Tag Archives: Monetary inflation

In The End The $ Goes To Zero And The US Defaults, by Egon von Greyerz

That’s where this train is headed. From Egon von Greyerz at goldswitzerland.com:

With US and Global debt exploding prior to both assets and debt imploding, let us look at the disastrous consequences for the US and the world.

Debt explosion leading to the currency becoming worthless has happened in history for as long as there has been some form of money whether we talk about 3rd century Rome, 18th century France or 20th century Weimar Republic and many many more.

So here we are again, another monetary era and another guaranteed collapse as von Mises said:

“There is no means of avoiding the final collapse
of a boom brought about by credit expansion”

This disastrous borrowed prosperity, with ZERO ability to repay the surging debt,  will lead to one of the three consequences below:




The most likely outcome is number 3 in my view. The dollar will go to ZERO and the US will default. The same will happen to most countries.

I outline the consequences for the world at the end of his article.

Many people say that the US can never default. That is of course absolute nonsense.

If a country prints worthless debt that nobody will buy in a currency that no one wants to hold, the country has definitely defaulted whatever spin they put on it.

In the next few years, not just US but all sovereign debt will only have one buyer which is the country that issues the debt. And every time a sovereign state buys its own debt, it has to issue more worthless debt that nobody will touch with a barge pole.

Printing more money to pay for previous sins has never worked and never will.

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The Real Solution to the Coming Economic Crisis, by Mark Thornton

We may have to wait for Laissez-Faire until after economic collapse, but after such a collapse, what else can you try? From Mark Thornton at mises.org:

My previous article demonstrated how the free market solves a boom-bust crisis and is the only solution, its effectiveness depending upon the magnitude of the crisis and, more importantly, how much the government intervenes in response. The bigger the problem created by the Fed, the greater the crisis and the more government intervenes, and the slower the economy recovers.

Here we consider how the market works most effectively, with the efficiency of the process maximized by policy restraint. Like most illnesses, recessions can be “cured” with rest, hydration, nutrition, and fresh air, rather than major surgeries and dangerous medications.

The solution begins with getting rid of the initial monetary causes and allowing market participants, especially entrepreneurs, to adjust to the new conditions. Entrepreneurs will reallocate resources according to current consumer preferences and away from the previous policy allocations. There is no easy, straightforward market playbook for an individual entrepreneur to consult. Should a pizza restaurant stay open one hour later or use in-house delivery drivers? The owner could figure it out, but policy makers would have no idea of where to even begin to answer such questions.

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Doug Casey on How Inflation Destroys Civilization… and What You Can Do About It

Inflation is a hidden tax, and as such, it’s a lie by the currency’s issuer. Since monetary value is at the core of a productive economy, and money of no set value robs producers, inflation does indeed destroy civilization. From Doug Casey at internationalman.com:

International Man: According to a recent Newsweek poll, 63% of Americans “strongly support” new government stimulus checks to combat inflation.

In other words, let’s fight the effects of money printing by doing even more money printing.

What’s your take on this?

Doug Casey: The nature of the US has been transformed. Americans have come to see the government as a cornucopia that can kiss everything and make it better—especially since the bailouts of the Biden Administration.

That attitude has become a cultural value and very hard to change. “Panem et circenses,” as the Romans said, has become necessary for both the government and its subjects. Remember that the prime directive of any entity—whether it’s an amoeba, an individual, a corporation, or a government—is to survive. The present government can’t survive without supporting more than half the population, which has become parasites. But the government itself is the biggest parasite of all. Can parasites live on each other forever? No. To use an overly fashionable word, it’s “unsustainable.”

Where will the US government get the money it needs to survive? It can no longer even remotely survive on its tax receipts; deficits of one to two trillion per year lie ahead for the indefinite future. It can no longer borrow adequate amounts from either American citizens or foreign governments—just rolling over the $32 trillion of existing debt, forget about trillions of new debt, at anything near current interest rates is hard enough. So there’s no alternative left for them but to print more money. And print they will (electronically, of course). The thousands of “economists” at the Federal Reserve and the Treasury Department have no more of a grip on sound economics than government economists in Argentina or Zimbabwe.

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The Sordid Politics of Inflation, by MN Gordon

More even than an economic issue, inflation—debasement of the currency—is a moral issue. From MN Gordon at economicprism.com:

Some airlines, if you want six more inches between you and the seat in front, you pay more money but you don’t know it … these are junk fees, they’re unfair and they hit marginalized Americans the hardest, especially … people of color.”

– President Joe Biden, October 26, 2022

Fist Bump Agreements

President Joe Biden just crapped the bed.  Again!

The near octogenarian thought he’d struck a secret deal back in July.

You may have seen Biden’s fist bump with Saudi Crown Prince Mohammed bin Salman at the time.  The non-binding agreement called for increased oil production until at least December, after the midterm elections.

With additional Saudi Arabian oil, in combination with draining the Strategic Petroleum Reserve, now down 32 percent year-to-date, Biden planned to deliver cheap gasoline to American voters.

His calculation was that this gift would prevent a likely midterm catastrophe for the Democrat party.  What a slick political move, right?

Alas, Biden recently woke up – like a pig – rolling around in a mess of his making.

On October 5, the OPEC+ cartel announced it would cut oil production by two million barrels per day starting in November.  Then, this week, Saudi Arabia’s energy chief Prince Abdulaziz bin Salman provided the following warning:

“It is my profound duty to make clear to the world that losing (releasing) emergency stocks may be painful in the months to come.”

In this regard, American taxpayers – including you – will have to pay higher oil prices to fill both the Strategic Petroleum Reserve and their own gas tanks in the months ahead.  How’s that for presidential strategery?

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What’s happening to your money?, by Dr. Vernon Coleman

The currency is being debased even faster, and the government even more tyrannical, in Great Britain than the U.S. From Dr. Vernon Coleman at 2ndsmartestguyintheworld.substack.com:

  • Central banks (including the Bank of England, the European Central Bank, the Federal Reserve) all failed to spot that inflation was coming. Why in the name of everything fiscal do we give money to these incompetent, overpaid buffoons? And why does anyone take any notice of what they say? It wasn’t difficult to see that inflation was coming. (I warned that inflation was coming fast and hard two years ago. I told you it was going into double figures.) Similarly, it was easy to see (and again you could have read it on this website) that interest rates were going up. The days of absurdly low, artificial interest rates are over. They’ve served their purpose – and lined up millions of people for penury, bankruptcy and homelessness. (You’ll find more about inflation in my book Moneypower.)
  • The idiots in governments keep saying that energy prices will fall next year. But they’re either being very, very stupid or they are lying. There is no way that energy prices are going to fall. They may go up and down a bit but the trend will be upwards. The officially supported and protected global warming cultists will ensure that energy prices go higher by helping to prevent oil companies finding new supplies. This winter is going to be a doddle compared to next winter. If you agree with me it might be a good idea to make appropriate plans. Congratulate yourself if you have a working chimney.
  • In the UK, the crypto-fascist-communist Government is now telling us how to heat our homes. They’re banning gas boilers and log burners and they want us all to install heat pumps and cavity wall insulation. They can sod off. When they pay my heating bills they can decide how it’s heated.

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Thanks to the Fed, You’ll Work More This Year to Keep Last Year’s Standard of Living, by Ryan McMaken

Do you have that running-in-place feeling? Having trouble making that last pay check stretch to the next payday? You’re not alone. From Ryan McMaken at mises.org:

According to the establishment survey of employment, released last week by the Bureau of Labor Statistics, total employment increased, month over month, by 263,000 jobs. The job market stays strong,” reads one CNBC headline, and the new jobs print was hailed as a great achievement of the Biden administration by MSNBC pundit Steve Benen.

Yet the employment data is possibly the only data that looks good right now, and that’s not much comfort, since employment is a lagging indicator of the economy’s direction. In fact, if we look beyond the employment survey, what we find is an economy where real earnings are falling, savings are falling, and more people are taking on second jobs to make ends meet.

The first indicator of this is the fact that while total jobs have shown some relatively strong growth, the total number of employed persons has been nearly flat for months, and only last month (September 2022) did it finally return to precovid levels. In fact, the jobs recovery in employed persons took thirty-two months to return to the previous peak. The fabled “V-shaped recovery” promised by advocates of covid lockdowns never materialized. Had there been a V-shaped recovery, employed persons would have recovered to previous peaks by mid-2021. It ended up taking about eighteen months longer than that.

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Something Big Has Already Broken: Price Stability, by Wolf Richter

Price inflation is definitely a sign that something is broken. From Wolf Richter at wolfstreet.com:

The Fed will tighten “Until Something Breaks?” Wait a minute…

There is a lot of tongue-wagging on Wall Street and in the financial media to the effect that the Federal Reserve will tighten – meaning hike rates and shed assets – until something breaks.

But that’s kind of funny when you think about it. Because the biggest thing that the Federal Reserve is in charge of, the most crucial thing that underlies a healthy economy and a healthy labor market has already broken: price stability.

It broke into tiny little pieces. Instead of price stability, we have raging inflation. And now the Fed is trying to fix it.

But hedge fund gurus and bond kings and stock-fund apostles and other crybabies on Wall Street who don’t give a hoot about this raging consumer-price inflation because they’re rich and don’t mind having to pay a little extra for some stuff, but who’re losing their shirts because asset prices are skidding lower, and they do mind that, well, they’re on TV and on the internet and on Bloomberg and the Wall Street Journal bemoaning the consequences of the end of free money.

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The Bear-Market Rally in Stocks, Bonds, Mortgages Wiped Out: Why This Nails the Parallel to the Dotcom Bust, by Wolf Richter

This is a debt contraction, and when debt contracts, assets prices go down. From Wolf Richter at wolfstreet.com:

But this time, there’s over 8% inflation.

The Dow Jones Industrial Average on Friday closed about 300 points below its June 16 low, thereby having more than wiped out the bear-market rally gains. For the Dow, the bear-market rally started on June 17 and ended on August 16. During the two-month rally, the Dow had jumped 14%. By Friday at the close, it was again down 20% from its all-time high.

The S&P 500 Index, on Friday intraday, fell through its closing low of June 16 – the infamous 3,666 – and then bounced a little to close 27 points above the June 16 low, at 3,693. During the two-month bear-market rally through August 16, the index had surged 17%. By Friday, the index was down 23% from its all-time high.

The Nasdaq closed about 2% above its June low. During the two-month rally, it had soared by 23%. Many of my Imploded Stocks that are now trading for a few bucks, had shot up by 50% or more, and a bunch of them doubled, before re-imploding after mid-August.

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The European Central Bank’s Zimbabwean Model, by Declan Hayes

The ECB and EU are trying to inflate Europe’s troubles away. From Declan Hayes at strategic-culture.org:

As the Dutch farmers are showing, that is something worth opposing von der Leyen, Lagarde, Stoltenberg and Europe’s other Quislings and the perches they pontificate from.

Though the function of European, German, Japanese and Zimbabwean central banks is to enable the credibility and efficiency of the financial side of their respective economies so that the real side of their economies may achieve the nation’s broader macro economic goals, NATO’s central banks have obviously and disastrously abandoned those tasks for reasons this article makes apparent. Because Zimbabwe, like Germany’s Weimar Republic before it, has reached annual inflation rates of 90 sextillion per cent a year, Europe should not be emulating the financial and economic basket case of Harare.

Whatever about Zimbabwe, Germany has been famously down this road before and, in a total reversal of earlier post-war policies, seems determined to traverse it again. The European Central Bank, based in Frankfurt, is printing euros as quickly as their colleagues in Zimbabwe are printing Zimbabwean dollars, as the Confederates printed their Greybacks and as Weimar printed their famously worthless marks.

Although Weimar’s woes were many, two of the most pertinent were that the Kaiser borrowed immensely to fund his armies, whose victories were supposed to enable him to repay his nation’s debts, and that the Western allies bled defeated Germany’s resources dry, thus opening the way for Herr Hitler once Weimar fell. Europe’s central banks are following this very policy today. They are doling out billions to ease energy bills, to bribe farmers and, most notoriously, to feed the money laundering Ponzi scheme that is Zelensky’s Kiev junta. The money supply, at more than 15 trillion euros, is at record levels and real interest rates are in negative terrain, pauperizing pensioners but failing to kick start their fuel starved economies. Inflation,.Germany’s bane, is again on the march as too far much money is in search of far too few bags of fire wood; and English toilet paper has increased in price by 50% in the last few months, Albion is really in squeaky bum time.

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Inflation is turning hyper, by Alasdair Macleod

Governments have no solutions to their food and energy crises other than more debt. Look for Covid-style debt and monetary expansion to those crises, which will only exacerbate inflation. Look for economic contraction as banks curtail lending. From Alasdair Macleod at goldmoney.com:

Money supply took off during covid lockdowns. It is now about to take off again to pay everyone’s energy bills. But that is not all.

Demands for currency and credit to be conjured out of thin air to pay for everything will be coming thick and fast. Expectations that energy prices, including European electricity, have peaked are naïve. Putin has yet to put the winter and spring screws on Europe and the world fully. It will be surprising if global oil and natural gas prices in Europe are not significantly higher on a twelve-month view. And Europe has messed up its electricity supplies — that is where the energy costs will rise most.

Bankers are trying to reduce their loan exposure to rising interest rates, undermining GDP. Besides paying for everyone’s energy bills, rescuing troubled banks, collapsing tax revenues, and difficulties in selling government debt on rising yields, governments are expected to apply economic stimulus to support both their economies and financial markets.

Furthermore, this article points to evidence as to why the expansion of central bank credit has a far greater impact on prices than contracting bank credit. The replacement of commercial bank credit by central bank credit will have a far greater inflationary impact than the deflation from bank credit alone.

Attempts to rescue the American, European, and Japanese economies by replacing commercial bank credit with central bank credit will probably be the coup de grace for fiat.

We can begin to anticipate the path to the destruction of purchasing power for all fiat currencies, not just those of Zimbabwe, Turkey, and Venezuela et al. A global hyperinflation is proving impossible to avoid.

First it was covid, now it is energy… 

For the magic money tree, its exfoliation is just one thing after another…

Having recognised the impracticality of putting price controls on Russian gas and oil, the EU is turning to protecting all households and businesses from the energy crisis. Even Switzerland, and now the UK are bowing to the inevitable consequences of combining inflationary monetary policies of recent years, environmental wokism, and frankly irresponsible energy policies with the decision to sanction the world’s largest energy exporter.

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