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2009 -- the US dollar, gold, Ponzi schemes, and hyperinflation

From Bill H. a member of www.lemetropolecafe.com

To all,

2008 has come and gone. Gold held up very well while the mining shares got hammered. In fact, Gold did everything it was supposed to do no matter what the nay sayers tell you. Actually the physical metal did far better than "they" want you to know. The physical metal, if you can find it, is trading at a $100+ premium over COMEX. This is better than a 10% gain for the year while virtually all other assets crumbled with the exception of US Treasuries. Treasuries are living on borrowed time though as the Treasury is issuing literally $trillions more in supply with no end in sight. In any case, the metal of monarchs turned in a year that many could only have wished for.

So where to now? I believe 2009 will be the year that "spin no longer works". I truly believe that this coming year will be one of comeuppance for the U.S. Treasury and the Federal Reserve. 2009 is shaping up as the year that the credit spigot will shut tight on further U.S. borrowings from the rest of the world. This shutdown may or may not be called a bankruptcy, though it matters not, Uncle Sam will be shut out and shut down. This will be THE year of divergence of those things real vs. those things paper. Some will even discover that what they thought was real, really was not, ie. ETF's, pooled accounts, etc.. UGLY is too pretty for what I am afraid 2009 holds in store.

If I am even half correct in what I expect 2009 to bring, civil unrest worldwide and in particular within the U.S. will be commonplace especially in the urban areas. This unrest will be a result of market and bank closures, those with "cash" will be disappointed that it will not spend for more than a couple weeks after the initial "banking holiday". Those with metal will be disappointed that "goods do not grow on shelves". while those with "goods" will be disappointed that they don't have more, or even enough. Putting it mildly, 2009 will be the year of disappointments. I come to the conclusion that 2009 will be the year of the fiscal and monetary train wreck that must come at the end of all fiat Ponzi schemes.

Why is this? Ponzi schemes all require more and more new capital to sustain prior entries, it is the same with "fiat" capitalism. Either more new debt and credit enters the system or the system will begin to deflate, this deflation is what kills off earlier entries into the system. It is either inflate or die until you can no longer inflate, then you die. We are there now. But what of hyperinflation? Don't worry, that is out there for 2009 also, probably very, very early in the year. Many have, and will, argue that deflation and hyperinflation are complete opposites and cannot exist together, I disagree completely. I envision much further deflation of assets in 2009 while the collapse of the $ will create $10 cups of coffee, [I'm not talking Starbucks either].

The deflation that surely will continue in 2009 will be massive in terms of Gold and to a lesser extent in Dollars, I also believe Gold will end 2009 at a minimum $1,600 per ounce and that is only IF the system holds together which I give odds of less than a coin flip of occurring. All bets are off when the banks close and Uncle Sam can no longer borrow, pick your wildest number for Gold and that will probably be too low, [2009 will probably be the year when you begin "counting ounces" as opposed to Dollars]. However, the hyperinflation side will be far worse to humanity than assets deflating, I say far worse because FOOD is the quintessential necessity and hyperinflation hurts the masses where it counts, in the belly. This, I believe, will be the catalyst for civil unrest, government response and thus conflict.

We stand in the doorway of food shortages for several reasons, first, a hyperinflation [currency run] causes hoarding and panic buying, second, what retailers have just experienced with inventory loans and the demand for COD payments will surely come to a grocery store near you, third, some farmers will not plant this year because crop prices have been pummeled by the commodity bust and can no longer make a profit, and fourth because of distribution bottlenecks. Distribution will be adversely affected by lack of credit, it already has in many retail industries. I wrote all about this potential "credit crunch" result early last year and it now appears to growing. Without credit, the umteen different "hand offs" from start to finish are affected and just like any chain, if one link breaks, the chain is no longer functional.

I don't like being the bearer of bad tidings or doom and gloom, but this is how I see it, I do not at this point see any possible escape from this "two headed 'flation' monster. The debt is already in place, the monetary and fiscal responses have been textbook, as one would expect, and yet still no traction. Unfortunately and unbelievably this appears to be the financial end of the greatest empire in Earth's history. Those who know me personally know that I do not say this with malice, I am speaking from my gut and hoping that those reading this will take all means to protect themselves and family. The bankruptcy of the US Treasury and Dollar is now imminent, is it Jan. 2009 or July 2010?, I have no idea. I would bet it will be sooner than later as only a fool would lend further funds at this point, and the U.S. Treasury "lives" on borrowed capital. The entire system as it turns out was a "con game", now that the "confidence" is gone we enter "game over". This "game" is really not a game, it is about the 6 billion souls living on the planet all of whom will suffer because of a long term banking scam centered in the U.S.

2008 was the year misdirection and illusions, next year, reality will hit you square between the eyes as things are so far over the edge that it will no longer be "spinnable". All along the spin has been deafening, "contained, sound, strong, no recession then mild recession, lower rates then 0% [yeah!], TARP and 22 other loan programs, $10 trillion from the Fed and Treasury, real estate is bottoming, V bottom then L bottom, and on and on. Nothing has worked, all the spin was just that, spin, the WHOLE THING HAS BEEN SPIN, IT IS ALL A PONZI SCHEME!!!

Individuals, banks, brokers, real estate, autos, insurance co's, municipalities, states, and even the federal government are all financially crippled with too much debt and no ability to service that debt, PLUS the money we use is untenable. What entity can possibly step in and fix this? I think the only possible remedy the rest of the world can take is to "change" the money. They must distance themselves from the Dollar or go down with it, I believe this also pertains to individuals. Either exit the Dollar arena or go down with it, pretty simple. Please do not take the upcoming year lightly as there will be a point in time where the public mindset will become one of "the boy who cried wolf" as it pertains to spin, reality will become all too apparent.

I wish everyone who encounters this missive the best of health, fortune, and luck in 2009, we will all need it.


Bill H.

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Danger Ahead

The impact of the Crunch on society offers a welcome stage for many who normally you would not expect to meet together on a birthday party. But combined they well may prove to become quite a nuisance for a ‘civilised’ return to the good old days. I have read an interesting related article on www.crunchreport.com .

Republicae's picture

"Many have, and will, argue

"Many have, and will, argue that deflation and hyperinflation are complete opposites and cannot exist together, I disagree completely. I envision much further deflation of assets in 2009 while the collapse of the $ will create $10 cups of coffee,."

He hit it on the head, if you recall I have stated that hyperinflation doesn't occur during an inflationary, but a deflationary event. A deepening deflationary bout will continue to push the FED and this government, as well as others, to react in the only way they know how: massive monetary inflation that is outside the normal boundaries of debt monetization, such as quantitative easing and direct injection of fiat into the economic substructure.


"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

I agree that a fiat money system,

is a ponzi scheme. but it does seem to work and it has worked in the past. perhaps these were isolated incidents in a larger pool. perhaps the larger pool is now going down?
I do see a lot of weakness in our infrastructure. food supplies are minimal and "just in time". electricity is also weak, it would be VERY easy to knock out whole sections if one wanted to.
things seem pretty normal here in this sleepy little southern town. I have a hard time getting people to pay attention. I wear my r3volution t shirts and people think I want to start a war......
it does make sense that if the entire world is on a fiat money system, that perhaps the entire world is over built?

" the important thing is to never stop questioning, curiousity, has it's own reason for existing..
Albert Einstien

Scary news...but thank you for posting.

Libera me, let the truth break, what my fears make--Leslie Phillips

"Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the office of a thoroughly nasty business concern." ~~C.S. Lewis
Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

Less scary (maybe?) if we prepare.


"I've abandoned free-market principles to save the free-market system, to make sure the economy doesn't collapse."
- G. W. Bush

Ron Paul "Sign Wave Across the USA" -- November 5th!

You are right, it is less scary if you are prepared...

Or at least you may be better off for sure....I strongly believe everything you wrote, and I know exactly where you are coming from, it is the truth.
If interest rates don't go back up, and if the Federal Reserve continues to print all their fiat money, Hyperinflation here we come. Bernanke said he would never allow deflation, but I bet ya with all the printing of money, he will allow America to go into Hyperinflationary chaos.