Dec 08

Flashback:

- Inflation, Hyperinflation and Real Estate (Price Collaps):

And when there is hyperinflation, real estate prices of all sorts—residential, commercial, industrial—go into a free-fall: Their prices crash and burn, completely and utterly.

The Great Hernán P.’s example is exactly what any sensible investor should do, in an inflationary or hyperinflationary period: Preserve capital at all costs, via commodities (… like gold and silver), while keeping a sharp eye out for real estate opportunities. As inflation rises and real estate prices collapse, be prepared to trade the commodities you own for real estate assets selling at depressed prices.

- Argentina’s Economic Collapse (Documentary)


Click the play button below to listen to Chris’ interview with Mike Maloney (43m:35s)

- Mike Maloney: The Coming Wealth Transfer (Peak Prosperity, Dec 6, 2014):

There’s nowhere to hide (except in hard assets)

History may not repeat but it sure does rhyme. Mike Maloney has studied monetary and financial breakdowns throughout history and concludes that there’s nothing new or different happening this time, except its global and far more massive than any other time in history.

Worse, there are echoes of 1911 where a series of diplomatic blunders and national pride and intransigence combined to create the still largely inexplicable start to WW I.

Chris Martenson: Well it’s global this time, right? This is — there’s nowhere to hide. (…)  What has happened when we’ve tried to print our way to prosperity before? What has happen? Why has it happened and what have been the consequences always been?

Mike Maloney: Whenever you try to print your way to prosperity it transfers well from the masses to the few. The few being the people running the game and then also the hucksters that are very nimble, the con artists and so on. You see these people get rich during the Weimar Hyperinflation. There were quite a few of these fancy salespeople that got rich; they didn’t stay rich once things stabilized again.

But it creates such a topsy turvy world that the normal person that does not know how to operate under these weird economic conditions cannot possibly keep up with things and wealth is transferred away from those people to the people that are very good at observing what’s going on that second and adjusting to it. But the one thing that I see as a constant throughout history is that gold and silver eventually do an accounting of all this — the financial — you know financial finessing that the governments are doing.

And when it does that it — there is a transfer of wealth to the people that own gold and silver. And so — it’s very rare moments in history. This does not happen often. But it’s a great opportunity and I’ve just — you know if you look at gold right now the public’s opinion of gold is quite low because it’s been going down for three years. Continue reading »

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Dec 06

- Jim Grant Sums It All Up In 2 Stunning Paragraphs (ZeroHedge, Dec 6, 2014):

What will futurity make of the [so-called] Ph.D. standard [that runs our world]?

Likely it will be even more baffled than we are. Imagine trying to explain the present-day arrangements to your 20-something grandchild a couple of decades hence – after the crash of, say, 2016, that wiped out the youngster’s inheritance and provoked a cenral bank response so heavy-handed as to shatter the confidence even of Wall Street in the Federal reserve’s methods…

I expect you’ll wind up saying something like this: Continue reading »

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Nov 07

VoodooEconomists-futurama

- The Magic Of CPI: Watch How Economists Transform A 400% Price Increase Into A 7.1% Decline (ZeroHedge, Nov 6, 2014):

Confused how your cost of living increase is always orders of magnitude above the “inflation” reported by the BLS’ Consumer Price Index? Then prepare for your daily dose of Keynesian epiphany, with this step by step guide from the BLS of how to use the Hedonic Quality Adjustment to turn a 400% price increase into a 7.1% decline.

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Oct 22

- How Japanese Hyperinflation Starts (In 1 Chart) (ZeroHedge, Oct 21, 2014):

The Japanese Yen’s real effective exchange rate (REER) has collapsed to the weakest since 1982, according to Mitsubishi UFJ Morgan Stanley Securities. Simply put, REER is a trade-weighted measure of Yen strength (or weakness) against, in this case, 59 trading partners; and as the nation posts an unprecedented 27th straight month of trade deficits [43rd straight month of Seasonally-adjusted trade deficits], Bloomberg reports MUFJ indicates “a structural shift” has taken place.

20141020_hyperinflation-japan

As a reminder, the Real Effective Exchange Rate (REER) is: Continue reading »

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Jul 21

In 1920 gold fell, then it soared!


weimar-hyperinflation

- Gold/Silver Prices Under the Weimar Republic’s Inflation (Daily Paul, Dec 21, 2010):

Stole this from another article/blogger.

Quote:

“On a closing note, because I forgot last week, I would like to share with everyone just how the price of silver and gold escalated in German Mark terms, through the Weimar experience:

Hyperinflation: Wiemar, Germany January 1919 to November 1923
[Expressed in German Marks needed to by an oz. of ag. or au.]”

Jan. 1919
Silver 12
Gold 170

May. 1919
Silver 17
Gold 267

Sept. 1919
Silver 31
Gold 499

Jan. 1920
Silver 84
Gold 1,340

May 1920
Silver 60
Gold 966

Sept. 1921
Silver 80
Gold 2,175

Jan. 1922
Silver 249
Gold 3,976

May. 1922
Silver 375
Gold 6,012

Sept. 1922
Silver 1899
Gold 30,381 Continue reading »

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Jul 18

- If This Keeps Up, They Will Have To Start Putting Armed Guards On Food Trucks (Economic Collapse, July 16, 2014):

The basic necessities in life just keep getting more expensive.  On Tuesday, Hershey announced that the price of all of their chocolate bars is going to go up by about 8 percent.  That is particularly distressing to me, because I am known to love chocolate.  But if it was just chocolate that was becoming significantly more expensive perhaps that would be okay.  Last month, it was coffee.  J.M. Smucker, one of the largest coffee producers in the United States, announced that it planned to raise coffee prices by about 9 percent.  And Starbucks has announced a bunch of price increases across the board on their coffee products.  Of course we could all survive without chocolate and coffee, but as you will see below just about every food category is becoming more expensive.  If this keeps up, could we eventually see armed guards in grocery stores and on food trucks? Continue reading »

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May 23

Inflation-Ahead

- No inflation Friday: 42.4% increase in the price of being… poor? (Sovereign Man, May 23, 2014):

One of the most intellectually disingenuous statements made by western policymakers is that inflation is tame… nonexistent.

For example, the minutes released this week from the most recent Federal Reserve policy meeting said that the Fed saw NO inflation risk in ‘fueling job growth’ [i.e. printing money].

So by their own admission, the Fed thinks they can conjure hundreds of billions of dollars out of thin air without any consequences whatsoever. Zero risk.

Every time I hear something like this it just makes my skin crawl… and I always think, “go get on a plane.”

Inflation is out there in the rest of the world. To deny its existence is massively arrogant, insensitive, and just plain wrong. Continue reading »

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Jan 14

One Hundred Trillion Dollars

- We Will Be Told Hyperinflation is Necessary, Proper, Patriotic, and Ethical (Ludwig von Mises Institute, Jan 13, 2014):

Hyperinflation leads to the complete breakdown in the demand for a currency, which means simply that no one wishes to hold it. Everyone wants to get rid of that kind of money as fast as possible. Prices, denominated in the hyper-inflated currency, suddenly and dramatically go through the roof. The most famous examples, although there are many others, are Germany in the early 1920s and Zimbabwe just a few years ago. German Reichsmarks and Zim dollars were printed in million and even trillion unit denominations.

Continue reading »

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Oct 31

- Don’t Worry – The Government Says That The Inflation You See Is Just Your Imagination (Economic Collapse, Oct 29, 2013):

If you believe that there is high inflation in the United States, you are just imagining things.  That is the message that the U.S. government and the Federal Reserve would have us to believe.  You might have noticed that the government announced on Wednesday that the cost of living increase for Social Security beneficiaries will only be 1.5 percent next year.  This is one of the smallest cost of living increases that we have ever seen.  The federal government is able to get away with this because the official numbers say that there is hardly any inflation in the U.S. right now.  Of course anyone that shops for groceries or that pays bills regularly knows what a load of nonsense the official inflation rate is.  The U.S. government has changed the way that inflation is calculated numerous times since 1978, and each time it has been changed the goal has been to make inflation appear to be even lower.  According to John Williams of shadowstats.com, if the inflation rate was still calculated the same way that it was back when Jimmy Carter was president, the official rate of inflation would be somewhere between 8 and 10 percent today.  But if the mainstream news actually reported such a number, everyone would be screaming and yelling about getting inflation under control.  Instead, the super low number that gets put out to the public makes it look like the Federal Reserve has plenty of room to do even more reckless money printing.  It is a giant scam, but most Americans are falling for it.

Meanwhile, the prices of the things that most Americans buy on a regular basis just keep going up.  The following are just a few examples of price inflation that we have seen lately: Continue reading »

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Sep 23

- Quantitative Easing Worked For The Weimar Republic For A Little While Too (Economic Collapse, Sep 22, 2013):

There is a reason why every fiat currency in the history of the world has eventually failed.  At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money.  Sometimes, the motivation for doing this is good.  When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had “more money”.  Today, the Federal Reserve finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago.  Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt.  Unfortunately, the Federal Reserve has decided to adopt the same solution that the Weimar Republic chose.  The Federal Reserve is recklessly printing money out of thin air, and in the short-term some positive things have come out of it.  But quantitative easing worked for the Weimar Republic for a little while too.  At first, more money caused economic activity to increase and unemployment was low.  But all of that money printing destroyed faith in German currency and in the German financial system and ultimately Germany experienced an economic meltdown that the world is still talking about today.  This is the path that the Federal Reserve is taking America down, but most Americans have absolutely no idea what is happening.

It is really easy to start printing money, but it is incredibly hard to stop.  Like any addict, the Fed is promising that they can quit at any time, but this month they refused to even start tapering their money printing a little bit.  The behavior of the Fed is so shameful that even CNBC is comparing it to a drug addict at this point: Continue reading »

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May 26


YouTube Added: 24.05.2013

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May 23

- Hyperinflation – 10 Worst Cases (ToTheTick, May 22, 2013):

I have a neat little app on my smartphone that I like to look at when I’m feeling bored. It won’t change anything in my life, but it makes me think as I see the numbers clocking up, and then suddenly stopping for a few seconds. It’s the app that tells me the how much the National Debt of each country stands at in real-time. As I sit down at my computer screen the USA National Debt amounts to $17 041 241 xxx xxx. Forgive the x’s…they’re not kisses…I tried to get the last six digits, but, there’s no point, they’re moving too fast! Speedie Gonzalez has got into that app! It works out to $54 087 per person. That’s the same value as 3 408 248 816 XXX Big Mac Meals.

Inflation is hot property today, hyperinflation is even hotter! We think we are modern, contemporary, smart and ready to deal with anything. We’ve got that seen-it-all-before, been-there-done-it attitude. But, we are not a patch on what some countries have been through in the worst cases of hyperinflation in history. Here’s the top 10 list of worst cases in history. We’ll start with the worst first…let’s think positive! Continue reading »

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May 22

- Argentine Inflation: It’s Tough When All You Get Is Lies (Testosterone Pit, May 21, 2013):

The issue of inflation is complex everywhere. Official rates are disputed. People can’t reconcile them with what they see at the store. There are different formulas and data sets, resulting in different rates, and everyone picks and chooses what suits their needs. But nowhere is the issue as “complex,” infested with lies, and shrouded in obscurity as in Argentina.

Continue reading »

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May 15

- Argentines Are Hoarding 1 Of Every 15 Cash Dollars In The World (ZeroHedge, May 15, 2013):

With the shadow (or blue) market for Argentina Pesos already devalued by an incredible 50%, it is little surprise that the population is bidding for any store of value. Demand for luxury cars is soaring (BMW sales up 30% in the last 20 months) and Bitcoin activity is often discussed as the population transfer increasingly worthless Pesos into a fungible “currency” or domestic CPI protection; but it is USD that are the most-cherished item (despite a ban on buying USD) as hyperinflation hedges. But as Bloomberg Businessweek reports, a lot of US Dollar bills are tucked away somewhere in Argentina (in stacks of $100 bills since the number in circulation has risen from 58% of the total to 62% since 2008). One table is a 2012 Fed paper on demand abroad for US currency shows net inflows to Russia and Argentina has increased by 500% since 2006 (compared to US demand up around 10%). In fact, demand for large dollar transfers to Argentina since 2006 has outstripped demand for dollar cash overall in the world. It is safe to surmise from the data (that is relatively well guarded by the government) that over $50bn is being hoarded in Argentina (or well over one in every fifteen dollars). It is little wonder that the government is furiously digging at the country’s undeclared (stashed under the mattress) wealth. Continue reading »

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Apr 05

- Kyle Bass: “Japan Will Implode Under Weight Of Their Debt” (ZeroHedge, April 4, 2013):

As the fast-money flabber-mouths stare admiringly at the rise in nominal prices of Japanese (and the rest of the world ex-China) stock prices amid soaring sales of wheelbarrows following Kuroda’s ‘shock-and-awe’ last night, it is Kyle Bass who brings these surrealists back to earth with some cold-hard-facting. Out of the gate Bass explains the massive significance of what the Japanese are embarking on, “they are essentially doubling the monetary base by the end of 2104.”

It is a “Giant Experiment,” he warns, but when you are backed into a corner and your debts are north of 20 times your government tax revenue, “you’re already insolvent.” Simply put, Bass says they have to do something and they have to something big because they are “about to implode under the weight of their debt.” For a sense of the scale of the BoJ’s ‘experimentation’, Bass sums it up perfectly (and concerningly), “the BoJ is monetizing at a rate around 75% of the Fed on an economy that is one-third the size of the US!”

What they are trying to do is devalue the currency to attempt to become more competitive while holding their rates market flat – the economic zealots running the world’s central banks believe they can live in that Nirvana – and Bass believes that is not the case, as they will lose control of rates, since leaving the zone of insolvency is impossible now. His advice, “if you’re Japanese, spend! or take it out of your country. If you’re not, borrow in JPY and invest in productive assets.” Do not be long JPY or Japanese assets as he concludes with the reality of Japan’s “hollowed out” manufacturing industry and why USDJPY is less important that KRWJPY.

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Apr 05


YouTube

Description:

In this interview with investor Kyle Bass from Day 1 at AmeriCatalyst 6th of November 2011, in Austin, Texas, Bass discloses his discussion about the economic crisis with a senior from the Obama Administration. According to Kyle Bass the basic solution coming from this senior was: “We’re Just Going to Kill the Dollar”.

Killing the US Dollar in this context means keep printing more US Dollars in order to weaken the dollar to make exports cheaper through inflation. Massive inflation might be the answer for the Obama Administration, but in the process your purchasing power will be destroyed. And because the US Dollar is the world’s reserve currency the eventual impact of inflation would have an impact that would reach far beyond those holding US Dollar assets.

Thousands of paper currencies has come and gone over the years and there is no question if the dollar, or the euro for that sake, will have its value go to zero; the question is when?

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Mar 31

- How Cyprus Exposed The Fundamental Flaw Of Fractional Reserve Banking (ZeroHedge, March 31, 2013):

In the past week much has been written about the emerging distinction between the Cypriot Euro and the currency of the Eurozone proper, even though the two are (or were) identical. The argument goes that all €’s are equal, but those that are found elsewhere than on the doomed island in the eastern Mediterranean are more equal than the Cypriot euros, or something along those lines. This of course, while superficially right, is woefully inaccurate as it misses the core of the problem, which is a distinction between electronic currency and hard, tangible banknotes. Which is why the capital controls imposed in Cyprus do little to limit the distribution and dissemination of electronic payments within the confines of the island (when it comes to payments leaving the island to other jurisdictions it is a different matter entirely), and are focused exclusively at limiting the procurement and allowance of paper banknotes in the hands of Cypriots (hence the limits on ATM and bank branch withdrawals, as well as the hard limit on currency exiting the island).

Continue reading »

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Mar 21

- Its Time to Collapse the System (Gordon Gekko’s Blog, March 20, 2013)

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Feb 28

- Trust me, this time is different… (Sovereign Man, Feb 26, 2013):

By 1789, a lot of French people were starving. Their economy had long since deteriorated into a weak, pitiful shell. Decades of unsustainable spending had left the French treasury depleted. The currency was being rapidly debased. Food was scarce, and expensive.

Perhaps most famously, though, the French monarchy was dangerously out of touch with reality, historically enshrined with the quip, “Let them eat cake.”

The Bourbon monarchy paid the price for it, eventually losing their heads in a 1793 execution.  But it took the French economy decades to finally recover.

Along the way, the government tried an experiment: issuing a form of paper money. It didn’t matter to the French politicians that every previous experiment with paper money in history had been an absolute disaster.

As French Assemblyman M. Matrineau put it in 1790, “Paper money under a despotism is dangerous. It favors corruption. But in a nation constitutionally governed, which itself takes care in the emission of its notes [and] determines their number and use, that danger no longer exists.”

Translation: This time is different. We’re different. We’re smarter. We won’t suffer the same fate. TRUST US.

Continue reading »

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Feb 05

- Argentina Freezes Supermarket Prices To Halt Soaring Inflation; Chaos To Follow (ZeroHedge, Feb 5, 2013):

Up until now, Argentina’s descent into a hyperinflationary basket case, with a crashing currency and loss of outside funding was relatively moderate and controlled. All this is about to change. Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported. As AP reports, “The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1.” Continue reading »

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