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Classic Videos: Hyperinflation Nation 2/3

by John Rubino on March 20, 2010

Here’s the middle part of a great series created by the National Inflation Association. It begins with a look at Zimbabwe’s hyperinflation, then goes on to explain that the U.S. is traveling the same road. Social Security is a Ponzi scheme, the dollar is heading for its intrinsic value, and gold is the solution. It ends with: “…that would represent a 2,000% increase in the price of silver.”

Tagged as: Dollar, Gold, Inflation, Silver

{ 13 comments… read them below or add one }

Brad Thrasher March 20, 2010 at 1:17 pm: In our lifetime, the precedent for taxpayer bailouts is Jimmy Carter’s bailout of Chrysler. Just goes to show ya when a liberal cuts a deal, it works. Since Carter, our last truly great president, we’ve had a succession of corporate welfare bums who didn’t see a tax cut or deregulation they couldn’t support.

As I’ve shown before on this page, we will not see hyperinflation unless and until the banks start lending again. When all the new money the Fed has issued makes its way outside the tight little circle of cash reserves-Treasuries-Fed deposits is when we experience hyperinflation.

It may take 20 years or more to grow the real economy supported by an honest dollar. Anyway that is the hope for avoiding the Zimbabwe solution.

Oh and by way of explanation conservatives in the tradition of Lincoln and Eisenhower are to be respected and not to be confused with the corporatist usurpers of today.
Bruce C. March 20, 2010 at 3:20 pm: I know that most of the people who’ll see this video are already converts but I think it’s too sensational to be persuasive to the general public. In my experience, most people think the economy is improving so convincing them that Zimbabwe II is coming soon is a tough sell these days. Even ordinary inflation is given short shrift because half the guru-types out there are lamenting de-flation, and pointing to low interest rates, decreasing energy costs, depressed demand, excess labor, low factory utilization, cheap imports, wage cuts, etc. Oh, and that gold is about to tank.

Anyway, I agree with Jim Sinclair that hyperinflation is more of a social event than an economic one in that it happens when there is a crisis in confidence in the currency, not simply (or only) because of massive liquidity (unlike first-order inflation). Even if all those bank reserves never get lent out, if the Euro and Pound get in trouble the dollar could collapse as well.

P.S. to Brad: How exactly was Chrysler’s bailout not another example of corporate welfare? Is it because the loan was paid back with interest, thus making it an investment and not outright give way? Hope you’re right about Liberal deal making always working out so well. We shall see.
Brad Thrasher March 20, 2010 at 8:34 pm: That’s a stunner Bruce C. My entire family talks about layoffs, reduced hours up to 20% so far, 401K’s that haven’t come back, little to no equity in our homes, putting off retirement, one couple both working with one child is launching a cash business part time. I’d sum up the mood as one part anger and one part fear.

As to your question, yes. As I recall the loan/investment were made at market rates and paid off early. Very Keynesian
tyler March 20, 2010 at 9:40 pm: This site says “precious metals news” it should say gold news. Im gonna laugh my ass off when silver outperforms gold by a lot. Gold is not the best precious metal.
kenny March 20, 2010 at 10:37 pm: A wheelbarrow of money for a loaf of bread……….read it it’s in Revelations
Bruce C. March 21, 2010 at 9:19 am: Brad,

First of all I’m sorry to hear about your family’s situations. All of that is actually true for me as well, and for a lot of people I know. Nevertheless, an odd sort of schism is going on.

For example, I’m a home builder/remodeler and have virtually no work. However, I talk to my subs and they’re very busy but it’s all service and repair work. In fact, they want to hire more people but few want to work or are under-qualified.

Here’s another: A friend of mine manages a country club for a large middle class development and needs to hire another staffer. She says its a normal/good part-time job for a young person in that area (20-30 hours per week at $9/hr.) She advertised that offer for over 2 weeks to over 1100 homes in the community and only one person responded. She says that a year or two ago at least 10 would have responded within days. She offered the girl a job, but the girl turned it down because she found a full-time job somewhere else. (Also, as an aside, there a very few delinquencies of club dues now, unlike last year.)

Pardon all the detail, but those are microcosms of what going on now. Go figure.
Jack March 21, 2010 at 2:09 pm: It is corrpution of the spirit that will doom us to hyperinflation. Americians want things we love things, campers, boats 4 wheelers, motorcycles ect… it is how we define sucess. That love of things leads to love of money. The money will begin to get to the spenders again, we the people will demand it. Fractional banking will ratio out to 20 or 30 to 1. (talk about risk) Will the fed raise intrest rates, eventually yes. Then as in the vid taxes will increase to cover intrest, consumer spending will fall. Then what will we do? Print more money? You’re thinking this all sounds like a confused mess, you are right. In the midst of confusion and moral decay, it will fall apart. When who knows but I don’t think it is to far away.
Bruce C. March 21, 2010 at 6:17 pm: QUESTION FOR JOHN:

I was reading the article at Free Gold Money Report called “US Dollar Money Supply is Underreported” (http://www.fgmr.com/us-dollar-money-supply-is-underreported.html) and I don’t understand why deposit currency created by the Fed is not part of M1, since M1 includes “deposit currency within the banking system”. Are the Reserve banks not considered part of the banking system?
John Rubino March 21, 2010 at 7:48 pm: Bruce,

Here’s James Turk’s response:

John

I don’t understand either why deposit currency created by the Fed is not part of M1, which is the point of my article. Because it is not included, M1 is understated.

Regards

James
khl March 21, 2010 at 8:30 pm: The money is starting to find its way out. I was at a recent mortgage bank conference. There were half a dozen banks beginning to make jumbos again. In addition, the Fed is lying about the money supply. Demand deposit accounts with sweep features are considered time deposits, rather than demand deposits. Even though the money can be withdrawn at any time. This artificially decreases M1 and therefore the money supply.
Gargamel March 22, 2010 at 1:32 pm: I am withdrawing my 401K and spending it while I still have the opportunity. Every where you look there is another ponzi scheme. 401k, social security, now health care. This is so obviously going wrong it is impossible to ignore. Hope for the best and prepare for the worst.
CompassionateFascist March 24, 2010 at 7:42 pm: Instructive video, interesting posts. But people need to start thinking outside the (economic) box. There’s a wild card in this deck: the Iran War. Which – given the values and interests of a certain powerful group entitlement which controls the financing and media traction of most of our politicians – will begin with a US or US/Israel attack on that nation around about late 2011-early 2012. With the Persian Gulf, maybe most of the Middle East a war zone, oil goes to $200+/barrel, angry China and Japan shed dollars, dollar gets run then turns into wallpaper as US pyramid scheme economy collapses. Amid chaos, militia activity, state secession efforts escalate. Mid-2012: Obama regime declares martial law, attempts gun confiscation. Civil War II begins. Stay tuned, amd start stockpiling.
Jack March 26, 2010 at 11:46 am: The more I see and read and learn, truth gone, republic gone, spending out of control check, taxing buisness out of business phase 1 complete. Time to hunker down. I now start spending to defend my family ASAP. Good Luck, I am gonna lay low and prepare. Hoping and working for the best but prepareing for what I know is coming. USA 1776-2010 RIP