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John Williams: Hyperinflation by 2014

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John Williams of Shadowstats.com gave an interview on usawatchdog regarding his opinion that there will be hyperinflation by 2014.

  • Public awareness to grow in the months.
  • Its a certainty that we will experience hyperinflation.
  • You will see a sell off in dollar followed by spike in oil prices.
  • The Fed’s primary concern is to keep the banking system afloat.
  • $12 trillion in liquid dollar assets held outside the U.S.  Williams says it is only a matter of time before all the Fed money printing will “trigger a sell-off”.
  • Buy gold and silver to protect your purchasing power.
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Gold In Iran Up 23% In Last Week

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Iran’s currency the rial  lost over 40% of it value against the dollar last week. There are already stores of hyperinflation emerging from the country that has been majorly hit by sanctions.

“Better buy now,” advised the rice merchant in Tehran. The retired factory guard took him up on the advice, buying 900 pounds of the stuff to feed his extended family for the next 12 months.

“As I was gathering my money,” the retiree told The New York Times, he got a phone call. “When he hung up, he told me prices had just gone up by 10%. Of course, I paid. God knows how much it will cost tomorrow.”

The 3 stages of inflation as described by Austrian economists are:

In the first stage, people still hang onto their money, expecting prices to come down. In the second stage, people part with their money to stock up on goods before prices rise again. In the final hyperinflationary stage, people buy anything they can get their hands on — even if they don’t need it — because the goods are more valuable than the currency.

But as the currency continued to collapse despite the best efforts of the Iranian Central Bank, the people are turning to gold.

Just over a week ago were the first to shed light on the reality of hyperinflation on the ground in Iran – and subtley suggested the whole thing could be watched in real-time. Soon after, a mysterious cabal of 16 currency manipulators was arrested and the Rial jumped dramatically higher (according to official sources) – as if by magic there was no problem at all. This all sounded a little too good to be true (just like unemployment rates in slightly more controlled economies). Sure enough, by the power of social media, we now know it was too good to be true.

As open-market foreign exchange rates – not just Rial-to-Dollar – have disappeared from the major currency exchange sites, as trade has reportedly slowed to near suspension after the Central Bank ‘imposed’ a rate of 28,500 Rials to the USD this weekend.

Critically, though, via EAWorldView, while the ‘real’ rate for the Iranian Real is effectively blacked out, gold prices continue to soar. ‘Old gold coin’ is now selling for 16 million Rials, up 23% from the pre-suspension 13 million Rial levels – even as the

Central Bank tries to suppress reality (especially to the rest of the world’s gaze) as hyperinflation continues – though less transparently.

Source: Forbes, ZeroHedge

Hyperinflations of The Past

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The chart below is originally from a ZeroHedge article written about the 56 documented instances of hyperinflation in the modern, and not so modern, world and zero HyperDeflation instances. Note the length of time taken for prices to double.

John Williams, ShadowStats: Hyperinflation is Coming

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Interview with John Williams from ShadowStats giving his opinion that Hyperinflation is coming by 2014. His gives a good sumation of where the US is right now and where he sees it going.

Economic Collapse For Dummies

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Highly recommend viewing.

World’s Debt At $1.5 Quadrillion

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Egon von Greyerz interviewed by King World News does a quick calculation but you get the picture. With debts somewhere in the region of $1.5 quadrillion is quite clear politicians are only interested in nursing the situation on until finally it all comes down around them.

 “Spanish rates have broken back above the 7% level once again, but in reality we know that many European countries will never be able to repay these debts.  You now have a total worldwide debt of around $150 trillion.  If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion. If you add to that the outstanding derivatives, which are around one quadrillion dollars, and there are no reserves for them.  These are issued without any real asset backing them.  If you combine the two figures you are at a staggering one and a half quadrillion dollars.  That’s against world GDP which is around $50 trillion.

 So you are talking here about a leverage of 30 times global GDP….”

“How can anyone in the world invest in any government bond when they know that it can never be repaid?  The world is simply drowning in debt.  This is why it is guaranteed that governments will print money.

 So the money printing will come and the hyperinflation will come because without that we have no banking system and no financial system left.  You are talking about hundreds of trillions of dollars that potentially need to be printed.  The effect of this on the global economy will be disastrous.

 Prices of hard assets will go into the stratosphere, and this, of course, includes gold and silver.  Last time we talked about my target on gold of $3,500 to $5,000 over the next 12 to 18 months, and then over $10,000 in 3 years.  But with all of the money creation we are talking about, the world will experience massive inflation.  We already know that gold went from 100 marks to 100 trillion marks, from 1919 to 1923, during the Weimar Republic.

 With world debt at much greater levels today vs that time period, the gold price will eventually have lots and lots of zeros after it.  But people who are still holding paper money may very well find it is worthless.  At least gold will protect your purchasing power.

 What has to be said today to holders of government debt, which yields nothing, is when you have governments like the US, Spanish, Greek, and now even the German government with all of their ballooning commitments, there is no government that will ever be able to repay these debts.

 This is why it’s so important for KWN readers to understand the consequences and be able to protect themselves.  Readers and listeners must understand the risks in the system here and take precautions.  We may be in the summer doldrums, but the next move will come.  It’s not far away at this point.”

Still think everything is gonna be ok?

Source: KingWorldNews

Devalue The Euro To Save It

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A few weeks ago ZeroHedge ran an article outlining the possibilities for the euro after the EU summit. It reached the conclusion that devaluation would be the end point. Joshua Brown reaches a similar conclusion that the only way to save the euro is devalue it, but how do you convince the Germans? The method to do this is the ESM borrowing from the ECB to circumvent the existing rules and limitations of the ECB.

Is it time for Germany to accept the fact that the only way out of economic hell is an export-led recovery, brought about by “dollar parity,” (a one for one exchange rate between dollar and euro) so that peripheral economies can become competitive again?

Is this the part where Germany gets over the fear of 3 to 4% inflation (as opposed to the current 2%) because a bit of inflation is a much better long-term risk than a break-up of the common currency?

Does the ECB need to just suck it up and start printing already? Do they need to blow up (devalue) the euro in order to save it?

Today’s cover story in Barron’s makes a highly compelling case that not only is this the best course of action, it may be the only one left once the austerity mandates and lending facilities have run their course.  The basic idea is that the newly formed and almost funded ESM (Euro Stability Mechanism), which will begin with $500 billion – $100 billion of which is already going to Spain – could borrow from the ECB on an unlimited basis.  This would be the closest thing the Euros have had to what the Fed/Treasury have done here in the states.  It would drive the euro currency value down, allowing Spain and Italy to become more competitive on the global stage for manufacturing, exporting etc, even as spending reforms are adopted.  Germany would bear the brunt of the minor inflation this would induce, but it would benefit from the drastic uptick in economic activity and the cessation of Permanent Crisis Mode that’s frozen so much of the continent (not to mention the threat to the rest of the world that Germany likes to sell to).

Let the currency wars continue. Of course devaluing currencies was exactly what happened during the 1920s and 30s with disasterous consequences globally and it looks as if we are heading down that same path.

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