John Williams: Hyperinflation Special Report! Economy and Financial System Face Eventual Great Collapse! High Risk of Ultimate Dollar Crisis Unfolding in Year Ahead !
- This is a great report by John Williams (of www.shadowstats.com). For all those who are weighing the risks of inflation or deflation, you should read what this independent trained economist say. No holds barred straight talk even though you may not agree with his conclusions. He is representative of the hyperinflation camp, which I agree with. Inflation or deflation, gold (and silver) will do very well. Got Gold yet?
HYPERINFLATION SPECIAL REPORT (UPDATE 2010)
- Economy and Financial System Face Eventual Great Collapse
- Government and Fed Actions Have Narrowed Timing for
Hyperinflationary Great Depression to Next Five Years
- High Risk of Ultimate Dollar Crisis Unfolding in Year Ahead
A Great Collapse. The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold.
Crises Brewed by Federal Government and Federal Reserve Malfeasance. The crises have been generated out of and are centered on the United States financial system, triggered by the collapse of debt excesses actively encouraged by the Greenspan Federal Reserve. Recognizing that the U.S. economy was sagging under the weight of structural changes created by government trade, regulatory and social policies — policies that limited real consumer income growth — Mr. Greenspan played along with the political and banking systems. He made policy decisions to steal economic activity from the future, fueling economic growth of the last decade largely through debt expansion.
The Greenspan Fed pushed for ever-greater systemic leverage, including the happy acceptance of new financial products, which included instruments of mis-packaged lending risks, designed for consumption by global entities that openly did not understand the nature of the risks being taken. Complicit in this broad malfeasance was the U.S. government, including both major political parties in successive Administrations and Congresses.
As with consumers, the federal government could not make ends meet while appeasing that portion of the electorate that could be kept docile by ever-expanding government programs and increasing government spending. The solution was ever-expanding federal debt and deficits.
Indeed, pushing the big problems into the future appears to have been the working strategy for both the Fed and recent Administrations. Yet, the U.S. dollar and the budget deficit do matter, and the future is at hand. The day of ultimate financial reckoning has arrived, and it is playing out.
Saving the System at Any Cost. The Federal Reserve and the U.S. Treasury moved early in the current solvency crisis to prevent a collapse of the banking system, at any cost. It was the collapse of the banking system and loss of depositor assets in the early-1930s that intensified the Great Depression and its attendant deflation. A somewhat parallel risk was envisioned in 2008 as the system passed over the brink. The decision was made to avoid a deflationary great depression.
Effective financial impairments and at least partial nationalizations or orchestrated bailouts/takeovers resulted for institutions such as Bear Stearns, Citigroup, Washington Mutual, AIG, General Motors, Chrysler, Fannie Mae and Freddie Mac, along with a number of further troubled financial institutions. The Fed moved to provide whatever systemic liquidity would be needed, while the federal government moved to finance corporate bailouts and to introduce significant stimulus spending.
Curiously, though, the Fed and the Treasury let Lehman Brothers fail outright, which triggered a foreseeable run on the system and markedly intensified the systemic solvency crisis in September 2008. Whether someone was trying to play political games, with the public and Congress increasingly raising questions of moral hazard issues, or whether the U.S. financial wizards missed what would happen or simply moved to bring the crisis to a head, remains to be seen.
In the midst of the crises, the Obama Administration has introduced major new government programs, ranging from carbon tax plans to a national health care and insurance program. Irrespective of any stated goals of not increasing the federal deficit further, these programs will have severely negative impact on the federal deficit, either from massive net expenses, or from losses in tax revenues in a weaker economy. The various initiatives generally will act as major depressants on business activity. The U.S. Treasury has delayed publishing the U.S. Government’s 2009 GAAP-based financial statements for two months, until February 2010. With my estimate of a GAAP-based 2009 annual deficit of roughly $9 trillion, there may some method in pushing off unhappy accounting until after the health-care package is resolved.
While the system will be saved at any cost, and the government will spend whatever it can spend until the financial markets rebel, the ultimate cost here will be in inflation and the increasing debasement of the purchasing power of the U.S. Dollar.
Hyperinflation Nears. Before the systemic solvency crisis began to unfold in 2007, the U.S. government already had condemned the U.S. dollar to a hyperinflationary grave by taking on debt and obligations that never could be covered through raising taxes and/or by severely slashing government spending that had become politically untouchable. The U.S. economy also already had entered a severe structural downturn, which helped to trigger the systemic solvency crisis.
The intensifying economic and solvency crises, and the responses to both by the U.S. government and the Federal Reserve in the last two years, have exacerbated the government’s solvency issues and moved forward my timing estimation for the hyperinflation to the next five years, from the 2010 to 2018 timing range estimated in the prior report. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, gross mismanagement, and a deliberate and ongoing effort to debase the U.S. currency. Accordingly, risks are particularly high of the hyperinflation crisis breaking within the next year.
Numerous foreign governments have offered unusually blunt criticism of U.S. fiscal and Federal Reserve policies in the last year. Both private and official demand for U.S. Treasuries increasingly is unenthusiastic. Looming with uncertain timing is a panicked dollar dumping and dumping of dollar-denominated paper assets. Such is the most likely event to trigger the onset of hyperinflation in the year ahead.
The U.S. has no way of avoiding a financial Armageddon. Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover obligations. The alternative would be for the U.S. to renege on its existing debt and obligations, a solution for modern sovereign states rarely seen outside of governments overthrown in revolution, and a solution with no happier ending than simply printing the needed money. With the creation of massive amounts of new fiat dollars (not backed by gold or silver) will come the eventual destruction of the value of the U.S. dollar and related dollar-denominated paper assets.
…. to continue reading click here!
Rates Rise Worldwide! John Mauldin: ‘Not A Smart Thing To Hold Sovereign Debts of Western Governments’!
- Forget about the Korean war drums. Forget about all the calls for war with Iran. You want to know when war will start? Just look at the bond market. War is but a distraction from the main event! Banksters are losing control. The treasury market is signalling just that. What do these snakes do in the event of total collapse? Play their world war card ! Kill all the sheeple, nationalize everything (ie steal everything via their Illuminist owned politician puppets and governments), sell the righteous war rhetoric: freedom, liberty, deliverance from tyranny, war of self defence … blah, blah, blah… It is all One Big SCAM !
Rates Rise Worldwide and John Mauldin Asks: “What Is Up With That?”
Treasury yields were rising Tuesday morning as the Obama-GOP tax package makes its way through Congress and this morning’s retail stales and PPI reports were stronger than expected. More than a few observers have noted that yields have risen since Nov. 3, when Ben Bernanke embarked on the voyage known as QE2, which the Fed could add some color on in today’s policy statement at 2:15 p.m.
But it’s not just U.S. yields that have risen, notes John Mauldin, president of Millennium Wave Securities.
“U.K. bond [yields] are moving up as well [and] look at what is happening to German bonds, supposedly the safest in Europe. They are up about as much as their counterparts,” he writes in a recent issue of his e-newsletter, Thoughts from the Frontline. “And then we look at Japan and we see the same phenomenon. Japanese real rates going up? Really? What is up with that?”
What’s up, Mauldin speculates, is that global investors – most notably emerging market central banks – “are asking themselves about the wisdom of holding sovereign debt in currencies that are either in trouble (the euro) or have central banks that are printing money (the U.S., U.K., and Japan),” he writes. “Couple that with the U.S. having just done a tax compromise that is one huge stimulus bill, on top of extending the tax cuts, and it is enough to make investors consider the wisdom of holding longer-term debt at low rates.”
Mauldin and I discuss the implications of these trends in the accompanying video, as well as his fear of a banking crisis in Europe that could mirror the dark days of 2008.
- You believe that the politician snakes in the District of Criminals (DC) serve the American people! You believe that they are working for the good of Americans! I have a seaside bungalow on Jupiter I want to sell to you. You can swim with the Jovian dolphins! Quotes:
“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with the flick of a pen, they will create enough money to buy it back again. Take this great power away from the bankers and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a better and happier world to live in. But if you want to continue the slaves of bankers and pay the cost of your own slavery, let them continue to create money and to control credit.”
Sir Josiah Stamp, Director and President of the Bank of England during the 1920′s
“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences. The apex of the system was the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the worlds’ central banks which were themselves private corporations. The growth of financial capitalism made possible a centralization of world economic control and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups.”
Tragedy and Hope: A History of The World in Our Time (Macmillan Company, 1966,) Professor Carroll Quigley of Georgetown University
“The real menace of our republic is this invisible government which like a giant octopus sprawls its slimy length over city, state and nation. Like the octopus of real life, it operates under cover of a self created screen….At the head of this octopus are the Rockefeller Standard Oil interests and a small group of powerful banking houses generally referred to as international bankers. The little coterie of powerful international bankers virtually run the United States government for their own selfish purposes. They practically control both political parties.“
New York City Mayor John F. Hylan, 1922
“The New World Order under the UN will reduce everything to one common denominator. The system will be made up of a single currency, single centrally financed government, single tax system, single language, single political system, single world court of justice, single state religion…Each person will have a registered number, without which he will not be allowed to buy or sell; and there will be one universal world church. Anyone who refuses to take part in the universal system will have no right to exist.”
Assessment of the New World by Dr. Kurk E. Koch
- America has the best Congress bankster money can buy. The politician snakes serve their masters. Just follow the money to the Illuminist banksters and ’666′.
Regulators exist to ‘serve the banks,’ next House finance chairman declares
Alabama Republican Spencer Bachus, the incoming chairman of the House banking committee, suggested Congress and federal regulators should play a subservient role with banks. “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” Bachus told The Birmingham News in an interview.
The Republican leadership last week designated Bachus the next chairman of the powerful House Financial Services Committee, which is tasked with overseeing banks, financial markets, housing and consumer credit.
Democrats characterized the remark as a Freudian slip, nicknaming the Alabaman ”Big Bank Bachus” and claiming the new Republican-controlled House will put the interests of financial institutions ahead of the American public.
“Congressman Spencer ‘Big Bank’ Bachus has given Americans a startlingly honest answer about the House Republican agenda – do whatever is good for the big banks and Wall Street special interests, rather than what’s good for hardworking Americans,” said Jesse Ferguson, a spokesman for the Democratic Congressional Campaign Committee.
The congressman from Alabama’s 6th district has throughout his 18-year House career raised millions from financial interests, including over $1 million from commercial banks alone, according to the Center for Responsive Politics.
He has received over $800,000 from the real estate industry, $700,000 from securities and investment firms, and $415,000 from credit companies — all of which he will have extraordinary influence over as banking committee chair.
- I do not, like most commentators, believe in the incompetence of the FedRes. It is really deliberate incompetence. The Illuminist banksters are following a carefully crafted plan: the total planned collapse of America and the remaking/merging of it into the Luciferian New World Order.
- Financial world war has been triggered by the FedRes. China is feeling the heat of inflation due to the direct consequence of the FedRes’ QE ‘money printing’. So will the rest of the world. Their plan is a global economic, financial and monetary collapse. Problem, Reaction and Pre-Planned Solution. The Hegelian Dialectic. With this coming crisis(hyperinflationary collapse), these Illuminists will push through their One World Currency, Global Supra-National Central Bank and World Government –> ’666′.
- How do you get people all over the world to abandon their local fiat currencies and accept the One World Currency? By destroying existing fiat currencies via hyperinflation. Inevitably, not everyone will accept this New Financial Hegemony, enslavement. War will be the result for countries which refuse to sign on!
Hyperinflation Watch – December 13, 2010
Numbers Don’t Lie –
For several months I have been warning that hyperinflation of the US dollar is looming. The ominous signs of this impending currency train-wreck are becoming increasingly clear. For example, crude oil is threatening to break above $90 per barrel. Copper has broken through $4 per pound to a record high price. The prices of many other commodities are also in uptrends. These commodities are not in short supply. There is no shortage of oil or copper. Rather, these high prices are the result of too much money printing, which if not quickly stopped by returning to a sound money policy will ultimately lead to hyperinflation.
Last week another important part of the hyperinflation puzzle fell into place. Long-term interest rates surged, continuing their sharp upward path that began two months ago. The 10-year T-note during this two month period has risen from 2.4% to end last week over 3.2%, a remarkable and therefore telling jump.
This rise in long-term rates lays bare the flawed logic of the Federal Reserve’s newly announced $600 billion so-called “Quantitative Easing” program supposedly designed to help the economy. This new round of money printing is not going to help the economy, which has been hollowed out by years of debt financed consumption along with too little savings and production. This money printing is serving only one purpose. This central bank trickery is providing the federal government with all the dollars it wants to spend.
So despite the fact the Fed will be purchasing $600 billion of US government debt instruments, T-bond and T-note yields are climbing, a clear sign that investors are rushing to sell their US government paper. Why? Because they know the purchasing power of the dollar is being debased by QE, and more importantly, will continue being debased.
I have discussed this reckless monetary policy before. “The [Federal Reserve] has one mission. It is to make sure that the federal government obtains all the dollars it wants to spend. If the federal government cannot attract these dollars from the world’s savings pool, then there is only one other way to obtain them. The Fed must print them.”
The following chart illustrates that the US government continues to spend and borrow recklessly. Despite all the pump-priming by the Federal Reserve aimed at stimulating the economy and therefore increasing US government revenue, there has been no meaningful reduction in the deficit.
Federal expenditures remain far above federal revenue. More worrisome is the resulting growth in US government debt – now nearly $14 trillion – much of which the Fed is turning into currency with its QE actions. The transformation of government debt into currency by the central bank is the core cause of hyperinflation.
The dollar not only remains on the road to hyperinflation, the rise in commodity prices and bond yields mean that the dollar is picking up speed as it heads toward the fiat currency graveyard. Remember, numbers don’t lie. But the same thing can’t be said for politicians who refuse to accept reality or central bankers willing to experiment with the US economy just to test their chalkboard theories.
Dan Norcini: Implications of The Long Bond Price Collapse! The Speed at which The Bond Market is Breaking Down is Startling!
- It appears the final pillar that is holding up the American economy is giving way. Jim Sinclair, gold maestro, believes that the collapse of the treasury market will propel gold to the moon. I believe him. When the treasury market collapses it is also the start of the flight out of the USD. The FedRes will be the buyer of all treasuries: ie QE to the stars! It will be the domino that triggers the global monetary crisis. More financial commentators are saying, if it happens : This is Financial Armageddon! Dan Norcini writes:
Implications Of The Long Bond Price Collapse
We have been alerting you to the breakdown in the US long bond over the last several weeks and have noted that its collapse in price has serious implications for all of us.
Judging solely by the price action in both the Ten year and the long bond, the Fed’s QE program, which was designed to hold down long term interest rates and thus spur lending particularly in an attempt to generate activity in the real estate sector, has proven to be an abject failure. Rates have gone up, not down. Combine that with a surfeit of houses due to the wave of foreclosures and it is difficult to see this distressed sector turning around any time soon.
What appears to have taken place is that the focus on the long end of the curve has shifted firmly towards the inflationary aspects of all this Quantitative Easing. In effect, the market has thumbed its nose at the policy boys of the FOMC and completely short-circuited the entire effort.
The long holdout on the FOMC, Governor Hoenig seems to have gotten it right as he has been sounding the alarm about the potential for strong inflationary pressures arising from this foolishness. The Fed has gotten the stock market reinflated and shoved the price of many commodities into the stratosphere, but that has come at a very real cost to all of us. The bond market is saying loud and clear – “you want inflation – fine – we’ll just get rid of our bonds”.
The simple fact is that the soaring CCI (Continuous Commodity Index) now has fully captured the attention of the bond market and unless the easy money policy is withdrawn (fat chance), they are going to begin the long anticipated, but seemingly never arriving, wave of selling which many of us have feared.
There are several dangers in all of this. The first is obvious – rising interest rates will have the opposite effect on consumer spending that the framers of the QE policy intended. The plan was to artificially force down longer term rates through the purchase of Treasuries which would spur bank lending and consumer and business borrowing. How that is supposed to be accomplished with rates going in the opposite direction, escapes me.
The next is every bit as real but perhaps not as obvious to the average consumer who is too busy with life to closely follow the implications of this like some of us screen watchers and that is the cost of borrowing for the US government.
Long term rates are rising even on the 5 year which means that the US is going to have to borrow more and more on a short term basis in order to fund its ballooning budget deficit and its rising entitlement costs if it wants to keep its borrowing costs low. That may work for a while but the fact is that a nation so deeply indebted as ours has become is now at the mercy of market forces that could drastically force up yields meaning the cost of carrying this mountain of debt grows larger with the passing of each month. In other words, our creditors are going to be demanding more money to carry us. I do not see how that benefits us in the long term in any form, fashion or shape whatsoever.
The speed at which the bond market is breaking down is startling. The problem with markets which begin to act like this is that oftentimes that selling begins to feed on itself and a frenzy to unload commences. It may or may not happen to the bonds but the risk is there. Quite frankly, there is only one line of support I can see on the price charts near the 119 level that is standing between the long bond and a drop below 115. If it gets down into that region, things are going to get dicey.
Lastly, note the ratio chart of gold to bonds that we have been sending up from time to time. Note how that ratio has soared in favor of gold. A rising ratio signifies that the market is anticipating a wave of inflationary pressures.
- Zionist ’666′ Israel, the Satanic counterfeit, is in total violation of God’s law:
“You shall neither mistreat a stranger nor oppress him, for you were strangers in the land of Egypt.”
“Also you shall not oppress a stranger, for you know the heart of a stranger, because you were strangers in the land of Egypt.”
‘And if a stranger dwells with you in your land, you shall not mistreat him.’
The stranger who dwells among you shall be to you as one born among you, and you shall love him as yourself; for you were strangers in the land of Egypt: I am the LORD your God.
‘When you reap the harvest of your land, you shall not wholly reap the corners of your field when you reap, nor shall you gather any gleaning from your harvest. You shall leave them for the poor and for the stranger: I am the LORD your God.’
You shall have the same law for the stranger and for one from your own country; for I am the LORD your God.
22 It shall be that you will divide it by lot as an inheritance for yourselves, and for the strangers who dwell among you and who bear children among you. They shall be to you as native-born among the children of Israel; they shall have an inheritance with you among the tribes of Israel. 23 And it shall be that in whatever tribe the stranger dwells, there you shall give him his inheritance,” says the Lord GOD.