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Category Archives: Hyperinflation

Monetary Madness Part II—Perpetual Bonds


The Cure of Economic Calamity: Looney Tune Economics [courtesy Google Images]

The Cure for Economic Calamity:
Looney Tune Economics
[courtesy Google Images]

As seen in the previous article, the total value of negative-interest rate bonds has jumped from nothing to $13 trillion in just two years.

Although governments issuing negative interest rates bonds don’t have to pay interest on those bonds, they still have to repay most of the principal.

What a bummer. Wouldn’t it be great if someone invented a government bond that not only didn’t have to pay interest (as with negative interest rate bonds) but also didn’t even have to repay the principal?

Well, folks, they appear to have done just that. They’re called “perpetual bonds”. They’re hot off the press, and the concept seems straight out of Looney Tunes.

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Last month, Gold-Eagle.com published an article entitled “Gold and the Perpetual Bonds Era”. The subject was “perpetual bonds”–a concept I’d heard of for the first time only about a week earlier.

Judging from what I’d already heard and the Gold-Eagle article, it’s apparent that “perpetual bonds” are—like “consumerism,” debt-based currency, sub-prime loans, fractional reserve banking, deficit financing, negative interest rates, market manipulation, and “helicopter money”—just another manifestation of the madness that’s inherent in the concept of fiat, debt-based currency—and of government’s desperation to do something, try anything, that might work to avoid or postpone a coming economic collapse.

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“Helicopter Money”


Helicopter Money [courtesy Google Images]

Helicopter Money
[courtesy Google Images]

Control of the economy is based on two sets of powers:

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1) The Federal Reserve wields the monetary powers which include control over interest rate and over the supply of currency.

2) The U.S. government wields the fiscal powers which include raising or lowering taxes, raising or lowering borrowing, and increasing or decreasing government spending on benefits, subsidies and wars.

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For the past year, we’ve heard the Federal Reserve say repeatedly that:

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1) The Federal Reserve has exhausted its monetary powers and is no longer capable of using previous, “conventional” monetary strategies like QE (Quantitative Easing; printing and injecting more currency into the economy) and ZIRP (near-Zero Interest Rate Policy) to stimulate the economy back to a “recovery”.

I believe the Federal Reserve’s claims that it’s currently helpless to do much more to “stimulate” the economy with monetary policy are true.

If the Fed’s not fibbing, then only the U.S. government remains to engineer an economic “recovery” by means of its fiscal policy. However,

2) The U.S. government is unwilling or unable use its fiscal powers to raise taxes and/or borrow more currency to provide enough additional “stimulation” to cause an economic recovery.

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Socialism, Gun Control, & Hyperinflation = Economic Collapse and National Chaos


Venezuela should be a lesson to all of America’s leftists, collectivists, and gun-control nuts.

video    00:11:54

 

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Armed Debt Collectors = Government Desperation


Government Debt Collectors [courtesy Google Images]

Student Loan Debt Collectors
[courtesy Google Images]

In last week’s article, Placebo Economics, I compared the Federal Reserve’s primary strategies (Quantitative Easing and Zero Interest Rate Policy) for dealing with the recession to medical “placebos”.  I.e., they had little or no fundamental effect in themselves, but might still be useful so long as the public believed in them.

I wrote in part:

 

“ZIRP [Zero Interest Rate Policy] and QE [Quantitative Easing] have failed in Japan, the EU and US because the [people] no longer believe in the efficacy of those economic “placebos” or the wisdom of our “witch doctors” in the Federal Reserve and/or federal government.

“Once we stop believing in the ‘witch doctors’ at the Federal Reserve, how will the Fed ever restore our belief and confidence in their economic placebos?  Once we know that our witch doctors have nothing real (like gold- or silver-based money) to offer us and can only provide intrinsically-worthless placebos (fiat dollars; promises to pay rather than actual payments), the economy will not be healed by mumbo-jumbo and our economic witch doctors may be run out of town on rails.

“If the previous conjecture is roughly correct, the way back to prosperity will not be achieved by means of more placebos.  It will be achieved only by means of hard work and the “real medicine” of physical gold and silver.”

I was mistaken.  There is another possible “way” back to prosperity besides by means of hard work, gold and silver.  I don’t think this alternative “way” will work.  But the temptation to try it will be almost irresistible.  I have little doubt that that “way” will be tried by the Federal Reserve and/or the federal government.

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A Hard Choice: Inflation Kills the Dollar; Deflation Kills the Government


Inflation or Deflation? [courtesy Google Images]

Inflation or Deflation?
[courtesy Google Images]

“timmy” is one of this blog’s regular readers.  He recently posted the following comment on one of my previous blog entries:

 

“I’ve been hearing about the demise of the dollar for twenty years, as it continues to hit cyclical highs, with no end in immediate sight…. long term, sure, it must die. But not in the next year or three. There is no viable alternative– yet. Is gold saying inflation, as it continues multi-year declines…?? Wake up folks.”

 

I agree that the fiat dollar and the US economy have been amazingly resilient.  They’ve both defied fundamentals and reality for at least forty years.   In the 1990s, I was convinced that the whole system would collapse before A.D. 2000.  I was wrong.  Goes to show what I know.

Today, I look at the economic and monetary systems’ resilience with a sense of awe and resignation and ask, “Who is like unto the beast?”

But, beast or no beast, I remain convinced that the dollar’s goin’ down.  My prediction’s timing may be unreliable, but my notion of fundamentals still strike me as valid

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Deflation, Hyperinflation & Vanishing Cheerleaders


Government Cheerleaders: Lie to the left! Lie to the right! Stand up, Sit down! Lie, Lie, Lie! [courtesy Google Images]

Government Cheerleaders:
Lie to the left!
Lie to the right!
Stand up, Sit down!
Lie, Lie, Lie!
[courtesy Google Images]

For years, the “alternative media” (of which I consider myself a card-carrying member; I’ve even got the decoder ring) has warned of an approaching, dramatic, even catastrophic, economic decline.  In general, I believe our warnings have been technically correct but premature.  Despite our warnings, the “system” has demonstrated a power, momentum and tenacity to not simply survive, but to defy reality.  The “system’s” survivability has been impressive—even chilling.

Who is like unto the beast, hmm?

While the alternative-media posted its premature warnings, the Main-Stream Media (MSM) have persistently cheered the government, Federal Reserve, and monetary and economic systems.  According to the MSM cheerleaders, the “recovery” has arrived—and even if it hasn’t, it soon will—and besides, everything is under control so, “don’ worry, be hoppy.”

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Hyperinflation—Calamity or Opportunity?


[courtesy Google Images]

[courtesy Google Images]

Jim Rickards, editor of Strategic Intelligence, recently published an article entitled Buffet Takes a Page From the ‘Inflation King’s’ Playbook”. 

In that article Rickards compares the apparent investing strategy of today’s Warren Buffet—one of the two or three most successful investors of our time—to that of Hugo Stinnes—the wealthiest investor and industrialist in Germany during the 1920s.

According to Rickards,

 

“Both Stinnes and Buffet were ultra-wealthy investors whose opinions were eagerly sought on important political matters, who exercised powerful behind the-scenes influence, and who seemed to make all the right moves when it came to playing markets.”

 

Stinnes achieved much of his spectacular wealth by accurately anticipating the Weimar Republic’s hyperinflation of 1922-1923 and investing accordingly.  Based on his seemingly miraculous success, Stinnes was dubbed Germany’s “Inflation King”.

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Posted by on May 25, 2015 in Gold & Silver Coin, Hyperinflation

 

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