The Psychological Trigger of Hyper-Inflation (Republicae)
Posted November 21st, 2008 by Republicae
output
In a fiat monetary system, there will always be a balancing act between inflation and deflation since the money must be manipulated by the central banking system. It is however, very rare for a fiat system to suffer from deflation because of the very nature of the monetary system itself and it only occurs when there has been a boom in the business cycle brought about by, once again, central banking manipulation of interest rates.
Of course, in our “collective” memory, the only thing we can associate deflation with is The Great Depression however, that memory when compared to our current deflationary bout is skewed by the differences between the two monetary systems; the one which existed prior to 1934 and then the one that now exist that came about in 1971. It should be obvious, but perhaps not, that a foundational difference in the monetary systems will have profound effects on both inflation and deflation; along with economic movements and behaviors. In a way, the world was turned upside down in the 30s, not because of The Great Depression, but because of the actions taken by our government in concert with the Federal Reserve Banking System.
When FDR debased our currency through the confiscation of gold and the revaluation of the official price of gold some very interesting things had to take place, similarly when Nixon cut the ties of gold completely from the dollar some drastic changes needed to occur. I don’t think many understand just what had to take place and what was involved to completely transform the monetary system of this country during these two periods. Basically, everything involved with all the very complex relationships within the economy and the market dynamics of domestic economy and later the foreign economy were eliminated during these transformations. It is therefore, impossible to adequately compare any economic disruption prior to those events to those we are now experiencing. While superficial comparisons can be made, the comparisons end there. There is a completely different dynamic at work under a total fiat monetary system than was at word during The Great Depression or even prior to 1971. Indeed, that difference was witnessed during the latter part of the 1970s and into the 1980s when the economy began to experience something that, according to the Keynesian/Neo-Classical “Text-Book” Economists, was not expected nor did it fit into their econometric models. Stagflation was simply not possible under their economic ideology.
Remember, prior to that time there had never been a period when there was a downturn in economic growth while there was an inflationary monetary event. The key, of course, was that the Dollar was no longer tied, in any way, to the only anchor of stability it had ever been tied to and that was gold. Historic inflationary charts reveal a great deal about the effects, not only of sound money, but also of partial and total fiat money. Interestingly, the ability to inflate without the restraint of gold commodity is extremely evident from that singular point in our economic history: 1971. Since that time there has been a steady incline in the amount of fiat money that has been created and perhaps more interesting is the steady decline in the overall economic and social health of this country.
The degree at which our Dollar’s purchasing power has been diminished since 1971 is absolutely astounding; actually it should be alarming to all of us. The purpose of money is to act as a means of exchange and when the purchasing power of a currency is drastically debased there is not only an economic consequence, but also a socio-political consequence to such depreciation. When a drastic depreciation takes place over a few decades there is a corresponding decline in both the political and social economy.
When a currency, which is a means of exchange, loses its purchasing power it eventually loses its meaning as a means of exchange, confidence is lost and as that confidence in the money erodes so too does the confidence in the political structure occur.
I have had people say to me that people are making more money today then they ever have in our history; that is true on the surface and it is perhaps one of the greatest deceptions of our time. It is not however, the number of Dollars or the face value of those Dollars that matter, it is the amount of goods and services that those Dollars can be exchanged for that provides the benefit. It is the Quality, not the Quantity of money that provides a social benefit.
Now, it is important to understand that inflation will eventually destroy the fiat monetary system and deflation will prolong the system’s life span. Inflation eats away at the purchase value of fiat money and deflation increases the purchase value of each fiat unit. Thus, as most of us know, inflation has eaten away at approximately 97% of the purchase value of the U.S. Federal Reserve Notes. It has been a type of taxation without any representation whatsoever; that in it would be enough to cause any one of our 18 Century ancestors to rise up in revolution, but we have been effectively duped by a very clever scheme to deprive this nation of our birthright.
Today, this and other countries find themselves in the situation of crisis because that is the belly of the fiat beast; there is a natural inclination toward fiscal abuses, not only on a governmental scale, but on a corporate and individual level as well. Everyone seems to be wondering just how this crisis came about, the answer is extremely easy: the fiat monetary system!
The world has been under the heavy thumb of the central bankers for the last 37 years in particular, prior to that they were restrained by a partial fiat monetary system that would only allow them to play in their cesspool up to their collective ankles. Since 1971 however, they have jumped head-first into the muck and mire of a total fiat system that has allowed them, along with their political comrades, to scrape up the dregs of a monetary system that will ultimately spell disaster, not only for the People of this country, but in the process even the central bankers will suffer as the monetary monster they created and upon which they depend, turns on them with a vengeance and consumes the works of their filthy hands.
Now, in a maddening dash toward the fiat abyss, the central bankers are embarking on a predictable path which will lead to ultimate destruction of the fiat monetary system, the only system they have, the only system they place their faith into and depend upon. Today, although hidden from our view, there is an absolute unprecedented depreciation of our Dollar taking place and few realize the fact that the “precious” fiat Federal Reserve Note, along with just about every other fiat note around the world, is being destroyed.
To give an example of just how skewed our economy is under a fiat system we should look at savings. Normally, under a sound monetary system a decrease in the savings rate will translate into a rise in interest rates, regulating credit accordingly, but not so under a fiat monetary system. Savings have been very low in this country, debt has been high and rates are artificially pressured downward by the FED. Everything in the man-made fiat monetary system is completely contrived and contrary to sound economics; it shows in more ways than we can imagine.
Now, Mises, in his wisdom, stated:
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Now, that one statement holds a vast amount of information that is very pertinent for us today, for it maps out the only two routes available to the Federal Reserve and this government. Either the Federal Reserve will allow for the economic exhaustion to run its course, abandoning its easy-money-easy-credit fiat policies, or the currency will be destroyed by hyperinflation. The problem of course is that they fear deflation because it will lay their plans before the world, exposing their inner-workings and fraud for all to see; the other alternative they feel they can control, but the awakening will be rude and cold. They live under a grand illusion and perhaps they are as deluded as the majority of politicians and the people themselves, but they will simply not be able to avoid a reality that is about to destroy their system.
At the moment, the bond markets are draining capital away from the economy, but that will not remain the case for much longer. The FED is churning out liquidity in record amounts, primarily in the form of direct infusions instead of the routine fractional reserve system. The massive debt, both public and private, is proving to be more and more difficult to pay off and as interest rates continue to fall, the actual value of that debt increases. The new fiat world order is saturated with malinvestments, stagnate debt and dwindling profits. All the while, the Bond Market sucks productive capital away from sector after sector, creating its own set of problems for the FED analyticals.
We simply don’t grasp just how distorted our economic world really is; it is difficult to understand just what had to take place in the natural order of things when our economy was completely divorced from gold money. Not only did that distort the economic order, but the resulting monetary policies, along with the regulatory policies of the government itself, have created an economic environment that is surreal and fantastical in its mechanics. There has, through market manipulation and fraudulent monetary contortions, been a massive asset mispricing, not only here in the U.S., but around the world.
On top of all that, there is a looming monstrosity lurking on the books of the Bank of International Settlements, you know the Central Bank of Central Banks, and that monstrosity is a vast quagmire of debt derivatives that will soon begin to function as an enormous black-hole. Since there is little knowledge or transparency about these “debt” assets, no requirements of disclosure about what they are and where they are associated, then there is no possible way to prepare for an eventuality of derivative toxicity streaming into the world’s economic circulatory system. One thing is certain, the Federal Reserve, along with our Treasury, is no longer just the lender of last resort, it appears that they have been forced, by their own past actions, to become the buyer of last resort also. They have the “printing presses” full of paper and ink, ready for what comes their way.
One of the problems, of course, is that under a fiat monetary system there will always be an excess of fiat paper then there is a demand for it. That sounds strange, how can there be an excess of money in an economy? The nature of fiat is to run in excess of demand because it must rely upon quantity since it cannot rely upon quality. The economy we see today is exorbitantly inflated by the fiat system, so much so that few people understand the illusion that the quantity of money creates. That is one reason that so few people can wrap their heads around a return to gold money, they look at today’s economy and are magically hypnotized by the face amount of dollars involved and say there is not enough gold to do the job. However, every dollar of economy value is only valued around 3 Cents or less, it does make a huge difference. Even so, the monetary mechanism of gold money does not act the same as fiat money, nor does it require a constant supply to be effective since each unit operates as a means of exchange throughout the economy and is rarely stagnate.
Under a fiat system inflation is the normal stage of operations; it must be inflated to maintain the illusion of its effectiveness. When there is a contraction, or even a simple stall within the creation and expansion of fiat money there is a direct effect on the economy superstructure, as we are currently witnessing in this and other countries. While there are those who believe the underlying debt is a restraint upon the creation of money, the truth is that it only restrains a certain type of fiat money creation. We have been told, not only by Bernanke, but by other central banking heads that they have an unlimited ability to create as much money as they feel they need to effect economic stimulation. What they don’t say is that an unlimited supply of fiat money has very definite consequences. They rarely admit that such an unlimited ability increasingly makes the purchase value of the currency worth less and less.
Another reason why the fiat monetary system must rely upon a continual increase in supply is that there must be some way for the central planners to compensate for the continual decrease in the purchase power of each monetary unit through inflation. Strange isn’t it? They debase the money through the increase of the money supply, but they have to increase the money supply to combat the effects of increasing the money supply and on and on and on and on they go down their yellow brick road as though they know where they are going. Their dilemma, of course, is that there is no way for them to play catch-up with the loss of purchasing power of the currency, not matter how much money they create the currency will always lose more value quicker than they can “print” it out.
The cows come home when the public begin to loose all confidence in the currency. This is particularly true when interest rates, which have been kept at artificially low levels, begin to bend to market pressures and the FED can no longer keep them down. What triggers the wide-spread lack of confidence in the currency is when the people realize that they money is increasingly worthless even when interest rates are beginning to rise, which would normally indicate a stronger value within the currency, but during a highly inflationary environment, the opposite happens. At that point the people begin to spend their increasingly worthless dollars as soon as they get them in their hands. The wild demand for money stops even though there seemingly an unlimited supply of money available. People and markets suddenly realize that all the money in the world cannot substitute for purchasing power of money. It is a strange occurrence and it happens the same way every time. It is almost an overnight epiphany that occurs.
You see, hyperinflation is not only a monetary event, but it is far more of a psychological event. During boom periods of economic fiat expansion, there a demand for money, the problem comes when a deflationary period enters the economic fiat landscape. At that point, as we have seen, the central bankers push the “presses” into overdrive, full steam ahead to avoid facing the consequences of correction associated with a fiat bust. It is during this period that the danger of hyperinflation evolves because the supply of money is rapidly increasing but the demand for that money is decreasing. Eventually, everyone begins to understand that no amount of fiat money can replace the loss of value associated with the money. At that point everyone suddenly gets a mind, they suddenly come to a realization about just how much of a fraud they have been victimized by over the years and they are no longer willing to play the game.
This great psychological event, as I said, always happens suddenly, so fast in fact that the government must respond by revaluing each monetary unit, seeking to exchange old fiat money with lower denominations with new fiat money complete with ever-increasing numbers of zeros on its face. The system, along with the central bank and government, is effectively destroyed. It is all crippled, stripped of its power to enforce not only legal tender laws, but all laws. The government is effectively neutralized by a hyperinflationary event and the fiat monetary system is dealt a final death blow from which it simply cannot recover because it cannot regain the confidence of either the people or the market.
A deflationary depression can be devastating to a country with massive layoffs, bankruptcies, defaults and business closures, but the money is never destroyed through deflation, that is not the case with hyperinflation. Deflationary will prolong the fiat monetary system, almost cleaning the system of excesses but hyperinflation will absolutely destroy everything that is even remotely associated with the currency. A deflationary depression will simply allow the Federal Reserve to continue its fiat shenanigans; hyperinflation will destroy the Federal Reserve, the fractional reserve banking system and the political machine that supports its criminal activity.
We have already been told, time and again, that the Federal Reserve will not allow a long deep deflationary event to occur; the other side of that coin is that their options will include, as we are now seeing, a drastic inflationary push of fiat economic instruments. Remember, our Dollar has already been debased by 97% or more, it will not take much to tip the scale of inflation where the people’s psychology is triggered and they cease any demand for the massive amounts of fiat money coming into the system.
PLEASE READ: http://www.dailypaul.com/...
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Technical Work and Astro indicates..
Late 2010 at the most.
As we have seen with this "panic" ...These things turn on a dime and make V bottoms, from deflation to hyperinflation overnight.
What will be the trigger? Perhaps meldowns in other societal institutions.
One Voice, One Vision, One Love ~ Liberty.
Good Thoughts, Good Words , Good Deeds.
That is the Ron Paul rEVOLution Creed.
One Louv. ;-)..
What happened to your last line?
"By the end of 2009, we should see the beginning of run-a-way inflation, by 2010; well it could prove the most difficult year in the history of mankind."
I think you got it exactly. This is what Lindsey Williams predicted--we have one year, at the most. Plan wisely.
"There can be only one permanent revolution - a moral one: The regeneration of the inner man."
—Tolstoy
I'm not sure what happened
I'm not sure what happened to that line....it disappeared from sight...interesting.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Their fear of deflation is causing them to act ...
iirational.
You might be right.
The probability that you are correct with your timeline has improved.
WAHOR!!
http://www.dailypaul.com/...
Indeed, they are acting with
Indeed, they are acting with extreme irrationality.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Good thread.
People who have trouble grasping what is about to happen should consider how governments raise money to cover their expenditure. There are only three ways.
1. Seigniorage.
This is the "net revenue derived from the issuing of currency". Printing or coining money. This is how the government of Zimbabwae stays afloat!
2. Borrowing money.
Selling bonds. Consider the mind boggling level of government debt owned by foreign governments and private investors. This has been steadily climbing for many decades in the US and Europe.
3. Taxation.
While no-one likes paying taxes, this is how LIMITED government SHOULD finance itself. According to the US constitution, that doesn't include a federal income tax.
For those who scoff at the concept of fed note hyperinflation, consider what will happen when the government bond holders refuse to re-invest!
What happens when they "cash out"? Where does all the NEW money come from? Think about it...
http://www.mises.org/Book...
http://www.ratical.org/ra...
Fluoride anyone?
http://uk.youtube.com/wat...
More evidence of hyperinflation
http://radio.goldseek.com...
I assume when Greed says that those who are expecting hyperinflation are idiots, he is referring back to the classical Greek definition: "those who are unelected."
Certainly, he can't mean quantitative analysts, people who have a level of understanding and education Greed can only vaguely conceptualize, (or not).
Where is Greed? Has anyone
Where is Greed? Has anyone seen a recent post from him? Someone should title a post: "Greed, where art thou?". I really would like to get a good explanation from the him.
Sinclair is saying exactly
Sinclair is saying exactly what I have been saying: Hyper-Inflation never occurs during a BOOM, it is always a result of the reaction to a BUST.
The worse-case scenario is to have a deflationary recession, deep and raking, then to have a highly inflationary event [hyper-inflation] without an actual recovery within the economy. That is what I see happening.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Personally, I think it is more nefarious than that.
I think that we have already entered what most are considering the deflationary period; that in fact is really a disinflationary event. This is being done--and people are being set up--to expect deflation in order for the banks to maximize their profits and holdings. Feel free to correct any point that I may be wrong about, but this is what I see as the endgame:
1. The credit crisis created the appearance that the whole financial system is in turmoil--not hard to do since it is a system that is dependent on people's perceptions, and has nothing underlying to support it.
2. The congress, against the will of the people passes the TARP with no oversight or transparency.
3. The treasury department issues massive amounts of short-term debt, thus taking most of the investment money out of circulation for periods of 30-90 days. This is causing the disinflation that we are witnessing--lower stock and commodity prices--and also has the effect of tricking investors into bonds in a perceived "flight to safety."
4. The TARP money is being given to the member banks of the New York Fed.
5. Due to the panic, the member banks of the New York fed are able to buy up properties, and companies--including other bank--at rock bottom prices. They are colluding to do this, with the blessing of the government, and this action can be witnessed by the massive surges in stock prices at certain times of the trading day. Similarly, we can witness selling in the paper precious metals markets at the same time almost every day (what I refer to as the 10 o'clock drop).
6. The debt that is being used to fund the TARP for the most part is in 30 day and other short term treasuries, so; expect from 30 days after the TARP money first made it to the banks for inflation to begin again, compounding monthly after that--including the interest that is being paid on the short-term debt.
This should lead to two separate but connected events:
First, hyperinflation, maximizing the false paper profits of the stocks that the banks bought, despite the fact that those companies are for the most part zombie operations; and second it will lead to a dollar default when the United States is unable to service the massive amount of debt that it has accumulated. By then, the bankers will have conveniently created the framework for a new international currency, leading to 100% immediate deflation (no amount of dollars will be able to purchase any amount of goods and services).
So, what I expect to see is this period of disinflation, followed by a short-term biflation--since few have the ability or desire to purchase finished goods--followed by hyperinflation, followed by 100% deflation. Shortly after, they will try to instill the new international fiat currency, after the banks of the NY fed own as much as they are able to get their hands on. My guess is that the plan will fail--the BRIC nations are never going to go for it--and we will see World War III followed by the probable breakup of the United States. This of course is an optimistic, best chance scenario. The alternative is a one world fiat currency and dictatorship that could last for another 70-100 years before something else goes wrong and the system fails.
But yeah, the real economy dependent on corporations is done for-- chalk it up as the failure of globalization--the FIRE economy is being propped up by a complicit government, and we are about to face a river's flow of liquidity that will drown everyone dependent on the system who doesn't hold a government or top corporate job before complete systemic collapse. Whoopee.
Personally, I think we are
Personally, I think we are rapidly passing from the disinflationary period into the deflationary slump, perhaps the deepest deflationary slump since the Great Depression. Deflation, like inflation, erases wealth in different ways and with different results. Deflation will decimate the wealth of those holding and depending upon debt for their income and the bottom-line of their businesses. Banks, particularly under a Fractional Reserve System, are very vulnerable to deflationary slumps because it wipes away both present and future earnings. This is especially true when banks are heavily burdened with non-self-liquidating loans, such as mortgages, cars, and other non-productive credit products. This is one reason why the Federal Reserve is and been, attempting to prop up the banking system because of its massive exposure to deflationary pressures. In this case, I see that it is very possible and probable, that the entire banking system is insolvent. Even in the best of times, banks under a Fractional Reserve System teeter on bankruptcy because they face exposure due to the lack of complete reserves.
Once again, I tend to look to history more than conspiracies. The nature of the Federal Reserve and Fractional Reserve System is to attempt a balancing act on a razor blade; the edge is that portion of the blade between boom and bust. It is, of course, an impossibility to achieve with the consistency necessary to avoid either or. Austrian Economics is a perfect methodology to predict such booms and busts. Once more, the nature of the system is to extend as much credit as possible to achieve as much economic growth as possible without lapsing into a bust, it never works however, and as the pendulum swings to the extreme of one side or the other, the Federal Reserve reacts, but it cannot react in terms of actual effective timing. In other words, it cannot adequately judge the timing of its own measures or actually know when those measures will take effect or how they will affect the previous mistakes it made in attempts to correct the last problem it created.
Obviously, I give those who operate the FED little credit in terms of economic sense. I don’t think they or the so-called elite have enough sense to control things as much as some on the DP gives them credit for. From what I am reading, and I read a great deal, I see a genuine panic among the ranks of the “elite”, the CFR, Trilateral Commission and others are in a frantic state of disarray seeking some type of solution to the problems now facing the global economy. While I do believe that there is a great deal of manipulation within the markets, I also believe that the market is so much more powerful and so much stronger than the strongest attempts to manipulate it or even maintain control over it.
That is part of the problem; there is a conflict between the manipulation of the economy and the powerful market forces that will always eventually seek equilibrium within the economy. Man cannot ultimately control the market, it is simply too big, too massive, it is a tidal force that cannot be contained by the attempts of those who seek to have absolute control over it. While the markets are psychological, we must understand that those within the “elite” are also driven by psychological forces as well and, as I said, I see a psychological panic in the writings and the comments of those who we would consider in the “elite”.
TARP, was perhaps one of the greatest things to happen to this country, odd that I would say that, but it has allowed more people in this country to not only question Congress, but to question the entire system. It is a bumbling failure and it is rapidly exposing the absolute idiocy within the system.
Once more, concerning TBonds/TBills; it is an interesting turn of events. It is showing several things, a flight into what is perceived as safe, but even now there are questions arising on many fronts as to the actual safety of those instruments. That is the very last thing that anyone in the FED or the government wishes to see. I think investors, even those who are seasoned, are scrambling to transfer their funds into anything that might protect their investments, but even at that, there are numerous questions beginning to be asked, even by them. Before this period it appears that few ever even considered the questions that are being raised during this current slump. That is a good thing because the more questions are asked the more there is an exposure from the silence they receive from those questions.
Once more, TARP is actually inconsequential at this point; the FED and the government are in the process of doing things never seen before, not even during the Great Depression. There is nothing that exposes more than failure, and we are about to see such failure within the economy, as well as in government that those among the People who have been asleep at the wheel will begin to be shaken awake. We have yet to see the full import of what is happening or what is about to happen. There have been more seeds of revolution planted within the last three months than at anytime before and at one time I said that more seeds were planted because of the Bush Administration, but I stand corrected. This event will scrape away a lot of illusions and delusions among the People, and that is always a good thing.
Now concerning the panic, we have yet to see real panic yet. The interventionism and adventurism, and the FED, along with other entities taking advantage of this slump will eventually come to naught. A hyper-inflationary event will effectively destroy the Federal Reserve, the fiat monetary system and the power of this government. Hyper-inflation will not maximize paper profits or any profits; hyper-inflation is an end-game, particularly on a scale that I am seeing, will end the system as we know it. It will be a scorched earth event. Once this takes place, you can forget about stocks, zombie operations, shadow governments, bankers, the debt and all the rest. The scale of a hyper-inflationary event will be something that history has never seen, the reason for that is the interconnectivity of the global economy.
After such a hyper-inflationary event, particularly on a scale that I am seeing, there will be nothing left to deflate, no fiat money or the power that system provided. The only way that a fiat system can work or be introduced is by viral injection into a sound monetary system. The only thing that can provide relief from a hyper-inflationary event is a sound monetary system, the last resort of any government which has been supported by a fiat system. I do not see a global currency, we have had one since 1971, and it was a global fiat monetary system. There is nothing left for them to build upon, they simply cannot impose another fiat system on top of the ruins of the last system, it would not support such a system, and there is no foundation. As I said, the only way a fiat system can be introduced in by injection into a sound money system, without it there is no substrate on which the fiat virus to grow and expand.
I wrote an article about 6 months ago, it is somewhere on the DP, entitled The Death Knell of the Federal Reserve…take a look at it.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Thanks, Republicae
I will look for your essay and reread it. I don't really believe so much in conspiracy as I do collusion--but I do agree with you that the end is not going to be to the liking of the elite; and that hubris is going to play a major part in their downfall.
How unstable things become in the meantime is anyone's guess.
Oh, I definitely believe
Oh, I definitely believe there has been a massive amount of collusion involved in the whole system since the Bankers first met on Jekyl Island in 1910 and that they sought a definitive advantage and benefit from the system they helped create and promote in this country. I personally feel that the degree of instability will be beyond anything most can conceive at the moment, it will alter our society.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
HYPER-INFLATION!!! LOL!
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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Go to the link below and be sure to click on the charts, and think about HYPER-INFLATION that so many idiots have been talking about!
http://waronyou.com/2008/...
Thank you, StaxBrix for the link!
http://www.dailypaul.com/...
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"The Psychological Trigger of Hyper-Inflation" ??? Do you mean it's all in your head, Republicae? LOL!
Here are a few tid-bits of
Here are a few tid-bits of GREED's level of understanding, not trying to be mean, but it just amazes me that he continues down the same opinionated road when he can't back up his opinions with factual information that would provide the reader with the necessary information to form an opinion of their own.
"What kind of money system do they have? Do they have a
On June 11th, 2008 GREEDisBAD says:
debt based money system? I don't know. Please, explain their system."
"There is fiat money that is issued by government that is not backed by anything, but required to use it to pay taxes. I think this is what people typically call fiat money.
The dollar is debt based money and arguably backed by collateral. In my opinion, this is a different type of beast and you cannot directly apply inflation argument of fiat money or commodity based money."
"Why would banks be closed in hyper-inflation? I don't get it?
On June 10th, 2008 GREEDisBAD says:"
"Oookay, so if all the banks are closed due to bank runs how will
On June 11th, 2008 GREEDisBAD says:
the money supply increase? "
"Are you talking about the Banking Holiday during the Great
On June 11th, 2008 GREEDisBAD says:
Depression? That was a deflationary depression, wasn't it?
How that would be inflationary?"
"Well, if that's not the case, I think you are very confused or I
On June 10th, 2008 GREEDisBAD says:
am very confused."
"I'm totally opposed to the debt based money system, but
On June 10th, 2008 GREEDisBAD says:
in terms of value, I just love the dollar so much. Yes, I do think that the value of the dollar is likely to go down until the start of the next great depression, but I'd like to accumulate while going down."
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Since you are so unaware of
Since you are so unaware of just what hyper-inflation is, or how it actually occurs then I take all you say as a complement. Believe me, if you had shown that you know anything about monetary mechanices then I would be hurt, truly I would, but you have shown your disdain for information, you have chosen instead to remain myoptic in both your understanding and your ability to look beyond current circumstances.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
hey GREED... listen to
hey GREED... listen to this.. did you know there is more then 1 kind of INFLATION? tell me where Sinclair is wrong!
http://www.radio.goldseek...
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
Hope you saw, at least, these charts.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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http://3.bp.blogspot.com/...
http://4.bp.blogspot.com/...
http://2.bp.blogspot.com/...
These were ORIGINALLY POSTED ON NOV, 11, 2008.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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Here
http://benbittrolff.blogs...
Actually, GREED, they were
Actually, GREED, they were posting long before that on the Federal Reserve Website...
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
WHAT A MORON! Even the Fed didn't update with the OCT data
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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until NOV.
Unfortunatly GREED, you seem
Unfortunatly GREED, you seem to utterly fail to understand is that Austrian Economics predicts that for every BOOM, there is a subsequent BUST. Deflation is not a surprise, nor was it unexpected. The other thing he fails to understand is that Hyper-Inflation never occurs during a BOOM, it always happens in response to a BUST. The worse-case scenario is to have a very deep deflationary recession, as we are just beginning to see, followed by reactionary hyper-inflation. The deflationary recession beats the crap out of the economy and instead of having an actual recovery, there is a rapid inflationary push through the latter part of the deflationary recession, this is the dangerous part of the equation, the part you and some others are willing to ignore in their myoptic views.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Saw them a long time ago
Saw them a long time ago GREED, once more, you fail to look at the bigger picture....you have tunnel vision. I have not only called for a deflationary slump in the past, but I see that slump into the future and see what is in the pipeline. You think deflation is bad, just wait until the massive inflationary bomb hits.....then you will be wishing for deflation, all of us will.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Here is the link to one chart that you couldn't click on.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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If you clicked on the charts, you probably found one chart that you couldn't click on. Here is the link to a larger version of the chart.
http://4.bp.blogspot.com/...
LOL!
I'd pay to watch a show about you GREED. They could put it on right after "My Name Is Earl".
You are so extremely
First, I have my doubts if you even read the above article. You are so extremely predictable, every little glimmer of deflationary information you get you shine with glee, yet you seem to ignore so very much and it is very obvious to everyone here on the DP except yourself. I find it outstanding that you had to wait to respond to this post for so long, you were eagerly awaiting some tid-bit, some little smidgeon of information to defend your stance, but still you fail to look at the big picture.
I saw those a long time ago GREED, in fact a few months ago I mentioned them along with the fact that in the beginning of the year the non-borrowed reserves had dropped to nearly a -100%, since that time the reserves have exploded, partially due to the fact that the FED raised the rates it pays on such reserves.
However, let us consider a few things. We have a bankrupt government, David Walker said that it has been technically bankrupt for several years now. So, what must a bankrupt government do to get funds?
It will be running at least a Trillion Dollar Deficit, correct?
It will not cut spending, but increase spending, correct?
It will not be able to increase taxes, at least not to a scale that would make a difference, correct?
It is increasingly doubtful that the government will find lenders to borrow much more to operate, correct?
It will no longer be able to borrow from the American People as it did in WWII, they no longer have a savings rate of any notable content, correct?
So, where will all the money come from? It has to come from somewhere and there are no other options left to this government or the Federal Reserve but to directly inject fiat money into the system. No other options left to it, none whatsoever!
Guess, take a wild guess and then determine the effect of that direct monetary process on the economy, I estimate by 2010 at the latest, perhaps sooner!
So, GREED, one day you will learn that it definitely pays to keep your eyes on the broader horizon, focused on the long term and the bigger trends. When you do that then you will begin to understand that these things are not, as you apparently suppose, in a vacuum.
The near term is definitely a deflationary slump, as I have said many times, but the groundwork has been set, and the foundation for hyper-inflation, huge increases in interest rates and massive jumps in the prices of gold and silver are coming. To ignore those factors is to ignore a great deal of information necessary to form an actual educated opinion. So, you can get bogged down in the short-term, blinded by your dogma or you can begin to look at those long-term trends and actually see what is coming down the pike.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
so much for
so much for deflation....
http://www.321gold.com/ed...
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
Are there any countries that don't have fiat currency?
?
Why yes, as a matter of fact!
I think "Never never land" is working on the gold standard and the "North pole"
are working on ginger bread snaps and hot coco.
All tyranny needs to gain a foothold is for people of good conscience to remain silent. Thomas Jefferson
IRAN.... And they stopped trading in FED notes in 2006
Why do you think we are so interested in spreading our democracy to IRAN?
"Americans need to take a Democrap and wipe it's Republican from the history books of this once great Nation"
-Concerned Citizen
I think
Iraq did not have a Rothschild-run central bank...I'm sure they're getting one now.
I think others may be Iran, N. Korea, Libya, Sudan and Venezuela.
Hmmm, the leaders of those countries sure seem to get demonized in our media....
Fiat Currencies Rule
I'm not sure if every country prescribes to a fiat national currency, but I can tell you every industrial-large nation does. Even if a country like the US wanted to move to a "commodity-backed" currency (one with some intrinsic value) there would remain the problem of how do you trade with countries that utilize a fiat currency? Would you be willing to accept a fiat currency in exchange?
How about the push for one world currency?
It seems to me that the collapse of the fiat monetary systems of the world are purposeful to create a "catastrophe" and thus a "solution". I like your post, but I don't think that any of this is a game that has now gotten out of control. Actually, the derivatives issue has helped accelerate their plan. They (central bankers-fascists) created the game and all the rules to it. They are in control and their original design of one world currency, and thus one world government, is how the game is won.
This would be the same scheme as the FED
The creation of a monopoly on the issue of currency and rate on a global scale. The trick will be how they will get the rest of the nations to accept this. I think this is one of the reasons why the IMF/World Bank was put in place. They can force any country who accepts its help to go along with a One World Currency.
"Americans need to take a Democrap and wipe it's Republican from the history books of this once great Nation"
-Concerned Citizen
Fiat currency does not = Central banks
The two things, a fiat currency and central banks have no direct correlation. For example, the US could fire the Federal Reserve (parasitic central banking system) and create our own fiat currency, without any interest. It was done by Lincoln during the Civil War.
Conversely, you may have a commodity backed currency and the Federal Reserve. For example, at inception, and for many years after (1913-1971) the US dollar was backed, perhaps at an eroding ratio, by gold and silver.
The problem is not a fiat currency, the problem is that the central reserve banks charge interest on all money created.
Get rid of the Federal Reserve system AND eliminate all interest on any money created.
Actually, as I have said
Actually, as I have said before, the problem very much is with fiat currency. Even examples where interest was not charged, the fiat system begs for abuses and indeed everyone that has existed has been abused, usually ending in an inflationary event that destroys the value of the currency and brings down the government. Even Lincoln's Greenbacks only last 7 years from 1862 to 1879, and even then they were combined with gold-backed certificates to be redeemed at a future date. Inflation, once again, was a problem under the Greenback system. From 1780 to 1914, there was a Fixed Gold Standard that created a stable economy with virtually no inflation.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
They have nothing to replace
They have nothing to replace the current system with, what could they use that would work? Nothing that I am aware of...history is simply repeating itself, this has all happened before and is following the same pattern of destruction. I am a student of economic history among other things, I am not so bound up with conspiracy theories that I am compelled to ignore a history that is repeating itself once more.
The system they have built up, spent decades implementing simply cannot be replaced with another fiat monetary system, it will be like eating their own vomit trying to restore a system.
You don't understand, since 1971 we have had a World Currency, it is called fiat money. Back in the 1940s, both Dexter White and John Maynard Keynes tossed around the idea of a One World Currency, but came to the conclusion that they could achieve the very same results by allowing each country to maintain the illusion of independent currencies while transforming each of those currencies into fiat money, each would be bascially the same under the ink. That happened just as it was planned. No, I see this as another attempt at a system that was doomed to failure from its conception, and while I do beleive that the Fabian Socialists, such as Keynes and White (a Marxist) played a large part in the imposition of such a system, I also believe this is it, it is the end of that system and they have no viable alternatives to the one they created.
They cannot replace the current system with anything that will restore the economy. They have sought a productive serfdom and they have implemented such a system over the globe, we have all lived under that system for most of our lives. They don't want slaves, slaves are not as productive as serfs because serfs actually think that they are, to a degree, free.
Like Greenspan stated, he was afraid that the "controlled disintergration" of the economy could easily become an "uncontrollable disintergration", I think that has happened. The boom and bust cycles are manipulated into existence and are used to transfer a great deal of wealth and power, but this is different, this is a hyper-inflationary event in the making. This is a government ender, a society killer and it will wipe away the remnants of the power of the elite as such events have done time and time again throughout history.
This canker is eating away at all the power the elite possess, the power we see at the moment is but an illusion and will fade away as the people lose all confidence in their government, their money and their society.
To maintain control over any people you must have a degree of confidence of the people, when that leaves it becomes impossible to maintain control.
We are on the edge of revolution and the elite are well aware of that fact, they will be running for cover as they are hunted like the cur dogs they are....LET THEM SWING AND PISS THEMSELVES AS THEY DANCE THE TIBER-JIG!
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Nice explanation. Thanks. Some other questions.
Since we are in the deflationary period now, what about the current consolidation of assets of banks and other corporations. Doesn't that put world wealth and power further into the elitists hands who control the world banks? If the elites have all the wealth (in property/country ownership) and power (power being the key word) doesn't the financial turmoil created by the deflationary/hyper inflationary situation provide more than enough despair on the public that they will want the pain to "just go away" - thus giving up freedom and national sovereignty? Wouldn't the elites want to consolidate into a single world currency, now? That provides them with even more control.
These people, the real players, are already wealthy beyond our imaginations. They don't need any more money, but controlling the world would be optimal in their minds. Power is their poisonous motive. Isn't that what Dexter and White wanted? Maybe they couldn't achieve it in the 40's, but couldn't it be a real possibility now?
History does repeat itself, in a manner of speaking. But this situation appears to the perfect storm for world monetary domination. Something never seen on this magnitude before.
Thanks. I look forward to your answers and insight.
To your first statement,
To your first statement, several things are taking place at the same time; we should never get too much tunnel vision or rely upon the various theories for our information. We must look at history because history is the truer denominator. While it is true that there is a great deal of apparent consolidation, what are they really consolidating? Is it wealth? Is it debt? It is worth anything at all? There is indeed a consolidation, but it appears that this consolidation is one that is occurring to salvage a system, not bring more power into it. You think about what is happening to some of the largest, the most powerful banking institutions ever seen in the history of the world. They are, based upon who is lining up at the rescue trough, some of the most powerful, richest elite corporations seeking to get what amounts to a bailout. Even J.P. Morgan Chase is, if they curtain was drawn back, in terrible fiscal shape. They have all depended upon, relied upon and maintained their positions through the Fiat/Fractional Monetary System, now it is failing them.
While a deflationary event, similar to the Great Depression, would allow for the continuation of the elitist system, a hyper-inflationary event would complexly wipe it away, along with the government and its authoritarian powers. The “real players” are not beyond financial ruin, especially the ruin that comes with a hyper-inflationary event, it is truly an end-game. Dexter White, along with the rest of the Fabians, wanted to bring about a Socialist Society, not a slave society. The Fabians were gradualists, they planned their economic and political blueprint in detail, and up to now that blueprint has been followed and implemented, this does not appear in their plans, nor have I read anything in the white papers of the CFR/Trilateral Commissions. In fact, in reading various papers and comments coming out of those organizations they are worried, very worried and seeking answers to restore the system that is crumbling in front of their eyes.
It simply makes no sense for them to have worked, invested so much into a system over the last 100 or so years to turn around and destroy it. They had effectively created a “happy-unquestioning” population of serfs, they don’t want questions, they don’t want the curtain pulled back to reveal their system or their plans, and that is exactly what happens during such economic stress. This type of economic disruption allows for them to be seen, to be questioned by many more people than what they have considered a manageable “fringe”, like us.
It is far from a perfect storm for monetary domination, just the opposite, it is a perfect storm to completely expose and destroy their powers, their wealth and their ability to dominate. Perhaps I see the positive side instead of the negative side. I happen to be hopeful that we all use this period to announce Liberty and Freedom to the masses, to tell and educate them that there is a better way.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
This is such a great thread..
The article and the comments.
I wish all posts were this 1st class.
****
Don't think of it as `gun control', think of it as `victim disarmament'. If we make enough laws, we can all be criminals.
Yes, fun thread.
Reminds me of DP a year ago.
Thanks One_Louv.....I
Thanks One_Louv.....I appreciate the compliment and I agree we have had some great comments on the thread!
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
It's happening here
Icelanders demand PM resignation
Nov 23, 2008 2:09 PM
Thousands of Icelanders demonstrated in Reykjavik on Saturday demanding the resignation of Prime Minister Geir Haarde and Central Bank Governor David Oddsson for failing to stop a financial meltdown in the country.
It was the latest in a series of protests in the capital since the financial meltdown that crippled the island's economy.
Hordur Torfason, a well-known troubadour in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down.
"They don't have our trust and they are no longer legitimate," Torfason said as the crowds gathered in the drizzle before the Althing, the Icelandic parliament.
A separate group of 200-300 people gathered in front of the city's main police station demanding the release of a young protester being held there, Icelandic media reported.
Police in riot gear used pepper spray to drive back an attempt to free the protester during which several windows at the police station were shattered. The protester was later released after a fine he had been sentenced to pay was paid.
Iceland's three biggest banks - Kaupthing, Landsbanki and Glitnir - collapsed under the weight of billions of dollars of debts accumulated in an aggressive overseas expansion, shattering the currency and forcing Iceland to seek aid from the International Monetary Fund (IMF).
This week, the North Atlantic island nation of 320,000 secured a package of more than $10 billion (NZD$18.9 billion) in loans from the IMF and several European countries to help it rebuild its shattered financial system.
Despite the loans, Iceland faces a sharp economic contraction and surging unemployment while many Icelanders also risk losing their homes and life savings.
A young man climbed onto the balcony of the Althing building, where the president appears upon inauguration and on Iceland's national day, and hung a banner reading: "Iceland for Sale - $2.100.000.000", the amount of the loan Iceland is getting from the IMF.
The rally lasted less than one hour and as daylight began to wane, demonstrators drifted away into the nearby coffee shops where the price of a cup of coffee has shot up to 300 kronas (NZD$4) in the last few weeks, up by about one third from before the crisis struck, as the currency has tumbled.
Opposition parties tabled a no-confidence motion in the government on Friday over its handling of the crisis, but the motion carries little chance of toppling the ruling coalition which has a solid parliamentary majority.
"I've just had enough of this whole thing," said Gudrun Jonsdottir, a 36-year-old office worker.
"I don't trust the government, I don't trust the banks, I don't trust the political parties, and I don't trust the IMF. We had a good country here and they've ruined it."
Source: Reuters
...And it will happen here
...And it will happen here too!
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Our monetary system is a "pyramid scheme" - by design
Our system was doomed to fail since back in 1913 with the Federal Reserve Act. The juggling gyrations between inflation and deflation was a deception to bring some credibility to system that was and is a mathematical model that will always fail, regardless of whether you choose a commodity or fiat currency.
The deadly problem is the compounding interest applied to all liquidity brought into the system. Accumulating and compounding interest always grows at an exponential rate given enough time. And, exponential growth is inherently compound growth by nature.
Let's look at a compound interest formula:
P = C (1 + r/n)nt
Where:
P = future value
C = initial amount or deposit
r = interest rate (expressed as a fraction, eg. 0.05 is 5%
n = number of times per year interest is compounded
t = number of years
If you take this formula and plug in whatever positive numbers you want, you will always find that eventually the growth will become exponential and simply unsustainable as accumulated debt and current interest payments consume all liquidity that can be brought into the system by worthy and wanting new debtors. Or, you can find a number of compound interest spreadsheets on the web - they will all point to the same conclusion.
This is the same basic formula that will predict that if you buy some guppies and an aquarium, and provide a healthy habitat that provides for some guppy romance, eventually, the aquarium, no matter how big, will be overcome by guppies. The guppy population will eventually grow exponentially - until the water becomes fouled by the build up of biological toxins and they all die.
Closer to the human species, the Malthusian growth model was used to make a scary prediction about human population growth - we will over-run the planet unless some forms of birth control were in widespread usage.
According to Wikipedia, "The Malthusian growth model, sometimes called the simple exponential growth model, is essentially exponential growth based on a constant rate of compound interest."
Back to money - we have hit a brick wall which is mortared with the rock solid forces of simple math. The system is being artificially suspended by irregular and unaccountable liquidity injections that may buy enough time for the NWOBB (new world order banking bastards) to move all liabilities from their balance sheet to ours before everything seizes.
Paulson, Bernanke and the President have all known about this for some years at a minimum. I don't know if the outspoken McFadden knew but Presidents Kennedy and Reagan understood. And going even further back, I think Thomas Jefferson knew about the exponential growth of interest and warned us of it.
And rest assured, your local bank knows about this as evidenced by the fact that if you want to borrow money, they will quote an APR (annual percentage rate) and if you want to invest money, like in a CD, they will quote an APY (annual percentage yield). The APY will always be greater than the APR because the past balance is moved forward in the compounding schedule. It would be interesting to see what our national APY is today, one thing for sure, it is shooting through the roof.
This is the key to understanding what's wrong with our economy and it is also a key to realizing that we have been subjected to a cheap pyramid scheme, all while our leaders have looked the other way.
As far as predicting deflation or inflation I would say that you will not find much agreement from the experts. For certain, we are in a deflationary period - and many have been calling for inflation/hyper month after month after month.
Many say the liquidity is being soaked up like water to a dry sponge. I can't estimate when inflation might begin but I will suggest that they will continue to drive liquidity into the system by any means - which is scary. The dollar is terminally ill and I suspect that our system may seize before it inflates.
While it is true that a
While it is true that a system that relies upon the complete manipulation of interest to achieve certain political economics is doomed from the beginning. It is also true that if a government simply refrains from all interventions into a free-market sound monetary system that such a system will always surrender to market forces in regulating itself, interest rates and will balance itself with the natural market ebbs and flows of inflation and deflation. Both inflation and deflation are a natural part of a free-market; it is only when those forces are manipulated that they become extremely exaggerated and thus become destructive.
As we have seen money, in particular fiat money does not operate within normal parameters, nor has it adhered to normal mathematical laws otherwise it could nor would it have ever been accepted in the first place. In fact, for decades, those who advocated a fiat monetary system were considered, as they should be, quacks, snake-oil salesmen, monetary idiots and mathematical imbeciles because the fiat system simply did not conform with sound accounting principles.
In fact, if we are to judge the system via accepted accounting practices it would be impossible to have a monetary or mathematical model that would allow a double liability entry. In other words, the fiat monetary system is a double-entry liability; it is a double-negative entry system that relies upon a debt instrument being created out of prima-materia debt, or original debt. As such, all normal mathematical and accounting principles are basically thrown out the door.
When you have a double-negative entry system that not only creates the money, but upon which the money system operates; the entire system depends far more on psychological acceptance and confidence in the system and the government that issues it than on sound accounting or mathematical principles. When the system was gradually imposed upon this country it was done so like a virus, injected into the real monetary system and allowed to grow until the real monetary system was completely consumed finally in 1971.
When confidence is removed from the system the system collapses. As far as debt is concerned, it is just as fiat as the money itself; when you boil it down it too is simply an illusion. Confidence in the system continues to allow the creditors to allow lending, but when that confidence ends, the Federal Reserve will simply become the creditor to the government instead of reaching to foreign creditors who no longer hold confidence. We are seeing that happen now as the Federal Reserve has basically increased its own balance sheet to directly inject fiat money into the system.
Since the debt is based upon the face value of fiat currency, in other words it is denominated in dollars based upon face value, the oldest fiat trick in the world is to inflate the currency to the point that basically they pay off debt with face value currency that holds absolutely no purchase value. That’s the simply explanation of how debt is eventually consumed in a fiat monetary system. They inflate the debt away be directly creating money outside monetizing debt.
The government just pledged $7.4 Trillion Dollars to prop up the credit system….where is that money coming from, it is certainly not the monetizing of the debt, this is a direct process that side-steps the process that is normally used to create fiat money. This is a hyper-inflationary event. Remember, this system operates outside normal accounting practices; therefore it operates outside normal mathematical modeling. They will do what they must do to try to prop up the system; it must be manipulated to function, whether it is done by borrowing or by direct fiat creation.
They are basically creating a direct fiat bubble, this is the last bubble they can create in an attempt to maintain the ruse, hoping against hope that this will save the system and return it to semi-normal operations, and it will not work. The Debt-Standard of Fiat Money ended last year, we will now operate on a purely Ink-Standard of Fiat Money directly injected into the system, they have no other choices, history is simply repeating itself and we have entered into the final phase that all fiat systems enter into, it happens this way every time.
We must not look at prices to gage inflation or deflation; prices are a lagging indicator of what is happening. We are witnessing a deflationary stage that normally precedes a hyper-inflationary event. Hyper-inflation never happens in a boom, it is always the result of a bust and the reactions of that bust by the central bank and the government.
It should be obvious by now that the accepted “experts” are not experts at all; most are operating under the same fiat illusion that the people themselves have been subjected to for decades. The “experts” operate on the same assumptions that created the fiat monetary system in the first place and those assumptions are based upon the lie that such a system can be controlled, maintained and will continue.
Hyper-inflation is far more of a psychological event than a physical event. Here mathematical models fly out the window and human action takes precedent. Deflation, in this case is multi-faceted, it is combined with a credit expansionary system in decline and a drop of confidence on several levels placing pressure on the economics of the monetary system while the monetary system itself continues to be manipulated by the central bankers of the world in response.
Remember, a hyper-inflationary event never happens during a boom, it is always, without exception the last stage of a major deflationary slump and the response taken by central bankers to combat that slump. It is much more than just the inflationary creation of fiat money; it is a convergence between the response of the central banks and the resulting monetary inflation that occurs during such periods of deflation when seeking to avert deflation.
The Federal Reserve, along with the central banks of the world, is injecting unprecedented, historic levels of fiat money into the system. This is happening all around the world. The liquidity, while it seems to be absorbed, is actually “parked” as it were. There is still a massive amount of deflation waiting to present itself in the economy. The housing market is far, far from hitting the bottom of the pit; I estimate that the foreclosure rate to increase so drastically that the Federal Reserve and the government will take the most unimaginable actions to avert the truly massive foreclosure collapse that is just around the corner.
In fact, I see something coming our way that will fundamentally change everything in terms of the socio-political economy in this country and others. We will see the most drastic actions taken by the governments of this world to prop up their power, the economy and civilization as we know it that it will become unrecognizable.
The fact is that they system has already seized up, we are now witnessing the central banks and the governments reacting to the credit seize and corresponding convulsions now taking place in the economy. Just as the head of the Bank of England recently said: “We will issue all the money necessary to avert this crisis.” Our own Federal Reserve, along with other central banks around the world, including the IMF have basically said the same thing...they will directly inject fiat money instead of relying on the Open Market to monetize debt. Now, if they cannot borrow, what do you think they will do? They will “print” in hopes that even if those fiat bills are only used domestically, it will loosen up the system. The results will be a hyper-inflationary loss of confidence in the entire system, including government.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Yup, something big and ugly is coming our way
Republicae said: "In fact, I see something coming our way that will fundamentally change everything in terms of the socio-political economy in this country and others. We will see the most drastic actions taken by the governments of this world to prop up their power, the economy and civilization as we know it that it will become unrecognizable."
Unfortunately I think you are right - and I'm beginning hear a chorus of others, who's opinions I respect saying the same thing. We are moving into interesting and dangerous times - I agree and believe things will soon seize-up. Maybe late January, maybe sometime in February, maybe sooner.
Your ideas and opinions are very welcome - and I think we agree over 90% of the time making the other 10% that much more interesting. My explanation of the exponential growth of money borrowed at compounding interest was clumsy - I will try again some time and hope you will research this on your own as I'm sure you will be able to explain this important phenomenon more ably than me.
Thanks, as far as
Thanks, as far as researching the exponential growth of debt money burdened by the compounding of interest, you don't have to explain. I have researched that portion of the equation for years also, I have read Mike's works for the last couple of years and as I said, there's some good information on the site but there is a great deal which cannot be determined by his methodologies. If debt were the only way that our fiat money was created then his methodologies would be far more valid however, as we are seeing the central banks of the world are not limited to monetizing debt, they can and will side-step that process if necessary and it appears that it is now necessary for them to do just that. Such a move makes me far more convinced that the end game is upon us and that end game is, as history proves, a hyper-inflationary reactionary event.
http://www.1776solution.b...
I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue. Barry Goldwater
Confusing myself
I just started taking an interest in economics since the news of the bailouts. So over the last few months I’ve been trying to play catch up and reading whatever I can on this subject. The hyperinflation topic is of great interest (and confusion) for me. I think I’ve been reading so many different opposing views on the subject, I’m just confused. If you could, please answer a question on hyperinflation effects in asset prices in an economy.
I don’t question that imported goods prices (imported energy, consumer goods, etc) will go way up, but I just can’t my head around domestic asset prices going up; specifically housing prices. We’re seeing them go down as the bubble bursts and prices correct themselves. But I also understand that increasing the amount of money destroys its buying power (seen through rising prices) which is what the Fed is doing now through capital injections and lowering interest rates.
I guess I’m having trouble tying the two together…buying power will go down, so what will happen to the housing market and stock prices? Will they quickly and abruptly do an about face and start climbing? Essentially they are re-inflating the bubble? But the prices originally went up because of easy credit (an artificially high amount of money in the economy) and demand. We’ll still have “too many” dollars in the system, but the demand will be gone. I just don’t understand and would appreciate some direction.
It depends on the assets, if
It depends on the assets, if you own outright an asset then it retains a value, but one that can no longer be determined by the face value of the currency. For instance, if you own an acre of land that in normal times may be valued at say $10,000.00, during the end game of hyper-inflation it may bring an asking price of $3,000,000,000,000,000.00 because the currency no longer hold any purchasing power. In other words, it becomes an absurdity, basically worthless in rational terms. Take for instance when hyper-inflation first hit Zimbabwe, a single sheet of toilet tissue was selling for $280,000.00 Zimbabwean Dollars. It was cheaper to wipe your ass with the paper money than to buy toilet tissue. So, you can see the absurdity of such an event. The people simply loose all confidence in the currency and the government that still tries to issue it.
At the point when hyper-inflation hits you will not be concerned with housing markets or stock prices, you will be concerned with food and safety. There are some very strange things that happen when hyper-inflation first begins. You will find people trying to get rid of their dollars as soon as they get them, they don’t want to hold them because the purchasing power declines so fast, so they will buy absolutely anything and everything they can in the hopes that what they buy will have some value they can use in the near future. They also feel that if they wait to spend their increasingly worthless dollars that they will not be able to buy what they need or what they think will help them. At some point the demand, under a hyper-inflationary event simply stops, at that point no one uses the dollars for anything but insulation, burning as fuel, but not money.
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