Thursday, November 4, 2010

Two More Nails In The Dollar’s Coffin—the Republican “Victory”, and the Fed’s QE2

So on Wednesday, not only did the Republicans win control of the House of Representatives, but the Federal Reserve finally took the plunge with Quantitative Easing 2—

—in other words, on the very same day, the U.S. dollar got the ol’ one-two punch—right to the groin: 
First the spend-and-cut-taxes Republicans won the Congress—and then, the Fed opened the money spigot with QE2. 
Light at the end of the tunnel?
Talk about a bad hair day! The issue is no longer if the dollar will be killed—it’s now a matter of when.
Full disclosure: Though I am a fiscal and social conservative, I have always sneered at the Republican Party’s fiscal policies. 

The Republicans have always espoused “smaller government” and “fiscal prudence”—but in the last 40 years, it was the Democrat’s president, Bill Clinton, who actually made government smaller. Shrub, Bush, Ford, Nixon, even the dubiously sainted Ronald Reagan all made government bigger: Bigger in absolute terms, bigger as a percentage of GDP—bigger government has been the real mantra of the Republican Party. 

As for “fiscal prudence”—nominally, the Republican Party is in favor of balanced budgets. But ever since Richard Nixon said, “I am a Keynesian”, there hasn’t been a single Republican president who has managed to balance the budget. Cutting taxes without cutting spending is not a viable definition of “fiscal prudence”—but that’s what Republicans have been selling as viable macro-economic policy for close to 40 years. 
The reason is simple. Long ago, the Republicans and the Democrats came to a tacit understanding: The Republicans let the Democrats spend all they want on various Big Government programs, while the Democrats let the Republicans cut all the taxes they want and spend all the money they want on defense. That way, both parties look good with their voters. 

The cost of this Faustian bargain? The Deficit. 
Dick Cheney summed up the Republicans’ attitude: Deficits don’t matter. Those three simple words are the Republican Party’s real mantra—their real motto. Deficits don’t matter—which is why Republican administrations have never delivered a balanced budget since Dwight Eisenhower, over fifty years ago. 
That the Deficit doesn’t matter to Democrats is understandable: They are a party that by definition is fiscally irresponsible. Keynesian Klowns run that particular circus. 
But the Republicans were supposed to be the party of fiscal restraint and discipline. After the profligacy of the George W. Bush administration, does anyone really believe that anymore? 
The United States now has a debt of roughly 100% of GDP—the deficit is now running at about 10% of GDP annually. This is worse than Greece. 
Yet aside from raising shrill bleetings when it suits them—id est, whenever there’s a Democrat in the White House—never a peep is heard from the Republicans about the Deficit when they are in power, either in the White House or up on Capitol Hill. 
So now that the Republican Party has won Congress, this is what they will want—and get: 
• Tax cuts for the wealthy will become permanent. 
• A great big chunk of regulations governing corporate behavior—and corporate excess—will be rescinded, most especially in the banking and financial sectors. That whole “financial reform” bill? Neutered like Spot, its teeth pulled for good measure. 
• There will be no cuts in the bloated defense budget, much less any cuts in the budgets for the pointless, needless wars in Iraq and Afghanistan. 
Meanwhile, the Democrats will want more Keynesian stimulus—and ironically, they will likely get it. 
Precisely because the Republican Party won’t want to be perceived as hindering the economic recovery—and because the current Republican Party is at heart Keynesian to its very marrow—the Republicans will support the Democrats with: 
• More money for another round of stimulus. Yes, you heard right. 
• More money for jobs programs and extended unemployment benefits. Ditto. 
• More money for Social Security. Talk of reforming Social Security is just that—talk. A cheap way to buy the illusion of fiscal responsibility and prudence.
• More money for Medicare. Need those seniors’ votes—especially with 60 million Boomers about to become seniors. 
• More money for the individual states, many of which are bankrupt in all but name. 
In exchange for their votes on these spending programs, the Democrats will let the G.O.P. kill environmental bills and regulations, and probably gut the so-called “health-care reform” bill that was passed in the last session. 
Why will the Republican-controlled Congress allow the passage of even more Democrat spending bills? Because the measures are popular and populist, no matter how fiscally irresponsible
See, the Republicans aren’t stupid—they know that they won the mid-term by default. It wasn’t a Republican “victory”—it was a throw-the-bums-out election. If it had really been an election signalling a true ideological shift—like the ‘94 midterm—then the Tea Party candidates would have swept all their elections. They didn’t—but the Dems got trounced anyway. So in other words, it’s not that the Republicans won—the Democrats lost
So the Republicans aren’t going to do anything that will antagonize the voters.

On the contrary: If the American people want more deficit spending, in the mistaken Keynesian belief that deficit spending can pull the economy out of this black hole? Then by golly, that’s what the new Republican-controlled Congress is going to give them! 
More spending!
That is of course not what the American economy—and the American people—need. 
What the American people need is for the political leadership to say, “We need to cut spending here, here, and here—we need to wind down these pointless wars that are sucking us dry—and we need to raise taxes on these wealthy folks and big corporations here, here and here.”

In other words, America needs a political party to stand up and speak to the people like the grown-ups that they are—like David Cameron in the UK is doing: The Conservative Prime Minister is slashing government spending and raising taxes, in a hell-bent-for-leather drive to cut the Labour Party deficit his government inherited.

Are the British people happy about these measures? No. Are they going along with them? Yes. Why? Because they realize it has to be done
The American people aren’t getting this grown-up treatment from their political leadership. They might have thrown out the Democratic bums out—but they got new bums in their place: The Republicans.

Just you watch: The Deficit is going to get a whole lot worse, because of the Republican Congress.

Now, this alone would be bad enough— 
Once through the Money Hole,
the travellers ventured into another
dimension of the Fed-Dollar continuum.
—but the Fed’s actions are making it all even worse.

With Wednesday’s announcement of QE2, the Federal Reserve has implemented the absolutely worst choice it could possibly make, in terms of monetary policy.

Before Wednesday’s announcement, there were three paths the Fed could have taken: 
One, more stealth monetization: Printing money—sorry, “expanding its balance sheet”—and buying more toxic assets from the Too Big To Fail banks. The TBTF banks would then turn around and use this cash to buy up Treasury bonds, and thereby complete the stealth monetization process I described here. (I was actually betting on this outcome.) 
The rationale for buying more MBS was that, because of the Mortgage Mess that I discussed here, the Mortgage Backed Securities market is tumbling even as we speak. The MBS’s Credit Default Swaps—the same bit of financial kryptonite that damn near wasted the entire financial sector in 2008—are climbing like Edmund Hillary on speed. A big swath of money to prop up MBS’s would soothe the financial markets, which are beginning to stress something awful because of Foreclosuregate. 
Two, a massive, shock-therapy, direct Treasury bond buy: No screwing around, no half-measures—just one big dollop of money in the shape of a one-off $500 billion to $1 trillion buy of Treasury bonds. The most adventurous possible outcome, and before today’s decision the least likely, considering the personalities and outlooks of the men charged with the decision. 
It’s ironic, but this policy option was the helicoptering Ben Bernanke was referring to in his famous speech: A shock to the system that would literally bully the markets into doing the Fed’s bidding, which is reigniting the economy. 
But Benny’s all hat, no cattle—he didn’t have the balls to do what he claimed he would do, if the time came. 
Three, the Federal Reserve could refuse to print any more money, and instead say, “We’re going to stand pat, and keep our powder dry, in case something bad happens.” This was actually the easiest of the three choices I’ve outlined—and likely the best of all the possible choices. 
But instead of making one of these three choices—one of these three rational, sensible choices—what did Backstop Benny and his Lollipop Gang at the Federal Reserve do?
They will direct-buy $75 billion a month in Treasuries over the next eight months, for a total injection of $600 billion. 
This was the worst possible decision they could have made. They couldn’t have screwed the pooch any better, not even if they’d taken a fistful of Viagra and left the condoms at home. I mean, really, they fucked it up!
Let me explain why: 
The Federal government is running a yearly deficit of around $1.4 trillion. That means that the U.S. Treasury has to borrow, on average, $100 billion a month. So during the next eight months—as announced by the Federal Reserve—the U.S. Treasury will only have to borrow $25 billion per month from the private sector. The other $75 billion will be coming from the Fed, who will simply conjure the money out of thin air, as is its power. 
Now, what will the private sector do with the $75 billion a month it will no longer be lending to the Federal government? 
Why, it will buy some other asset class. 
But if the Fed is printing $600 billion over the next eight months—that is, expanding its balance sheet by 25% over the next eight months—what should the smart money do? 
Easy: Get out of the dollar. Now
What asset class would be the safest safe haven, and is instantly convertible to any needed currency? 

New readers might fail to see this, but my kind fans will recognize the point we have now reached: We have reached the endgame of the dollar, as I discussed a mere two months ago in my How Hyperinflation Will Happen piece—commodities
Quantitative Easing 2 is the starting gun for a run up on commodities. A couple of trader friends pointed out how oil crossed the $85 a barrel mark today. Oil will continue to rise. Gold, silver, other precious and industrial metals—all will rise. Grains too—on top of the 33% year-over-year that they’ve risen so far. 
And the winter is coming . . . 
The winter oil demands will put price pressure on petroleum products and foodstuffs—which will naturally be passed on to the consumer. Thus inflation will rise—I am predicting to a 5%–6.5% annualized rate by March of 2011. Courtesy of the Federal Reserve, which thinks inflation—whatever its cause—is a sign that the American economy is back on track . . . 
Incompetent mother fuckers. I’m sorry for the foul language, but there’s really no other way to characterize what they have done. What they are doing. And doing it with such placid calm!

Backstop Benny and the Fed don’t recognize that inflation is like fever: It is a symptom of any of a whole host of maladies and conditions. Inflation by itself does not necessarily mean that the economy is expanding, and therefore putting pressure on prices. That’s like saying, “Whenever you get in shape, you lose weight—therefore, if you lose weight, you are getting in shape”—the most blatant post hoc ergo propter hoc error imaginable, a logical fallacy that not even a mediocre junior-high school student would make.

But the Fed is making it! Incompetent mother fuckers!
Coupled to the Fed’s incompetence, the newly installed Republican Congress is going to cry havoc and let slip the Dogs of Deficit: More tax cuts, more defense spending, and a fiscal 2011 deficit that will be greater than the $1.1 trillion for fiscal 2011 the Congressional Budget Office is currently projecting. My guess is, the 2011 deficit will be on the order of $1.4 trillion—just like 2010 and 2009. 
What does this all mean?
The SACT party (the “spending-and-cutting-taxes” party, the “sacked” party, it ceased being the GOP long ago) is going to expand the Deficit by $200 to $300 billion per year, between their tax cuts, their refusal to back out of Iraq and Afghanistan, and the spending sops they will likely throw at the Democrats like scraps to the neighborhood dogs. Fiscal 2012 will likely be similar to 2011—or worse. 
These budgets deficits will put added strain on the U.S. Treasury’s funding efforts—exacerbating the underlying problem, which is really quite simple: The United States government spends far more money than it brings in. It’s as simple as that. 
But because both parties are unwilling to cut spending and raise taxes, and because the Federal Reserve is so willing to encourage this political irresponsibility by its insane efforts at Quantitative Easing, there will be more and more pressure on the dollar—

—until the dollar finally collapses as a fiat currency. 
Bottom line, I am more confident than ever in my predictions of a hyperinflationary collapse. I am more confident today than on Tuesday that the dollar will go up in flames in a hyperinflationary event, which will begin no later than Q4 of 2011 when annualized inflation crosses 10%. I am more confident than ever that the dollar will collapse no latter than 2012—unfortunately.

What, you think it gives me any sort of satisfaction to be right? No it does not—I’d far prefer to be completely wrong about my call, and instead see the economy staggering along at close to zero-percent growth but with a stable currency, rather than watch the American economy take a hyperinflationary fall. 
See, hyperinflation won’t bring a slight drop in GDP—instead, GDP will take a massive 20%–30% hit, when all is said and done. Hyperinflation is destructive. Destructive in a way the United States has not experienced in close to 70 years. 
This is on the way—with Wedensday’s Fed announcement, coupled with what the Republican-controlled Congress will most likely do, there is no longer any turning back. 
A few people have criticized me, for going on and on and on about hyperinflation. But see, if a truck is heading straight at your child—about to run him over—would you prefer it if I said, “Oh dear,” quietly under my breath, and just to myself? 
Or would you prefer it if I shouted from the rooftops for all to hear—especially you?


  1. Hope strings eternal...the republicans will be different THIS time

  2. oops springs not strings

  3. I am afraid to say I totally agree with your scenario...there is no going back from this.

    One point: Prime Minister Cameron is slashing government spending and raising taxes, but not to reduce the deficit but SIMPLY TO STABILIZE IT...if it works we might look to start paying some of it off in five years...that's how bad it is here NW London

  4. GL, you write well, on the point! Many thanks for the great work!

  5. Geez, you make it sound like John "Medicare Part D" Boehner is talking out of his arse. I'm expanding my wife's garden and canning operation.

    Count deKuntier

  6. As a conservative myself, I find myself just as frustrated with the GOP. The term "grownup" is an apt description for what the country needs. Too bad it is likely too late.

    And too bad everyone remains obsessed with the right/left argument instead of actually learning what it happening to our economy. I can't begin to talk about this before someone always interrupts me and says, "See, it's Obama's fault" or "See, it's the Republicans'/Bush's fault." They are so obsessed with placing blame that they don't even know what they are blaming them for. They are so obsessed with telling everyone what the government should do but have forgotten to ask what the government can afford to do. And when they do, they buy the line, "deficits don't matter" that the GOP and Dems give them.

    They don't understand that the Fed is blowing up our currency to prop up asset and stock prices in a misguided attempt to restore confidence. All the Fed is doing it shattering confidence in our currency - and by extention our economy. The whole thing is just frustrating. Keep up the great posts, GL! Nice to find some level of sanity out there.

  7. I want to attend your $75 webcast but would it be OK if I pay you in 2014 dollars ?

    Seriously - this place is a mess. I'll be on the webcast.

  8. First, let's keep in mind that hyperinflation, as explained by Mish on his blog, is the result of a total loss of trust in a currency. Prices have little to do with it.

    This means that hyperinflation and a dollar collapse may happen almost overnight. If the Chinese, or the Saoudis, or the Japanese, start dumping their dollars, it's game over.

    As I already mentioned, it all looks like a poker game.

    The US, with a pair of six in its hand, is betting the farm and the other players don't know what to do. They are afraid! They have been living in their US Mama's house for too long, with the comfortable feeling that Mama would never let them down.

    And now that Mama has got Alzheimer, they are lost. They can't imagine a world without the dollar as reserve currency.

    How long this will last is a matter of psychology, not economy.

    The way I see it is that the whole Western world will just wait and go down together with the US.

    Click on my name to visit my blog.

  9. I have to say that I disagree with the political side of this analysis. The Republicans can't help but understand that this election was, beginning-to-end, about government spending.

  10. You had me right up to the point you suggested the way out for the American people was to cut spending while raising taxes. This simply will not work. US companies ALREADY shipped manufacturing and millions of decent jobs overseas due to twenty or thirty years of "taxing the rich to pay for the poor".

    The corporations don't care about anything but the bottom line. Tax and regulate them and they will go away. It's that simple.

    Another oft-repeated fallacy is that the dollars for 'needed' government programs such as Social Security, public education, or Medicare are spent, on the whole, wisely and judiciously. The argument follows we just need to slash the 'bad' programs while preserving the 'good' ones. Wrong. They are all bad. There are virtually no examples where the federal government has accomplished any needful societal purpose better, quicker, or more economically than the private sector or even volunteer remedy it supplanted.

    Waste, corruption, and gross incompetence are the touchstones of every federal boondoggle and white elephant since the New Deal. The one simple solution is that which is never, ever mentioned except by wild-eyed gunslingers in Gadsen flag t-shirts-- follow the damn constitution. The fellows who wrote that document knew a thing or two about how much harm a bloated, self-serving, tyrannical government could do to a freedom-loving people.

    The only way to lessen the damage wrought by government is to permanently reduce its size, scope and authority. That's precisely what that forgotten agreement sought to accomplish, and we ignore it at our peril.

    Contrary to popular belief, it's still cool to think for ourselves, to seek solutions independent of Washington. Unless we target the source of our misery-- unconstitutional laws, illegal banks and corporations, we will very shortly realize Jefferson's Apocalyptic warning of our children "waking up homeless in the lands their fathers conquered."

  11. IF the republicans do increase spending it will be the death blow their party. Stopping excessive spending is part of the wave they rode to victory; and THIS TIME, the people are really watching.

  12. Nice post GL. I have also said for many years the same re: Republican party. Grow Gov't, Increase Govt Spending and Cut Taxes. Deficits Don't Matter.

    That does mean, for the rational and fiscally conservative, you better get Oil, "Physical" PM's, Ag Lands and Products as I have cited here -


  13. About dollarcollapse and trust there is a movie "Rollover" with Jane Fonda and Kris Kristofferson, that have some aplication to this theme.

  14. I absolutely, positively disagree with the Gonz, the whole effing financial system is about to collapse and it will happen sooner than he predicts. Actually, I suspect that the Gonz believes the same thing, but knows that shooting sacred cows needs doing one at a time instead of all at once. Go ahead, shout your head off, nobody dares listen. Americans are just a bunch of ignorant pussies. Fat, Dumb and Ugly. They are ugly, as they are about to take the world down with them and will whine the whole way. I am an ashamed american, living in a country run by sociopathic gangster banksters. Bernanke's policies will kill a billion people in the near future and americans are too stupid to even feel guilty.

  15. Sorry, but I can't buy the incompetence argument. I've heard that one related to Bush and the Iraq war. At that level of operations, the people calling the shots have adequate knowledge of history to know in advance what will be the consequences of their actions. Investigate with that idea in mind and another picture emerges.

  16. I am not a financial expert, a political scientist nor an economist of any shape or form, but I just can't see why the American people tolerate their inept governments. If I was an American citizen I would be marching on Capitol Hill! I would be so pissed off that over the last 20 years or so my free and prosperous country was being destroyed by a series of fat self serving bureaucrats!! The excessive consumerism and demand for cheap Chinese shit (we get the same shit in Canada) makes my blood boil when I think of the good jobs that have been taken away from us. I just can't wrap my head around any of the wars the US has been in either! I mean no disrespect to any one who has suffered through these, I just don't understand why the future of the US is being wasted in the middle east? Contracts for Cheney and Rumsfeld? Big oil? Revenge on muslims?

    Why is the most armed nation on earth not taking to the streets and demanding fiscal responsibility from their elected officials? Millions of people need to stand up and march for change! European nations stand up and march for far lesser issues than the destruction of the economy and dollar and they don't even have weapons!

  17. First of all, to those unfortunate, trusting souls who think the Republicans actually "get it" this time and recognize that the election was about out of control spending, GET REAL! They may have SAID that, but they certainly didn't mean it. This is the party that nominated Palin, after all. It's all about appearances, and fooling the least sophisticated sector of the electorate. Nothing has changed.

    Now, for the assertion that the Fed made a mistake. Wrong! They did exactly the best thing...FOR THE FED! The Fed is a privately held consortiom of banks. Their actions are not necessarily intended to save us or the economy; their actions are intended to save the banks, to drive up asset valuations so the smart money can get out before the collapse.

    Ben Bernanke was a boy wonder, child prodigy and a genius academician. He still is. He is only doing the bidding of his betters in this, saving the asses of the asses who drove the economy into the ground. To hell with the best interest of the US.

  18. It'd be funny---it it weren't so sad and pathetic---to listen to these doofuses blather on about eliminating earmarks and reducing gubmint spending to 2008's level.

    That's like being on a yacht that's being swamped and starting to sink, and someone saying, "I've got it! Let's each of us find a champagne glass and start bailing!"

    I differ with GL on a couple of points:

    1. Bubba never balanced a budget---it was the Social Security surplus used to mask the deficit that allowed the illusion of a balanced budget.

    2. Newt's GOP really forced Bubba's hand, and Bubba got the credit for fiscal prudence, because the POTUS gets credit when things go well and blame when they don't.

  19. We can only hope that the few T party people will be in the position to be able to bring sanity to the Repubs. Maybe Rand Paul can spark the senate and numerous others spark the house into an across the board wholesale reduction. Otherwise I agree the dollar is toast. I am already stocking up on gold, food, bullets, seeds and looking for some acres to grow sustenance if neccesary. Maybe I will end up with a hobby farm, maybe it will be needed to save my family's life. Either way it should pay to be prepared.

    Wow my miner stocks went up $5K today!

  20. What most Americans don't seem to realise is that The Republicans and Democrats are essentially THE SAME. Oh, yes they try to pretend they are different with varying policies on abortion and suchlike but at the end of the day, both of them end up with the same result every single time - they run up MASSIVE deficits and cut services to those who most need them. The whole politics game in America is a complete waste of time. Nothing ever gets done with all teh bickering between them and none of them have any clue as to how to balance a budget and run a country with the money they actually HAVE (which is not a lot nowadays).

  21. GL:
    You are mostly right; however, it is Congress that matters, not the presidency. During the forty years that the dems controlled Congress up until their rout in 1994, the US economy expanded three-fold, but the federal govt expanded NINE-fold, both in real terms. Defense spending as a percent of GDP peaked under Kennedy with his insane move into Vietnam and has been trending lower since.
    Good ol Uncle Bill Clinton likes to take credit for balancing the budget, albeit briefly, but it was move to the middle and the Contract with America after his 1994 mid-term shellacking that did it. And even that was specious because it was mainly to the massive cap gains distributions of the mutual fund industry in 99 and 2000 that caused the surge in tax revenue.
    Yes, both parties suck, but the dems have sucked far, far worse. This is merely round one of the revolution. It will take more pain and 2012 to fully throw the bums out and get real leadership.

    John Gault

  22. Everyone forgets that the FED is a private corporation with a Federal charter. It is owned by the member banks, which are owned by private stockholders. The FED will support the banksters not the American people, by transferring their toxic debt to the public fisc, having convinced the Congress and the Executive that they are too big to fail. Unlike the 30's when they lost their assets, due to excessively leveraged bets, facilitated by the FED, this time you will lose yours, while they keep theirs. Since the Banksters and their parent FED have removed all restraint in the creation of credit (funny money), they will join Argentina and flood the world with their toxic paper, and destroy the value of that which you hold.

  23. Lucinda: Americans aren't taught economics and business principles in school--they're taught self-confidence and multi-cultural equivalence.

    They don't know any better, as a group, than children.

    New education's about to begin though...

  24. Clinton didn't make government smaller. That was not happening in the first two years of his presidency. In fact, he wanted to increase the size and reach of the government with government health care, various VAT taxes, additional income tax, etc. It was the Republicans under Newt Gingrich and Bob Dole that shrunk government and balanced the budget. Ever hear of the notion that "Clinton stole the Republican agenda"? Guess what? He did... I do give him credit for that. He was politically adept enough to read the writing on the wall and act (unlike the boy king their today). And I do fully admit that the Republican party lost its way, and I became a Libertarian as a result of it, but it is clearly Democratic programs that have bankrupted this country.

  25. SPECTRE of DeflationNovember 4, 2010 at 8:02 PM

    GL, sorry to say you have a short memory regarding what caused "the good ole' fiscal days" during Clinton's terms. The 1994 Republican Revolution engineered by Gingrich was the catalyst that caused the fiscal conservatism and surpluses you mention. In fact Clinton vetoed several Balanced Budgets before realizing the hand writing was on the wall. If nothing else, Bill Clinton is a pragmatist, and ended up caving in on the budget and welfare reform among other things, after delaying as long as possible, because it was in his interest to do so for the upcoming 1996 election.

  26. Other than some factual distortions re. the Republicans ... seems to me that 'control congress' they would have to be in control of BOTH houses. Dem's still have the POTUS and the Senate. So I guess we'll just have to wait and see how it plays out....

  27. If you make errors in the assumptions than you will have errors in the conclusions. I stopped looking to government to solve any problem... they... the Republicans and the Democrats have just made the problems worse. One of the writers that I read said, "If it can't continue, it will stop." It will be painful but neccessary. ps I liked your article.

  28. As to the Republicans VS the Dems, a used car salesman is the same no matter what auto dealer he represents. They are liars to the very core. They will tell you anything to sell you - so they can profit. Have we forgotten these congressmen are more likely than not lawyers???
    GL is right - Americans voted against the guys in office - not for the new guys. Most of these clowns will spend the next 6 years in office raising money so they can stay in office. The only real agent of change is pain. Americans have not had enough yet I fear. I don't like BO - he was too green for the top job in my opinion. He was easily lead - like that ass Bush. The Banksters have both parties leashed and in their full control. BO kept the Bush guys and the beat goes on... Meanwhile I made 2K in one hour in the market today. I need more monopoly money because well you know...

  29. Hey All,

    I've been pondering this for some time and would like your input.

    If hyperinflation is about to occur, isn't now the perfect time to buy a house or farmland? Won't my mortgage debts be wiped out in the coming dollar meltdown?

    What is wrong with this thinking?

  30. Bill Clinton didn't bring down the national debt the congress elected in 1994 did. Perhaps you weren't around to watch what happened and are depending on something you read. Clinton didn't want any part of their austerity and bit his lip (literally) many times. But for once in my lifetime congress actually did it's job.

    Cutting taxes is absolutely necessary. Most Americans in the middle class and most Americans in the "working" lower class are being ground down by taxes. Federal, state and local taxes keep going up and the average middle class taxpayer pays more the half their income in taxes.

  31. Anonymous @ 12:52 hits the mark. His comment is especially true for central bankers, who are sublimely competent at fulfilling their purpose: advancing the agenda of their semi-covert owners, whose identities cannot even be investigated and openly discussed without incurring certain risks.

    Jason Black

  32. Pretty spot on, GL. Thank you for confidently expressing your feeling for a timeline on this mess. It is only getting easier to see day by day, isn't it? Of course, a black swan could appear at any time - causing all kinds of waves -and a quick ending to it all.

  33. "...and we need to raise taxes on these wealthy folks and big corporations..."

    #1. Define 'Wealthy folks'

    #2. Taxes are already high - for everyone. What would raising them do, save for giving politicians more $$$ to spend - i.e., who would be the gatekeeper of this newly found tax revenue - the current crop of R & D politicians...?

    #3. And then there's Jolly Old England... Cutting spending, AND raising taxes, and the good Limey's take it like champs - well, because they're 'adults' - and what self respecting 'adult' wouldn't want his/her taxes raised, no? I mean, what the Bloody Hell, the government spends them into bankruptcy and so the solution is to 'man up' and take the higher taxes like a 'Happy Breed of Men, right?

    Jesus H...

  34. Gonzalo;

    The "downsized" Clinton government materialized only after the democrats lost control of congress in both houses in 1994. The balanced budget and other positives Clinton is credited with came only after the Republican Congress was in place after 1994 elections.

    Prior to 1994 Bill was just as brazenly reckless as Barack and Hillary was hell-bent on passing her asinine health plan similar to Barack's in order to pacify their bribers uh, I mean supporters, uh, I mean for the benefit of the "Umerican Peoples".

    From the stand point of what is in the country's long-term, self-preservation interests, both parties are utterly irresponsible and criminal. You and I would have been arrested long ago if we tried to pull of 1/1000 of what politicians get away with on a daily basis.

    This country needs more people like Ron Paul in Congress and as President as the current buffoons already have most us at a simmering boil and it won't take long before the fireworks will start. The sight of 300 million angry people fed up with years of BS will be a sight to behold.

    On a positive note, gridlock improved things in the 1990's so maybe this will force Barack to put his magnificent ears to better use.

  35. Sadly, you are all being hoodwinked!

    There is no incompetence, stupidity or anything else like this.

    The current economic mess has all been coldy calculated, staged and executed with heartless and deliberate precision to the detriment of humanity. It will conclude with a very specific end result.

    Go to and read the free article series on "Understanding Money and War" then read some of the free articles on "Goldsmiths" (Goldsmith was the name given to International Bankers in the middle ages).

    You will come to discover that this whole mess has been perpetrated, an inch at a time, by a tiny minority upon the human race (regarded as inferior by them) and they have been working at it over many generations for the last 250 years!

    Soon we will be fighting each other and directing our anger and frustration on, politicians, the U.S.A., China, the Middle East, Israel, etc (all of these mere puppets) while they sit back, laugh, and take even more control over our daily lives once the dust settles!

    If this sounds too incredible to be true, that is precisely why they've been able to pull it off. Hopefully enough of us will wake up and do something effective.

  36. Yes...this is not about incompetence. This is about highly focussed COMPETENCE. Of the slimiest, most traitorous, most massively criminal, most supernaturally cunning, most black hearted alien despicable way of operating. This has been PLANNED from the outset. Multigenerational, systematic, from the start of the Fed, or before.To scalp and screw the US, and much of the world, via the black hole vortex of printing worthless bits of paper in exchange for all the blood, sweat and tears and wealth and gold...and all the hopes, dreams, plans, of multi generations of families in America. All sucked out of the body of the US, like some ever fattening mosquito. Taking all the nourishment, morals, material structures, viable systems...the heart and soul of America, and making it a dead man walking .All by cold blooded design from the outset. The US is and has been played like a violin.Its a slow motion pyramid or ponzi scheme, where all fields of endeavour, including military, govt, schools, business, raising families...ALL...are enmeshed by the tentatacles of the money power. And being crushed to death, for the total power and control of a few faceless evil cretins, who will stop at nothing. Thats their program. As outlined in many Creature from Jekll Island via the net. What to do? End the Evil Empire of the Fed and terminate Darth Vader. Make use of 100+ lamposts a day, to backtrack on the hiden perpetrators of this simple scammy game. Take em out. Lop off the heads of the hydra, and get to the root of the slimy octopus thats affecting everything. And institute REAL honest, basic money systems, that start to circulate clean blood in the body, rather than the highly toxic blood that has been slow motion poisoning the country for many decades. Mostly...get people of absolute genuine intent at the helm. Who have demonstrated by their writings over 10+ years who really was calling it right, when the current parlous state was considered to be all OK. People of golden hearts, not demons in suits.(By their fruits are they known.) People who believe in invoking in a Higher Power of All Light, All Perfect Competence, All Perfect Love...into human affairs. But...its all and expansion possibility, as so many illusions now have to go by the wayside, and the scales fall off peoples' eyes. *This is all stated as viewed by "an outsider" living in Australia, who is looking in, and feeling that USA Titanic will create tidal waves across the world geography, as it sinks below the waters.

  37. To Anonymous @ 8:59 PM, Touche', I agree completely. You can still see the bickering over Clinton/Gingrich, Republican/Democrat on these blog comments. It is precisely why these guys keep getting away with this game over and over again. They understand the masses and how to manipulate them. At a certain level I respect their ability. However I despise their overall nature and regard for fellow humans. They appear to lack souls.

  38. Yes...this is not about incompetence. This is about highly focussed COMPETENCE. Of the slimiest, most traitorous, most massively criminal, most supernaturally cunning, most black hearted alien despicable way of operating. This has been PLANNED from the outset. Multigenerational, systematic, from the start of the Fed, or before.To scalp and screw the US, and much of the world, via the black hole vortex of printing worthless bits of paper in exchange for all the blood, sweat and tears and wealth and gold...and all the hopes, dreams, plans, of multi generations of families in America. All sucked out of the body of the US, like some ever fattening mosquito. Taking all the nourishment, morals, material structures, viable systems...the heart and soul of America, and making it a dead man walking .All by cold blooded design from the outset. The US is and has been played like a violin.Its a slow motion pyramid or ponzi scheme, where all fields of endeavour, including military, govt, schools, business, raising families...ALL...are enmeshed by the tentatacles of the money power. And being crushed to death, for the total power and control of a few faceless evil cretins, who will stop at nothing. Thats their program. As outlined in many Creature from Jekll Island via the net.

  39. Part 2 What to do? End the Evil Empire of the Fed and terminate Darth Vader. Make use of 100+ lamposts a day, to backtrack on the hiden perpetrators of this simple scammy game. Take em out. Lop off the heads of the hydra, and get to the root of the slimy octopus thats affecting everything. And institute REAL honest, basic money systems, that start to circulate clean blood in the body, rather than the highly toxic blood that has been slow motion poisoning the country for many decades. Mostly...get people of absolute genuine intent at the helm. Who have demonstrated by their writings over 10+ years who really was calling it right, when the current parlous state was considered to be all OK. People of golden hearts, not demons in suits.(By their fruits are they known.) People who believe in invoking in a Higher Power of All Light, All Perfect Competence, All Perfect Love...into human affairs. But...its all and expansion possibility, as so many illusions now have to go by the wayside, and the scales fall off peoples' eyes. *This is all stated as viewed by "an outsider" living in Australia, who is looking in, and feeling that USA Titanic will create tidal waves across the world geography, as it sinks below the waters.

  40. It appears that the only way to take our country back is to peacefully march in great numbers and bring all commerce to a halt. We don't go home until the FED is abolished and the banksters are prosecuted to the fullest extent of the law. If our elected officials refuse to do this then they too must leave and or be tried for treason. I do not see any other way out at this point in the game.

  41. I would agree that hyperinflation is locked and loaded. The only remaining question is timing. Perhaps it is as simple as once already higher commodity prices start to impact consumer prices, fixed income investors, who are also consumers will realize that their dollars are losing purchasing power rapidly and they will sell bonds and buy commodities thereby igniting hyperinflation. Gold, silver and especially the miners of gold and silver would seem to be the best protection from devaluation. It seems unlikely we will have to wait much longer for the crisis. I put the under over at 15 months.

  42. Thanks for all your thoughtful posts and the enthusiasm to wake people up. I believe this thing is going to go down faster than we think too.

    I happen to believe that if the Federal Reserve buys all of the debt we have then we become slaves to them, no? They (the Fed) have a claim on our work? I don't know.

    I have been homeschooling myself on these matters for 4 to 6 hrs a day and I am tired but most of all depressed. With knowledge comes grief.

    Keep up the good work. I can only imagine how low you must be feeling when you study and write about these horrific things.

  43. “Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”

    The USA is about to be scalped.

  44. It is not hard to understand the math for hyperinflation and how/why inflation gets out of control. Check this out:

  45. Dr. Lira nails it again! Brother, you are spot on! Your guts are talking to you and I'm listening, and as a matter of fact, by the looks of all the comments, a lot of people are listening to you and hearing the same rumblings in their bellies. There has been a real evolution to this whole thing over the last three years in particular, but now we have clarity like never before and the pace has increased to a most uncomfortable rate. When you shuck it all right down to the cob, it's time to step up your precious metal purchases, get out of the market, stock up on domestic commodities to see you through, and move the hell out of the city if you possibly can. The play book is changing into something that even my elderly parents have never seen, and they saw the Great Depression through the eyes of ten year old children who got a mere new penny and a tin cup under the tree. Gonzalo; keep talking to us! Dan McCartney, Toledo, Ohio

  46. Maybe we should just make Bill Clinton president again?

  47. Always enjoy your thoughts GL but, I have to take exception with the idea that because the fed is printing up the $75 billion/month that the publics money will go else where or as you say into commodities. Joe public, even the world for that matter, doesn't have the $75 billion a month to loan the usa anymore. If the fed didn't print it up then interest rates would have to rise dramatically to try and attract that kind of money on a monthly basis. Of course we all know rising rates blows interest payments on the debt to Mars. IMHO the fed needs to print probably four times that much to keep the usa from plunging into deflation.
    1) There is probably at least a trillion more treasury debt that needs to be rolled over this year,
    2) Then there is state/municipal debt that needs to be backstopped or go into default.
    3) State/municipal pensions need bailing out or they will default.
    4) By the end of the second qtr 2011 residential/ commercial real estate will lose anther $2 trillion in market value.(my rough estimate)
    5) Rising energy/food prices, the essentials that everyone needs to buy, will take profits away from other discretionary spending, reducing corp profits and ultimately slowing the economy down and collapsing the stock market.

    All these things are highly deflationary, $600 billion is just a down payment to try and keep the economy running. And it's not nearly enough. Sure some commodities will rise for a while. But even oil won't run much longer once the economy craps out and oil inventories start piling up everywhere. Incomes are stagnant or declining, no way to keep the demand for oil nor iphones up in a slowing economy with declining incomes.
    California's economy was already slowing this past summer with $75 oil, $86~$100 will put us in a depression real quick. Note that the stock market topped out nine months before oil reached $150 in 2008. Look for the same thing to happen soon, First the stock market will top out and oil will soon follow.

  48. The top bankers calling GOP and FED policy are not stupid. Collapsing the dollar will revalue their gold to the moon while simultaneously fucking the US people, China, Saudis etc. They have long since prepared impenetrable 21st century bunkers to wait out the ghastly trauma of transition to THEIR new gold based currency.

  49. This comment has been removed by the author.

  50. >If hyperinflation is about to occur, isn't >now the perfect time to buy a house or >farmland? Won't my mortgage debts be >wiped out in the coming dollar meltdown?

    If I understand GL correctly, and I am not sure I do, I believe the answer is no.

    During normal inflation wages keep up with prices, the house is twice as much but so is your income, so it’s a wash. That loan you took out way back when is easier to pay off. Inflation at 20%? Great buy that hobby farm.

    I’m not sure what we’re heading for fits the textbook definition of hyper inflation, but I’ll use the term anyway. During hyper inflation (a collapse of a global currency and the accompanying massive shift of wealth out of paper assets and into hard commodities) prices shoot through the roof and your wages stay the same (or close to it). No one is in the mood to be buying anything that is not absolutely necessary when a hamburger is $300 but your paycheck is the same and that includes hobby farms.

    Also in such an environment, no one will be making you a loan, so you and everyone else will be paying cash, that right there should knock hobby farm prices down a ways from here.

    When people are freaking out because their wealth has been destroyed that will be a great time to by the farm, but you'll probably be crapping in your pants like everyone else and hobby farms won't be on your mind;-)

  51. Knowing Dr. Bernanke incompetence this doesn't suprise me much. However I must congratulate Gonzalo, well done.
    What I see most shocking is the "Passive-atittude" from the citizenry in USA, that I believe are in coma, Or in their sacrifice to have the feeling of "Freedom" They reserve the rights to be screw by their beloved politicians.

    Few days ago they gather in Washington DC to listen more seriously to comedians, than demostrate against of what has been taken from them.

    I always remember an old phrase: "Every people have the government they deserve" indeed.

  52. This financial mess will end very badly for the people of the earth. Look for a conflict that will lead us into a world war to be coming our way. The elimination of 30% of the world's population and the destruction of foreign industrial capacity is the only solution to the financial problems facing the US. I would suspect this to happen before the elections of 2012.

  53. This comment has been removed by the author.

  54. Great as usual but, please don't give me this left vs. right party line bullshit. 99% of both sides work for the same people in the end, the bilderbergers, CFR, Tri-lateral, etc.

    From the late great George Carlin "the only real choices you've got are the 31 flavors at baskin robins or 20 types of bagels", "They've got a club and you and I ain't in it!"

  55. Anyone who thinks this election was about government spending is a damn fool. At the heart of the Democratic losses was a simple fact - the people who voted the Democrats into power in 2008 were looking for a change from the disasters of the Bush years. Obama turned out to be a fraud, and has essentially carried out almost all of Bush's policies. More war, more bailouts, a health care reform that was a gift to the insurance companies, no attempt to stop offshoring jobs, etc. He pissed on his base and on the independents who believed his hope and change lies both in his actions and in words, and so many of us stayed home or voted for third party candidates. We did not have a progressive option in the election, just two identical parties whoring themselves out to bankers and the corporations.

  56. Yes, Mr. Lyra, the truck is coming right at us, and no one can stop it. Those of us with eyes and realistic understanding of the players involved have known it for many years. Everyone, including Benny, is simply trying to delay the inevitable U.S. default as much as possible. So now we need people like you to tell us how to duck and how to position ourselves for intelligent survival the day after the dollar has collapsed and default has become official.

  57. Agree with what you say, both parties promise stuff they can't pay for just to get votes, it's a political desease in any country where winning elections are paramount to staying in power.

    I'd say they have to start on the spending side first. Raising taxes is more difficult as they may end up "killing the host" so to speak with a tax burden that leads to an eroded tax base.

    Start with restructuring the military industrial complex for defense instead of empire building, hegemony and conquest.. Remove all the hundreds of military bases around the world, bring the soldiers home and assign those needed to defend their own border. The US spends more on its military than the whole rest of the world together, it's simply absurd!!

    Reduce pensions and job security of government workers to that of private companies, no more pork for those who work in tax funded organizations. Hire and fire should be just the same as for any private organization, -no work no pay!

    Axe a lot of unneccessary laws and institutions, laws should be simple, short and to the point. Creating laws of thousands of pages just creates huge beurocratic administrations, law firms and legal departments everywhere, all unneccessary overhead taking a toll on the productive economy. Departments that are not actively needed to keep the economy running should be abolished, I doubt the huge cost of keeping the department of homeland security etc really pays off in increased productivity. It adds nothing to the ability of the country to compete in the world economy and should simply be axed, more overhead that feeds off those who do real work...

    Just some ideas...

  58. SPECTRE of DeflationNovember 5, 2010 at 4:32 PM

    "Tax the rich folks and corporations"? What exactly does GL think the Govt. will do with said money? Pay down debt? LOL! As someone else asked, what exactly is rich?

    How about these scenarios? I'm a small business owners who has busted ass for 25 years to get where I am today. I pay taxes like you can't imagine for both myself and my employees. I make $500,000 per year and am scalped at every turn by Local, State and Federal taxing authorities, yet I am lumped into some meaningless and unquantified group.

    Got it? I'm a one legged man in an ass kicking contest.

    Now let's say I'm a multi- millionaire who doesn't work because I have so much money I don't know what to do with it all. I invest my money so that my divs are taxed at a flat 15% for all the loot I make throughout the year.

    Got it? I'm the man that's kicking the one legged man's ass on a repeated basis throughout the year.

    It's very easy to throw around the word ""rich, and it's damn sloppy writing not to quantify what the Hell you are talking about when you throw said word around.

    As to the corporations, they can just leave America for brighter days elsewhere. Money is not static, and like water, will always find the path of least resistance. Like it or not we are in a global economy where resources can be easily moved from one place to another.

  59. Americans aren't taught economics and business principles in school and if they were you can bet it wouldn’t be Austrian Economics. No, they're taught to be self-confident and tolerant of multi-cultural agendas and global warming. So, as the Federal Reserve Board pushes for another round of quantitative easing (i.e. printing more money), no one really asks: Why? Even if explained in detail, your neighbor doesn't know any better, and taken as a group, are no more intelligent than children on this subject.
    Why is it the Fed is allowed to print money (out of thin air) and compete with you to buy anything it wants, including state and local debt, real estate - any asset - including stocks. Why is it that the FED continues to subvert the will of the American people by stepping in and buying things that any prudent individual wouldn’t touch with their own savings? And don’t blame your local banker for also not wanting to cut you a deal on refinancing your over burdened house payment if too he smells a bad debt that no one wants to buy. If previous quantitative easing hasn’t spurred domestic spending, why does the Fed STILL believe that doing more of the same will suddenly produce positive results?
    The answer: It’s not domestic spending that the Fed really hopes to stimulate by printing more money – it’s domestic DEBT. Look at the people who maneuver at that level of operations, the people calling the shots - they certainly have adequate knowledge of history (Chile, Argentina, Germany, Zimbabwe) to know in advance what will be the consequence of their actions - a demonstrated inflationary spiral. In the short run, it goes without saying that before the FED publically decides to bail out (AIG for example) or buy up (GM for example) you can bet your entire savings that the insiders have tipped off some of their friends, relatives and colleagues (at JP Morgan-Chase and Goldman-Sachs). It's how an elite 1% got to own 70% of our nation's wealth.
    But, the long run (the End Game) is to create such a huge debt, that it cannot be paid down even if attempted to be hyper-inflated away. The true owner’s of all that debt (the central bankers who control the FED) aren’t going to settle for promises of taxes– they’ll want real assets – water, raw material, and natural resources. Turning over what little gold is remaining in Fort Knox will no doubt be considered a suitable down payment.
    This current buying up of paper assets is being used to cut off the ability for Americans to continue to manage future destiny. With that idea in mind, another picture emerges. Investigate One World Order and those who are fulfilling their purpose: advancing the agenda of their semi-covert owners by an engineered collapse run by sociopathic gangster banksters.

  60. I hope that you will write a blog post entitled something along the lines of "The Five Year Old's Solution". Two days ago, when Bernanke announced that he was going to print six times ten to the eleventh power power federal reserve notes (I prefer using exponent form to emphasize the insanity of it) and use them to monetize federal debt, my girlfriend made an interesting observation. She said:

    "When I was five and first learned about budget deficits, I used to ask 'why don't they just print more money?' That's exactly what Bernanke is doing; he's doing what a five year old would do."

    I wish I had the standing to take this observation and run with it myself, but I have zero blogosphere standing. Thus, I would like to simply make the suggestion and pass the torch to you.

  61. Now, what will the private sector do with the $75 billion a month it will no longer be lending to the Federal government? Why, it will buy some other asset class.

    There is a misconception that when the government borrows a lot, private demand is "crowded out". Just because the government says "borrow" doesn't mean money that could be used to lend to private companies is lacking. Money will be lent where it makes sense. Borrowing is huge for government and business.

    Also, if you are insisting that the Fed printing $75 billion a month to buy bonds is inflationary because that money is now in "some other asset", I take it you would prefer the government run big deficits, so as to "squeeze" money from private investors?

  62. The United States deluded itself into believing it could continue to remain a prosperous nation by filching its own seed corn. The banksters convinced them the same, with hokum Keynesian BS that enabled them to skim more and more of the transfer of seedcorn to those indifferently consuming it.

    There is only one endgame when you confuse eating your seedcorn with a bountiful crop created by hard work, forgone consumption and sacrifice. Both major parties are more enamored with power than reality, and they haven't a dime's worth of understanding of the difference between seedcorn (a nation's stored wealth) and a bountiful harvest (actual wealth creation.) Even their dimwitted GDP measurement merely calculates how fast one consumes; it is completely indifferent to whether the economy consumes seedcorn or if it's consuming a fraction of what it creates vs. saves to create more wealth.

    Stupidly, few in the world can tell the difference between money and wealth, and so their wealth is rapidly filched through the expansion of money.

    Henry Ford is quoted as once saying, "If the American public truly understood the nature of their banking, there would be a revolution overnight." Enter union / government controlled eduction systems in the United States to assure they remain in the dark, putting in charge of the education the largest parasites at the seedcorn trough.

    It will not be pretty.

    I am Joey Peru. Google LosFunkyTown if you Dig it.

  63. GL-

    I was wondering if there was any calculation, any model or something concrete behind your expectation that inflation will be 5.5-6% in five months, or if you are just throwing a number out there.

    Either way, your writing is very entertaining.


  64. >If hyperinflation is about to occur, isn't >now the perfect time to buy a house or >farmland? Won't my mortgage debts be >wiped out in the coming dollar meltdown?

    We cannot see the future. Just because current trends suggest that mortgage debt will be wiped out, does not mean it will happen. The government and the bankers own the debt, they also write the laws; they could change the game to keep you on the hook. It does not seem likely they rigged this economy to create more independent smallholders. If that happens anyway, it might be windfall or not depending on how liquid housing is at the time, and how high your property taxes go.

    That being said, your mileage may vary. It might make sense anyway, if the down payment is a small part of your net worth, if you can move to a more resilient area, and/or your total housing costs (mortgage, taxes, utilities, maintenance, insurance) are equal or lower than present.

    If you are considering purchasing productive farmland, that pays its carrying costs with production sold locally, it could work; if you can maintain production in the coming turmoil.

    Farming is probably the most difficult business that exists, especially for an "outsider" in a close knit rural community. There is much to investigate.

    A few of the basic questions: Are good books kept, and can you see tax records? Will the current manager work with you for a year at least? Can s/he introduce you to all purchasers and suppliers and explain current arrangements? Are these arrangements extendable to you? Is all required equipment included or do you need to buy? If equipment is included, are maintenance records kept? What is equipments projected life and replacement cost? Can you reduce or at least maintain the cost of inputs? Can you improve marketing returns? Are there any enviornmental laws being ignored that could be a problem for a new owner?

    Farming is hard work, and most farms require before dawn to after dark workdays for a significant part of the year. Management must still be done at such times. If you are considering a small place and being the owner/manager/farmer can you truly do that much work?

    These questions are general and only scratch at the surface of the complexities of running a farm.

  65. Some commentators estimate that 2/3 of the QE-2 money injected by the Fed (from here on out) will not end up in dollar-based assets. That $50B+ will go into commodities or overseas.

    Don't forget that QE-lite is still going on (reinvesting the payments from QE-1). That is why the amount invested outside of dollar-based investments will exceed $50B.


  66. The logical error you cited was not "post hoc ergo propter hoc", but "affirming the consequent".

    p implies q
    q implies p

    This is affirming the consequent. Post hoc ergo propter hoc is the confusion of corollation and causation.

  67. This mindlessness thing might be a little worse in the usa because the evolution of television programming seems to run 10 years in front of europe.

    And here it has evolved to the point where it's ever present. Anyone need a great sunday read.

    >This great loom of media images, and images of images, is so many layers deep that it has replaced reality. No one can remember the original imprint. If there was one. The hologram is a hermetic snow globe, a self-referential circuitry of images, and a Möbius loop from which there is no logical escape. Logic has zilch to do with what is going on. The smallest part holographically recapitulates the whole, and vice versa. No thinking required, we just cycle and recycle through an aural dimension. Not all that bad, I guess, if it were not generated by forces out to fuck every last pair of eyeballs and mind plugged into it.

  68. Gonzalo:

    Who cares, really....? The inevitable is the inevitable... I hope that you've put your money where your mouth is... gold, silver, sugar, just to name a few, and not to mention where you should be short eventually.

    What you have here is a bunch of portly, pasty, botoxed, ignorant, sanctimonious gringos, who cloak themselves in pious patriotism. They ask themselves, "Gonzalo, is that a Muslim name.... Duh....?". Do you really care about these peasants, they are getting just what they deserve?

    If I were you, I'd fly a little bit more under the radar, these people have a tendency to shoot themselves in the foot and in the process kill the messengers.

    Best regards,


  69. Democrat’s president, Bill Clinton, who actually made government smaller.

    Waaaah! Poor little partisan Democrat. Did the mean Rethuglicans dis on your favorite team?

    It's true of course, just as long as that mean ol Rethuglican congress kept his feet to the fire. Look on the bright side bunky, it's a good chance that Obama will veto the tax decrease and you can get your tax increase you obviously want. I'm hoping it keeps your kids out of college. :)

    I don't like Republcans either, but Democrats suck even harder.

  70. I agree. It seems that its only a matter of time.

  71. If hyperinflation is about to occur, isn't now the perfect time to buy a house or farmland? Won't my mortgage debts be wiped out in the coming dollar meltdown?

    Only if you have hard assets, such as PMs, saved now and you sell them latter. As an example, lets say your mortgage is 100K, you believe that silver will go up 10x against the dollar during the hyperinflationary period before a new currency is issued. So, you purchase 10K in silver, put it in your safe and wait. Once silver hits 100 or 120K, you sell your silver and use the proceeds to payoff your mortgage.

  72. To Anonymous of Nov 4 @9:17pm and 9:19pm.

    Pal, You need to get back on your meds and crawl into your cave.

  73. I tip my ACH (Advanced Combat Helmet) to you, sir!

  74. I have not read you for a few months, since your hperinflation articles that were so widely linked. Taking a look at your site again I happened upon this article equating Democrats with Republicans and saying Bill Clinton was fiscally responsible. As many comments have correctly pointed out, saying Bill Clinton was responsible for fiscal sanity is insane. That particular congress, with Gingrich and great economically literate leaders like Dick Armey and others were the ones that produced the gridlock over spending that allowed the prosperity created by the Reagan Administration polices to continute for another 16 years through the 2 Clinton administrations and through most of the Bush II administrations until finally petering out under the latter, when of course the combination of moderate Republican and an insanely irresponsible deeply leftist congress took the reigns of spending.

    As I often tell my soft and mostly uninformed conservative friends when the attempt to equate Replublicans with Democrats, the truth is fiscally responsible conservative Republicans do exist. Fiscally responsible Democrats are so rare as to not exist. Thus it was so easy to predict our current circumstances when our country foolishly gave the extreme left congress veto proof majorities with an economic dunce/aspiring marxist to sign the bills. The result of course was the removal of all restraint on spending, a surge in strangling regulation and even government ownership of the means of production not to mention a voluminous ownership of financial assets.

    I like your extremely though provoking writing. However by equating all Republicans and all Democrats as to fiscally responsibility, you are on the verge of losing all your credibility and readers like me. You should forthwith do a mea culpa and get on with your writing.

  75. I agree with most of his comments but I don't see how we get hyperinflation in the near to mid term. Simply printing money and/or adding liquidity is not necessarily inflationary if there is a lack of demand and currently it seems the excess liquidity is being stuffed into stocks, bonds, both foreign and domestic and commodities thereby forming bubbles in these areas but most rises in prices are not being passed down to the consumer level. This is causing concern in the countries that are the recipients of large inflows of cash and is raising the prices of some industrial inputs but at the present time domestic demand seems to be low enough so that inflation remains at modest rates, perhaps about 6% or so annualized.

    The same folks that brought you the last round of bubbles are working hard to blow the next set because they liked the results of the last ones. They made obscene amounts of money and when the house of cards caved in the government came running and made them whole right down to the last dime. They, and I, don't expect the next blowoff to be any different although at some point they won't be able to inject enough liquidity into the system to save it and it will all collapse. They always manage to keep it going a lot longer than I think they can but in the end it will end it will definitely collapse.




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