What the Hyperinflationists Do Not Understand

What the Hyperinflationists do not understand is that government is always about government. They assume government will simply honor its promises and print into oblivion. It just never works that way. You are ALWAYS the enemy. Senator Alan Simpson of Wyoming, the Co-Chair of Obama’s deficit commission, made a slip of the tongue and for once spoke the truth – the truth about how government sees the people. I get to witness this all the time Behind the Curtain. Just as the Roman Senators said give them circuses (sports) and bread, and they will leave us alone, nothing has changed in 2000 years.  Most men can tell you what team won what sport. Some can tell you the names of ever person on a team. Ask them who is their local representative in government, and they are dumbfounded.

In politics they get everyone worked up over abortion, gay rights, and illegal aliens, but never mention anything about how their promises are never kept. Indeed, they turn vicious whenever a citizen actually asks for what they are entitled to. Alan Simpson spoke the truth. He called senior citizens the Greediest Generation as he compared “Social Security” to a Milk Cow with 310 million teats.

Well, they promise that they “feel our pain”, tax our money, promise to give us back three times as much, and when they can turn on us for having the audacity to actually expect them to honor their word.

So sorry. The hyperinflation scenario assumes way too much besides lacking the historical empirical support for a single core economy that has ever been extinguished through hyperinflation. Government ALWAYS, and without exception, turns against its own people. Why do you think there is revolution? They will NEVER print into oblivion, they will berate us for daring to expect what they promised. They will NEVER honor what they say, will default, change the rules, and even send in the troops against us to retain power.

They will not honor their promises.  American seniors nearing retirement found the goal posts for full retirement were moved from age 65 to age 67. They are looking to move it again to 69 to 70 on the theory the life-expectancy has increased. The life-expectancy was 65 when the created social security. They always figured you would die before collecting very much. An that was from the beginning.

They will sooner bribe some think-tank to produce a bogus study that supports that you will now live 20 years longer than in 1932 and they will attribute that to themselves, and then justify moving retirement age well into the 70s and tell you early retirement will be 75.

They all know in Washington and Brussels, a fool and his money are quickly parted. Guess who plays the fool?

The said part, this is like watching a Shakespearean play. It’s the same plot for centuries.


Paradox of Government

The food stamp program, administered by the is Department of Agriculture, is proud to be distributing the greatest amount of free meals and food stamps ever in its history.
Meanwhile, the National Park Service, administered by the Department of the Interior, asks us to “Please Do Not Feed the Animals.”
Their stated reason for the policy is because the animals will grow dependent on handouts and will not learn to take care of themselves.

Is there a paradox in philosophy between the Departments of Agriculture & Interior?

Perhaps we reduce the cost of government by transforming the jobs there into low paying positions without pensions that will be provided to people unable to find real productive jobs. This will reduce the cost of government and lower the cost of just feeding the animals who have become dependent.


Because of the seriousness of Germany forcing deflation upon Europe that could result in war, this fear of hyperinflation is just not warranted and must be addressed. ALL core economies simply collapse in Sovereign Debt Default. Hyperinflation takes place in the peripheral economies and is caused by the failure of capital to invest that is also witnessed by massive hoarding of wealth.

All currency is fiat to varying degrees even in ancient times long before paper money. It has always been a matter of CONFIDENCE and once that vanishes, collapse is inevitable. This is also why the stock market has never peaks with the same rate of interest twice. If the CONFIDENCE at that moment between expectations of profits exceeds the rate of interest, then the bull market will continue as expected profits above the cost of borrowing remains bullish. This is why interest rates have hit as high as nearly 200% in 1899 on the NYSE. If you think you will triple your money next year, you will pay 100% interest. It is the difference between expectation & the nominal interest rate that counts.

Likewise, all core economies collapse and take down everyone else with them. They are the Dark Cloud of doom. When Spain defaulted several times, they destroyed the Italian bankers. Banking then moved to Germany. They defaulted on them as well. They used the Spanish Inquisition to confiscate assets causing the Jews to flee to Amsterdam. That is where the first exchange began and in 1689 William of Orange took the Dutch financial know-how to Britain. Britain collapsed after World War I, and the Financial Capital of the World move to America. This is why the Financial Capital of the World migrates. It leaves behind a economy decay of default – not hyperinflation.

Because the core economy has attracted capital, it becomes the greatest debtor. They default like a bank when there is a run on its assets. Hyperinflation unfolds in a peripheral economy when they can no longer borrow and seek to continue to pay their bills with currency that goes into a spiral decline.

We do not face hyperinflation in Europe or the USA. These are not peripheral economies. These will simply implode into a Sovereign Default. This is far more dangerous for this is what causes war and brings society to the brink of extinction. Hyperinflation is typically domestic in its impact for foreign capital fled long before. What we face is much more like a bank run ending in collapse. Then the finger-pointing follows and usually war.

You can die of extreme heat or extreme cold. When hyperinflation strikes the fringe economies, it does not alter the trend of the core economies. They are interesting to watch from the sidelines. However, when a core economy crumbles, this creates far more dangerous consequences. The fall of Rome was followed by a Dark Age. The same was true with the fall of the Greek heroic age.

Given the urgency from Europe – we hope to have this out by the end of the summer.

Gold is still a hedge in ether circumstance. However, the hyperinflation is but a curiosity where as the Sovereign Debt Default wipes out society for a very long time. It is like an Ice Age – nothing grows for quite a while.

Based upon urgent requests from Europe, the hard evidence behind this distinction will be published in hopes that some politicians will at least blink.