Several years ago, when the financial crisis became apparent to pretty much everyone on the planet, talk of hyperinflation from economists Marc Faber and Bob Chapman, investor Jim Rogers and trend forecaster Gerald Celente was generally dismissed as an impossibility. With the Federal Reserve at the helm, most did not believe that such an event could occur in modern times. Even today, after two years of trillion dollar bailouts and stimulus, and no end in sight, Keynesian pundits still argue that we need to spend even more money.
Inflation, according to Ben Bernanke, is not the enemy – deflation is.
Forecasts for where the economy and the US dollar are headed include a variety of possibilities, with some in the deflation camp, some in the inflation camp, and a small minority suggesting the worst case scenario – out of control hyperinflationary price rises.
As we get deeper into the crisis, and the actions of global governments and central banks become more pronounced, forecasting the eventual result of their actions may be getting a bit easier.
Gonzalo Lira, who is well versed in the effects of inflation, as he had direct experience with it when it occurred in Argentina, has developed somewhat of a timeline of events to come.
Though we warn our readers that specific date forecasts generally don’t pan out exactly as predicted, the trend for a hyperinflationary event seems to be locked in – it’s really just a matter of when, not if:
In Signs Hyperinflation Is Arriving, Lira argues that we will soon see inflation popping up, even in the official government CPI figures:
These factors all point to one and the same thing:
An imminent currency collapse.
Therefore, I am confident in predicting the following sequence of events:
• By March of 2011, once higher commodity prices reach the marketplace, monthly CPI will be at an annualized rate of not less than 5%.
• By July of 2011, annualized CPI will be no less than 8% annualized.
• By October of 2011, annualized CPI will have crossed 10%.
• By March of 2012, annualized CPI will cross the hyperinflationary tipping point of 15%.
After that, CPI will rapidly increase, much like it did in 1980.
What the mainstream commentariat will make of all this will be really something: When CPI reaches 5% by the winter of 2011, pundits and economists and the Fed and the Obama administration will all say the same thing: “Happy days are here again! People are spending! The economy is back on track!â€
The first key number to look for over the next six months is the Consumer Price Index (CPI). If Lira is correct about his hyperinflation forecast, we will see the CPI jump from around 1%, where it is currently, to 5% or more.
If we close 2011 with a CPI of around 10%, it’s on – and you better be ready.
Remember, CPI is the “official” government price index, so it does not properly weigh the important consumer consumption products like food and energy (because those go up a lot higher and a lot faster than everything else). Thus, if and when the CPI reaches 10% in 2011, we can probably guess that food and energy prices will have already seen a 25% to 75% increase in price. Don’t worry if you don’t want to keep up with the specific percentages, you’ll know for sure when you go to the grocery store and your $150 weekly grocery bill buys about half of what it’s getting today.
If these events come to pass in 2011, then look out, because Lira doesn’t provide any good news in his forecast for the following years:
2012 will be the bad year: I predict that hyperinflation’s tipping point will be no later than the first quarter of 2012. From there, it will accelerate. By the end of 2012, I would not be surprised if the CPI for the year averaged 30%.
By that point, the rest of the economy—unemployment, GDP, all the rest of it—will be in the toilet. By that point, the rest of the economy will no longer matter: The collapsing dollar will make 2012 the really really bad year of our Global Depression
Whether Mr. Lira is right or wrong about his forecasts will be known over the next 18 months or so. For now, keep an eye out on the prices you’re paying at the pump, the grocery store, and even when you buy cheap Chinese goods, because all of them should be going up.
Though inflation rates of 15%, or 30% seem manageable, consider that Weimar Germany and Zimbabwe saw similar price inflation at the onset of their inflationary cycles, as depicted in this chart of the Zimbabwe inflation 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)
Now, imagine this trend playing out with the US dollar.
If Lira’s time lines and assessments are correct, we’ve got about 3 – 5 years before the price inflation for goods becomes totally unmanageable for average Americans.
And then, well, the only way to describe it is: SHTF & TEOTWAWKI
Read Gonzalo Lira’s Signs Hyperinflation is Arriving
For more information on hyperinflation, take a look at the following resources:
Hyperinflation related articles at SHTFplan.com
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Sorry for my ignorance but I”ve seen this many times before. What is “TEOTWAWKI?”
U.S. Bonds, anyone, anyone?
TEOTWAWKI = The End of the World as We Know It
Actually Lira is from Chile and not from Argentina. This minor little fact is talked about on his web page.
Sooner or later even the die hard hopefuls on Main Street will have to realize the gig is up, and will begin to raise prices to levels which allow them to survive. An all out war will soon be upon us, not with China, but between our own government and the “evil” private enterprises which are raising prices “out of greed”. Eating is a right. Cheap energy is a right. Healthcare is a right. How dare the corner five and dime now demand a twenty and fifty for just enough essentials to survive the next three days. The government will never take responsibility for the decisions which have brought us these times. They will use it as an opportunity to administer the final blow to free enterprise, private property rights, and the bill of rights as we know it. Alan Greenspan said “we can absolutely guarantee paychecks, we just cannot guarantee purchasing power” (paraphrase). Does anyone honestly believe that private enterprise can compete with a corrupt government bent on maintaining power and control which also prints the very “wealth” you need to feed your family?” If you have not already done so, take the tax hit on the old 401k and buy your lifestyle, and your freedom, while you can.
sanityjones….
You are right about getting out of  IRAs and 401Ks.   If guys like Lira are right,  everything paper is going to burn.  The dollar could go Zimbabwean on us.  Can you say….100 trillion dollar lunch?
I took that tax hit, Â in ’08, Â and have never looked back, because I put what I had left, in gold/silver. Â Still smiling!
I’ll bet your smiling again today Ozarks???
Wow! Silver up 72 cents. That puts another $1,400 in the value of my silver. At least for now. I keep expecting it to go down some. The store my wife works at was crazy today with people wanting to sell and people wanting to buy silver and gold but mostly silver. Still a value as far as I’m concerned. A couple oz’s every week……. One Roosevelt Dime from 1946 – 64 is worth $1.79. Amazing! A cup of coffee still only a dime.
Inflation has already started. The wife and I do our grocery shopping together. Prices have already started to go through the roof on many items; coffee, meat, corn based products, sugar, etc. You can see the increases each and every week. Get read, the really tough times are almost here.
That better be one good cup of coffee! A cup of joe is still a cup of joe.Â
No banks “yet” this week.
I’ve been reading of tipping points for about 20 years now, it always seems to be “next year”…
I guess it has to eventually happen, but I’m no longer biting my nails from these articles, I’ll wait until there’s blood in the streets before I believe it.
this talk of inflation is insane. there isn’t and there will never be inflation of more than the current 2% in america. our governemt can always freeze prices like nixon did with price controls and this would immediately solve any incipient problem. and then there’s all this propaganda about the value of gold and silver. if you think these junk “precious metal” coins have any real value just try to buy groceries with them. the grocery store employees will laugh you right out of their stores.
what everybody should do is save a few new crisp american federal reserve ten dollar bills. remember these bills are backed by the full faith and credit of the united states federal government which is the most powerful institution in the entire world.
wake up my fellow americans. don’t fall victim to a bunch a shysters trying to make profits selling junk gold and junk silver. some dealers are honest and advertize some of these coins as “junk silver.’
god bless america and god bless our federal reserve bankers who are protecting us from chinese commie punk currency speculators. america will prevail wharever it takes america will prevail,
PALIN/O’CONNELL 2012
Why on earth is this DEMOCRAT NUT MUSHROOOM, constantly promoting the Republican loser candidate Pailin for 2012???
Dems will vote for the Republican candidate Pailin/ … 2012 in the Republican Primary election. So Obama WILL win the 2012 presidential election by A LANDSLIDE OVER an inept Pailin who was defeated during the last election.
__________________
A)Â Just like Republicans listened to Rush Limbaugh to vote for Hillary Clinton in the Democratic Primary Election 2008.
B) Just like Democrats voted for McCain in the Primary Republican Election in 2008. McCain was at the bottom and ran out of money, but all of the sudden he was back on the top and won the nomination; Nobody ever knew why???
Anybody want to buy a bank the FDIC had to pick up last week? Nobody else wanted it: FDIC owns it besides bailing it out! That means you/us.
http://www.fdic.gov/bank/individual/failed/banklist.html
Dave, I agree with you..this is why I still am drawing from my 401k  in retirement as a monthly income.  If all this was going to happen , the powers that be would have pulled it off by now.  But I’ve got preps because I live in a hurricane area.  I stand by the fact : never trust a politician or any gov. official (appointed or elected).
8oz instant Great Value coffee at WalMart $3.88. Its really good coffee and its a bargain (1/2 price) against the name brands. Buy it now while its cheap. Use it or barter it!
More ‘hope and change’ coming your way………… compliments of your third world president.
Why not lump Laura? It was your money…..
MUSHROOM, GOD DANG IT!
Are you for real? Who are you? Barney Frank’s boyfriend?
No bank closures this Friday evening! All of those FDIC people must still be at the First Arizona Bank in Scottsdale.
Come on now childrens play nicely together. For those of us who are constitutionalists… remember that Mushroom has just as much the right to the freedom of speech as the rest of us do. Weather he/she’s blindly insane or merely posts’ from the prespective of a “sheeple”… obcessed over $10 bills… it is his/her consitutional right to do so.Â
One way or or the other shroom is smiling at us………….. I like his comments. He’s fine. He can be on my team anytime.
Yeah, ANON I am watching First Arizona closely. I’m hoping the FDIC puts a couple of those bank branches up for sale. I want to buy one in Flagstaff.
Comments….. I think the tipping point will come much sooner. So many key economic factors seem to be lining up weekly for the perfect storm to hit at any time. I find it curious that the president and his entourage will be absent during the voting this next week. Gone for vacation during a very important time for both parties??? Could the tipping point mentioned by Lira be the same as the tipping point mentioned by the webots for this same period of time. Coincidence??? Osama out of the country for whatever, with his family–coincidence???
    Too many coincidences for me. What ever happens will happen very quickly, perhaps overnight. Make sure you have some cash out of the banks, even if you have to borrow some ten dollar bills from shroom. he has plenty.
   All the internet chatter seems to be even more at a fever pace, of possible scenerios. I don’t think we’ll have long to wait, although I’ve been thinking that for a long time.
LAURA, smart idea to pull out the 401K Â before it turns into a “201K”.
GreaseMan sez: “I think the tipping point will come much sooner.”
I’m with you there, GM! The fevered pace of the chatter seems to be increasing in the last week. The whole thing is pretty jumpy right now. But, like you, I’ve been in that mode of everything thinking the excrement is about to extrude into the blades, yet, it doesn’t happen. I just keep on prepping. If the threat goes away, I’ll let the shelves thin a bit, but, until then, its bulk up time.
The rest of you need to pay attention. Mushroom is holding the administration and lamestream media line. He’s doing it so the sheople will see what he says (and it is in the extreme) and wake up. Shroomey doesn’t believe what he’s saying anymore than most of you, but, DANG, he is a good actor!
Amen and pass the $10 bills!
🙂
There is a new video just out from the National Inflation Association that is definately worth a look see. A little lengthy, but well worth your time. Just FYI:
http://inflation.us/videos.html
God Bless and good luck to all.
Comments…..On all this 401k discussion. Watch what the government does, not what it says. The tell you that they want to protect retirees savings by putting it in a government annuity. Bottom line, they are broke, and the trillions in private savings is the only money that they have yet to steal. What is left from the miserable returns of mutual funds, they want it all.
    The government’s job of total control of YOUR money, won’t be complete till it’s totally in their control. They will start with “encouraging” you to put it in their anuity. But later, you will be forced to give it to them.
    Any penalties you pay now will be less that the total collapse of the dollar that’s coming. I have taken my retirement annuity in chunks, and bought precious metals.  There is no looking back, as now, I have a safe, secure, real money, that’s in my possession.
    How can you tell the government is lying?? Everytime they open their lying ass mouth, and tell you we have turned the corner on this recession. No one but a moron like mushroom ( I mean that in the nicest way), believes that crap. Just look around with your own eyes. Do you see economic progress??
    Common sense dictates that severe banking problems are already here, and the inevitable collapse of some kind is very close. Do what you will with that useless 401k now. Soon, the decision will be taken out of your hands. Just google up legislation currently being debated in Congress. You will be amazed at the back room deals being made to take your money. Check it out for your own good.
I don’t have any useless $10 b ills, but:Â I CAN make change for your $9.00 bills, in ‘3’s.Â
Quite a reasonable timeline. My only problem is that the chronology of events over the past 2-3 years has been anything but reasonable.
There are several key things to take away from this, IMHO. One is that official CPI will continue to mask the problems for a while longer. If/when official CPI crosses the critical threshold of 15/30%, we will truly be in hell because “real” inflation will be 3-5 times that. I don’t believe that 15/30% will be manageable. Hell, it is barely manageable now at 1.3% or whatever pie-in-the-sky number the government tells us. But by continuing the lie not enough people will wake up synchronously to mount an effective insurgency. Again the boiling the frog analogy.
Second, what I expect (sadly) is that the government and Federal Reserve will lie to us right up to the end. Then, within a matter of days, perhaps hours, they will high-tail it to their bunkers that are just now almost completely built and get the hell out of Dodge, leaving a bewildered American populace left to ponder their dysfunctional existence.
I welcome sites like this a lot. Not many around. There are many complications to these sorts of scenarios. Two good contacts of mine say a US economic collapse has been planned and is proceeding apace.
Its all going to happen yet so many just cant see whats in front of them. We are I believe a resistance, united by the net.
greaseman I will have to agree with you 100%. Any one still having any doubts about 401k Should watch the 401K fallout documentary on cbc. here is the link:
http://moneywatch.bnet.com/retirement-planning/video/the-401k-fallout/290095/
Comments….. In the something to think about category– One reason that I think this QE1,2,3,4, spending spree by the FED, and the allowing of it by congress, is done, is that they know they won’t ever have to pay it back.
    If you knew you never had to pay back a “loan” wouldn’t you spend every dime you could of the “loan”?? The banksters know the US economy is a dead man walking. The congress knows it’s only a matter of time before it all collapses. Congress knows their jobs are toast anyway, and it would be foolish to try and stop anything at this point.. Just play the game as long as possible. The horse has left the corral. it can’t be penned up at this point. The US debt can not be paid back–it is mathmatically imposible. What part of “it’s over” don’t people understand?? Â
     But, Congress just keeps playing their role in the show, pretending that what they do actually makes a difference. They are a bunch of useless, ball-less, has beens, who answer to the elites that put them into office.Â
   Don’t be fooled into thinking voting makes a difference. It’s the same as a bookie who plays the point spread game. He wins no matter who wins, because he covers the spread. The elites own  most of the candidates once they get into office. if they aren’t corrupt when they get there, they will be soon enough. The entire show is an attempt to make Americans think the government has their best interest at heart. What a friggging pant load of warm crap. I’m sick of hearing some new executive order has been issued for my own safety. With laws like these, I think I’d rather have the crime. At least you know what a crooks’ intentions are up front.
   Folks, we have all been played for years, and the end result is what you see now before your very eyes. Your money gone, your freedom gone, and the real prospect of starving to death if you don’t prepare ahead some. We are well past things changing without some form of civil unrest. These civil actions have changed things in the past, and they will again. if you don’t think it’s coming again, I’ll  reserve you a place in line at the FEMA camp.Â
    Prep now, or get you bag packed to get on the big yellow cheese wagon to LA La land. it’s your choice.
You are right on this. It’s a sickening theater that is going to end soon. What follows is both a tragedy and opportunity for the world. What will come out of this no one knows we will have to wait and see.
What’s sure is better be prepared sooner than later… later can be too late.Â
Looks like he was wrong… with the timing
anyway.