Andy Hoffman of Miles Franklin joins us to discuss the FED’s actions on 12.12.12. With the announcement that the FED plans to make $45 BILLION PER MONTH in new, UNSTERILIZED Treasury purchases, we are merely biding time before the great collapse begins. With QE4, the fate of every American has been sealed; the death of the Dollar is now a guarantee. Andy warns, “This is truly, truly the beginnings of what you call hyperinflation – and there’s no way back …It’s going to be a very ugly world.”
In his last report, John Williams expects hyperinflation by the end of 2014. He has advised (in an interview separate from his most recent report) that when this happens, the purchasing power of the US Dollar will collapse and in about six months a new currency will be issued. All of this leads to a lower US dollar in an intact trend channel that goes to and below .5600 on the meaningless USDX index.
You’ve talked about a new, two-tiered currency regime (if I understand correctly) that will consist of a basket-type currency traded among central banks and national or multinational-basket currencies used by the rest of us.
My question is, after the new currency regime is created, what will happen to transfer-payment programs like SS, unemployment comp and the like? Will these payments resume in whatever currency the US uses next? How about public-sector employees? They, effectively, receive transfer payments too. Will they still be paid? I know the private sector will be FUBARed because it’s subject to market forces.
Don’t laugh at this next question: can this be handled seamlessly or should we assume Petunia is taking flying lessons?
Think of it as a virtual reserve currency only available to central banks to trade in. Think of it as the same currency system we have now with very different currency cross rate values. Think of it as the euro, ruble, rupee and yuan as a currency trading block, not a unified currency.
This is how you reduce international dollar debt and insular dollar entitlement payments to almost meaningless levels, all in one great arm wave on a singular day. It will also cure the health cost problem by removing the most sickly from the equation, the pensioner, by accelerated attrition. Timing is a question of when our masters via GS decide to pull the plug on confidence in the US dollar as there is no other practical solution in the minds of our masters.
The Euro at $1.5O and maybe much higher, which by the way makes my Swiss Franc and Canadian dollar inventory look quite good. I wager you never expected the Swiss Franc being bound to the euro at a cross rate of 1.20 was going to be outrageously bullish for the Swissy? We did here.
Regarding Petunia, could it be otherwise? She is a Sinclair, and presently there are 4 pilots in the family. No one lives in Alaska now. The only real question is rotorcraft or fixed wing? Dogs (which she is not too fond of) can drive. Why should Miss Petunia remain Earthbound?
Jim Sinclair’s Commentary
John Williams of Shadowstats.com Interview: The Next Crash Will Be A Lot Worse!
Paul Mylchreest has released the December Thunder Road Report, titled Inflationary Deflation: Creating a Bubble in New Money. The report is 75 MUST READ pages detailing the END GAME to the largest debt bubble in the history of the world: a massive cost-push hyperinflationary collapse of the US dollar.
This is the biggest debt bubble in history. Each time DEFLATIONARY forces re-assert themselves, offsetting INFLATIONARY forces (monetary stimulus in some form) have to becorrespondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this Long Wave is incubating a coming wave of inflation. This will not be the conventional demand pull inflation understood by most economists.
The end game is an inflationary/currency crisis, dislocation across credit and derivatives markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the go-to assets for capital preservation.
Full 75 page December Thunder Road Report below: Read more…
It’s a Trap!
The situation reminds me of a time not all that long ago, in 2005 if memory serves, when the tandem US stock market and real estate bubbles left many states in the unusual position of posting a surplus.
It was on one of these halcyon days that the governor of Vermont waxed rhapsodically on the radio about the surplus and all the many plans being developed to spend it.
“It’s a trap!” I well recall muttering to myself, adding something to the effect of, “Don’t do it, you dolts!”
That’s because it should have been obvious to anyone paying attention that the good days couldn’t last.
Not when the twin bubbles were entirely the result of a massive misallocation of capital based on the notion that anyone with a pulse was entitled to live in their dream house… then further leverage themselves with nearly effortless home equity loans to ensure that the new abode was fashionably outfitted with fine furniture, including the requisite La-Z-Boy.
Simultaneously, to ensure that no one would suffer the indignity of having to park a used car in their new driveway, the automobile industry was offering loans requiring zero money down and no payments for two years.
Yet, remarkably to me then and even now, almost no one in government or in the dark towers of Wall Street saw the situation for what it was. Or at least if they did, they didn’t say anything. Or do anything, other than continue with business as usual until the train left the tracks in 2008.
The situation today is, in my view, almost identical, with only the systematic pressure points having changed. The currency debasement is not an illusion, any more than the debt (which, for the record, has only gotten worse), but a massive and deliberate act of inflationary overkill on the part of governments that are otherwise reaching the end of their policy ropes.
Inflation as we know it is well embedded in this country with annual increases for the last ten years of 8-10%. The Fed will never reveal the truth, necessarily, as the average person would revolt at that thought. With 48 million people on food stamps, able to buy free food with SNAP and EBT cards, they won’t complain until the buying capacity of these cards is insufficient to buy even the basics. The middle class is so hammered and dispirited at their plight, they have yet to complain, choosing instead to reelect one of the people chiefly responsible for this problem. They probably still think he will produce a miracle to stem inflation. The knowledgeable wealthy can work around inflation of 8% by investing in assets that beat inflation (like gold and silver).
The reason we have yet to see the really heavy foot of inflation is the velocity of money. It is as low as it has been in the last century, even lower than during the Great Depression. When the movement of the $5 trillion plus involved starts in earnest, the inflation will be undeniable and massive. This is when the people and businesses begin to lose confidence in their stale and static accounts stuffed with FIAT and begin to spend it in an attempt to front run the inflationary effects they see….
Extremely positive development for Gold investors…Barry Ritholtz says “It’s time” and goes long in a big way!!!
Gold bugs can’t understand how the public can be so unaware, how highly intelligent policy makers can be so immoral, and how the mainstream media can be so incurious. We can’t understand why more men and women in the investment business haven’t joined some of the more successful ones that have come around to precious metals and have taken substantial positions in them for their funds and personal accounts. The list of high profile independent-minded investors that have come out of the proverbial closet is impressive and growing: Kyle Bass, John Paulson, David Einhorn, George Soros, Bill Gross and Paul Singer, to name only a few.
Conventional financial asset selection guidelines for professional investors are becoming increasingly uneconomic and problematic. Current macroeconomic conditions leave little doubt as to why. A zero-bound rate structure across developed economies, heavy monetary policy intervention, guaranteed negative real returns of benchmark financial assets and cash, impossible discount cash flow models, cacophonous (and economically meaningless) fiscal political wrangling diverting attention from legitimate budget arithmetic ($800 billion over ten years when we’re running $1 trillion-plus annual deficits?), dubious short and intermediate-term prospects in already-emerged emerging economies, and non-trending financial markets, all suggest something has changed….