for food. Afterall, China has to start supporting American Agriculture and send those dollars back to US.
Invest in commodities like the big boys. If you can’t invest, buy preps!
You’re right grease man, your not nearly as smart as you are wise. I’ll take wise ANY day of the week & on Sundays twice.
Very good book to read: yata, yata, I know, another book that someone wants YOU to buy & read! Written by James E. Sinclair & Peeter D. Carlin. 141 pages of true wisdom (small price). I got mine at jsmineset.com from Jim Sinclair. Thanks Mr. Sinclair. I would have paid much more for the little book. I think many here will enjoy reading it many times also. On my 3rd read already. It’s that good! I learn from many of you but it hasn’t changed the way I look at things. But it has made me more steadfast.
Pocketbook of Gold
A Survival Manual for Monetary Mayhem
damn touch pad
Clark: Another great quote and link, but if the FED wanted to increase the monetary base in the economy, they could have done so by now. Easily.
That is obviously not their intent. Again, the intent is clearly to protect the member banks from MM2. Quote anyone you want, but unless and until that money makes it into the economy, hyper inflation exists only in the minds of the NIA.
If anyone is truly worried about hyper inflation from QE2, they shouldn’t be. But if the big one hits LA, or another war is engaged (NK); the costs associated with either of those, or similar events, would ripple through the economy.
Keep prepping everybody. They ‘re coming.
greaseman…Way to go man…in my opinion you did one of the “smartest” things anybody could have done,got out of debt…KUDOS! Theres alot of folks who have all the goodies but are in hoc up to their eyeballs,and that isnt smart.
Greaseman, I see a lot of people defaulting on their credit cards soon. What are they going to do, take away their birthdays, send them to sea? Or is it the other way around…
I see quite a few people are up tonight. Who is going to be the lucky 100th poster for this blog? I have been before! Thanks Mac!
greaseman,
Great post! You are smarter than 99% of the people at the Fed. Heck, at this point the Fed doesn’t even understand itself, and Congress has abdicated all of its responsibility to control it.
The Fed doesn’t understand that it can’t force people to borrow money. They want to re-inflate the credit bubble in order to keep the Ponzi scheme going. But people have hit the wall with the amount of debt they can service….the great 30-year credit bubble is over. The rest of this ride is going to be interesting for sure.
Zero Hedge just put up a Bloomberg chart showing wheat and corn prices rising soon. This is a supply and demand issue, not a monetary policy issue (regardless of what the pundits say). Wheat shortages will mean higher prices for rice, since people will need to find a substitute for the wheat. And since corn is in everything from gasoline to cows, that means prices of those things will rise, too. Keep stocking up. Not out of fear, but trust your instincts. Good luck.
Comments…..My wife and I are currently living in Alaska. I work in the oil field so am able to travel to work if I move.
I was thinking that it might behove us to move south where food is easier to grow and the winters aren’t so severe. It is hard to see the forest for the trees if you know what I mean.
I don’t think my 401K is going to be around much longer and if it is it won’t be worth much. I was thinking of reducing the amount being  invested and buying gold and silver.
Do you thin I am on the right path or should I stay where I am at.
Overtheedge- perfect!! durango kidd – great economic insight, don’t go “zukadu” on us
Hyperinflation is purely and solely a monetary event. A currency, like any other commodity subject to supply and demand — the more you print, the less it will be worth. All other economic factors, although they may mitigate the consequences to varying minor degrees, are fundamentally irrelevant.
Yawn, ho-hum, burpppp, sigh. Silver is up 97 cents this morning. When is something going to happen?
Golden Rule: “He who has the gold rules”
Reb is the 100th!
DK, I’m still waiting on BB to start crying while being “interviewed” by RP. I’ll bet he has a home and a 2nd passport overseas. Hyperinflation is a loss of confidence event that happens to involve fiat paper. Those with the least wins unless you need to keep warm.
We are witnessing the burst of the Industrial Revolution bubble, brought to by the end of easy oil, and the end of easy credit.
The question will be, by 2020, will they be able to manufacture big screen TV sets, iPons and computers using plastics derived from “bio-poop”. If not, then enjoy this last great golden age of things, next generation will have 90% fewer items in their new 500 sq foot temporary homes (with the new 10 year warranty).
The big invention tomorrow will be the harness conversion kits that allow hitching horses or even illegal migrants (since there will be no work for them) to your cars, trucks and those welfare mother daytrip to the Indian casino busses.
The big food replacement item in the 2020’s will be in expandable full stomach pill.  Just add water and it expands in your stomach, providing you with up to three days full stomach.
The government will require these to all people weighing over 100 pounds, as they will be branded as economic terrorists by the Queen Michelle Obama government.
The big occupation in the 2040’s will be in street sanitation sweeping up horse manure from the streets.
By 2050, the despair between the rich and the poop poor will be so great that the rich will be walling off entire 1,000 square mile areas and making them “For Rich People Only” areas, complete with all the functions not found anymore in the poor areas.
Mark: I think you are in a good position where you are at. Obviously you have adapted to the weather. You are probably making really good money and have “survival skills” suitable for Alaska. Just make sure you have lots and lots and lots of ammo (7.62) and a few AR-15s.
Think about building an insulated, solar greenhouse or two to extend the summer growing season, and using the square foot gardening and sprouting techniques to enhance your food supply.
Gold and silver after your preps. Good luck!
The elite can control and install police state in North America and Europe but not in Asia and maybe not in South America. They try to control the rest of the world by taxing them through climate change and one world government fraud. So, if I have money, I will go to tropical country where land is cheap and not living in a police state where TSA irradiation and sexual molestation in airports,bus station, governnment buildings, even inside your home, taxing you to death or until you become homeless, unhealthy foods, etc….are the norms of life.
In the years to come, all paper assets will deflate and all real things will inflate. The economy as we know it today will simply come to a stop. The trick then will be to be self sufficient. To be self sufficient you need a place. You need to think like a deer or a wild turkey. They are self sufficient. If a group of same minded individuals could get together for the purpose of establishing your own credit out of thin air they should do so. It is a lot easier to make loan payments to yourself if you can use last month’s payment to make this months payment and so forth. Again this is self sufficiency, as in credit self sufficiency. Debt is our money supply, so why not use your own debt as a supply of money created out of thin air. I as for myself would like to see some people get together to share the cost of ownership of a place (land).
Chris: there is a guy squatting in a ghost town in kansas. hes got buildings and water about 20 miles from civilization. He reads and posts here I think.
If kansas works for you I will see if I have his email address for you.
serenity now: Caught your post on deflation. You may well be right. The FED says they are fighting deflation but we know when they speak they lie.
Rates are up and new business regulations next year will strangle small business: THE job creation engine. That will trickle through the economy to depress it. It has to be deliberate because they are not that stupid.
Buckle up everybody and cinch in that belt another notch.
In a fiat currency world, the legal tender so called, becomes a commodity, and is subject to supply and demand. The FED can increase the supply of legal tender, but it can not force that new legal tender to grow more food or built needed things. JPM/C last month purchased 350,000 tons of copper. Every major institutions and hedge funds is scrambling the world over for resources that can be stored for a long period. Even the biggest palladium producer in Russia has decided to stockpile the palladium in the waste material to be seperated at a later date when the price will be many times the present price. Also by just taking out the nickel now, they can cut pollution dramatically. Once the nickel is out, the plan is to use a different method to get the palladium out. In the next 5 years both platinum and palladium will out do gold. That is because most of the gold ever mined is still around, as where palladium and platinum is gone. All of this new money entering into circulation is doing nothing to increase production. We no longer can increase the production of oil, many precious metals, and good food. Finding real fruit juice is getting to be a challenge. Finding fake juice or pop is easy. Hyperinflation starts when people start to scramble for what little real there is left. Pension funds are now moving into precious metals at a price 5 times the price when they had no interest in just 10 years ago. In a matter of 4 years 1919-1923 gold went from 170 marks to 87 trillion marks in Germany. We are going to witness a repeat of history.
I have land, what I need is some souls who can help themselves by helping me to make something of it. Crop farming or raising cattle as practiced today is not sustainable. Input costs have outstripped the gains gained in higher prices. A crop or animal can die on you. A precious metal can’t. I can tell you by experience that is far more profitable to hold precious metal then to grow a crop or feed out animals.
Durango Kidd,
Yes, they lie. I can’t answer the inflation/deflation debate, but I do know that every single thing the government has done since 2007-2008 is the wrong thing. I know that free markets don’t need bailouts. I know that we need a banking system, but that doesn’t mean we need the TBTF banks. I know that failure is a part of capitalism, and if you try to cover up failure, you will kill the system.
The powers that be know all of the above.Â
Seems to me we can have both inflation and deflation at the same time. Without writing a book… our monetary supply can increase (monetary inflation) while we have assessments (property / homes) that are loosing value (deflation).
*”assets” not “assessments”
*”losing” not “loosing” (my apologies…)
Regarding the hyperinflation/deflation debate. They can be thought of as two sides of the same coin. As explained at http://snardfarker.ning.com/profiles/blogs/hyperinflation-and-deflation:
“The larger the deflation risk therefore, the larger the risk of financial crisis, and therefore the larger the required fiscal and monetary stimulus. The larger the stimulus, the more vulnerable the currency to deteriorating monetary confidence, and therefore the greater the hyper-inflation risk.”
1. So the gov’t/Fed battle the deflation of assets with printing.
2. The additional dollars are now created.
3. Once they start to circulate, the inflation begins (remember velocity of money is at a 50 year low!)
4. As people, nations, and banks holding dollars lose faith in the currency, they move to purchase commodities as fast as they can, sparking hyperinflation. They may even just be holding Treasuries and begin dumping them, but the fed buys them all up to keep the prices of the Treasuries up.
IF THE SHTF…BE EARLY AND GET SOME CHICKENS AND RABBITS…THAT WILL KEEP YOU GOING. IF THINGS NEVER GO BAD…AT RETIREMENT…GET SOME CHICKENS AND RABBITS AND FEED THEM ALL THE FOOD YOU STORED UP..THEN EAT THE ANIMALS. THEY WOULD TASTE BETTER. HA
If there is only one metal that you should be investing your money in today it surely would have to BRASS! Praise the Lord and pass the ammunition. In the right hands, one .308 round will serve up all the red meat that a family of 4 could ever hope to eat in a months time.  COUNTRY BOY WILL SURVIVE!