Thursday, March 17, 2011

I Think Today Is The Day The Dollar Breaks Down

Update below, discussing the G-7 intervention. 
Update II below, discussing today’s action (Friday March 18). 
Update III below, one final chart. 
I could be wrong—hell, most of the time, I’m way wrong. But I do think that today is the day the dollar breaks down.

Get used to it.
Consider the evidence: 

The Bank of Japan managed to keep the yen down following last Friday’s Sendai quake. It was trading in an eerily placid 81-to-82 band on Monday, Tuesday and Wednesday—but then Thursday (Japan time), someone at the BoJ must’ve prematurely decided that it was all over, because they let go of the gas. 

What happened? It all went south—huge. As I write this morning (8:12am EST), the yen is trading at 78.50 to the dollar. 

Meanwhile, on the eastern side of the Pacific pond, the Producer Price Index numbers came out yesterday—and they weren’t pretty. During February, PPI rose 1.6%, against a consensus estimate of 0.7%. For the year ending February 28, the PPI rose 5.6%. (report here)

Tomorrow, the Consumer Price Index numbers come out—and if the PPI numbers are any gauge, they do not look promising. 

But Ben Bernanke and the Tools of the Fed are cavalierly dismissing any notion of incipient inflation. They keep insisting, “Core inflation is all that matters! Forget fuel and food and commodity prices! It's Core Inflation!” As if people bought more of this magical “core inflation” at the supermarket than food, and filled their cars with “core inflation” rather than gasoline. 

Anyway: Bernanke and The Tools need to keep interest rates artificially, sickeningly low. Their rationale is that their Zero Interest Rate Policy (ZIRP) and Quantitative Easing 2 (QE-2) are necessary so as to kickstart the economy. But they also recognize that if they raise interest rates, the Federal government would not be able to finance itself—

—in other words, the Federal government will go broke if the Fed raises rates.

This is really the crux of the matter: The Federal Reserve is in a position where they realize that if they raise rates, they bankrupt the Federal government. So they have to stand pat, and pretend to the public and to themselves that there is no inflation, it’s all just a mirage.

As it is, the Fed debt monetization policy otherwise known as QE-2 is buying up 50% of the Federal government’s deficit for FY 2011. And though QE-2 is supposed to end in June, Treasury funding requirements are so huge—and the Treasury bond market is so weak, especially now that Japan is in crisis mode and will not be able to buy up its regular share—that Quantitative Easing will have to be extended.

But that’s a side issue: For now, the markets all have the fim expectation that the Fed will not raise rates, no matter what the inflationary provocation, precisely because of the reality of the Federal government’s de facto bankruptcy. 

Now, a couple of weeks ago, I wrote a piece called “The Dollar and the Next Ten Days”, where I argued that the dollar was at a crossroads: I argued that, off a three year trend, the dollar was at a crucial juncture of either breaking down, or bouncing back up, and that it would all happen over the next week and a half of trading—hence the caveat “the next ten days”. 

I used the following chart: 

The next ten days came and went, and the dollar essentially moved sideways: A little flirting upstream, a little more flirting downstream, but it just couldn’t seem to make up its mind. 

Here’s the chart, the fortnight circled in red: 

Then Sendai happened. On the Monday, Tuesday and Wednesday after the earthquake, the BoJ managed to control the situation, and keep the yen from rapidly appreciating. 

But today, it’s slipping—big time. I woke up this morning and saw the overnights: As I write (8:19am EST), the yen is at 78.56, the euro at 1.402 and rising, gold smartly up, silver sort of up—

—and the dollar index is off nearly a percent, at 75.970. 

I think this is it: I think this is the point in time when the dollar is going to break decisively lower—the next 48 hours. And if the Consumer Price Index numbers that come out tomorrow (Friday) are as bad as the PPI numbers would lead one to believe, then I think the dollar will fall harder over the next week. 

I could be woefully wrong—like I said, I often am. It’s not just that the Fed and the other central banksters could finesse the situation—prop up the dollar one last time. It’s not just that the Bank of Japan might flood the markets with massive yen liquidity, forcing a scurrying to the dollar. It’s that I could just be wrong: The dollar might somehow—all on its own—muddle through. 

But the thing is, if I’m wrong about the timing, I’m not wrong about the outcome. If the dollar doesn’t break down now, then it’ll break down the next time, or the time after that. And not next year or next decade—this year. Now

The reason the dollar will break down now is because the Federal Reserve is out of options: No matter how you look at it, the dollar is on the path to oblivion—the egregious Federal deficit and the unpayable debt guarantee this outcome.

The Federal Reserve decided on a couple of policy option—ZIRP and QE—that they thought would prop up the U.S. economy. But instead of propping up the economy, these policies have only served to undermine and destroy the dollar.

My sense is that today and tomorrow are a turning point in the dollar’s road to hell. My sense is that either today or tomorrow, the dollar will break through the 75.63 floor—and then all bets are off. That’s what I think.

Of course, the road to destruction is not an immediate outcome: It takes a while for it to happen. But we have been seeing it happen. The rise in commodity prices to record-breaking highs. The inability of the Federal government to function without Federal Reserve monetization. The box the Federal Reserve has maneuvered itself into. 

So no matter how much magic the Federal Reserve deploys to save the dollar this time, ultimately—like all magic tricks—it’s all smoke and mirrors: The Fed is merely postponing the inevitable—an inevitable outcome brought about by their own policies.

Update, 3/18/11 in the early a.m.: On Thursday, 8:00 pm EST (Friday 9:00 am Tokyo), the G-7 deliberately tried to make me look foolish, by intervening in the Yen. (I take currency manipulation personally, especially when I go out on a limb with a prediction.)

According to the Financial Times:
The Group of Seven industrialised nations have agreed to co-ordinated currency intervention for the first time in a decade to help Japan recover from its devastating earthquake, tsunami and nuclear crisis.
Authorities in Japan, the eurozone, the UK, Canada and the US agreed on Friday to help weaken the yen in a rolling intervention that began at 9am in Tokyo, which immediately pushed the yen down from above Y79 against the US dollar to below Y81.
It is the first time the G7 has agreed to intervene as a group since it propped up the euro in 2000 and shows the extent of international sympathy for Japan.
Of note: Though the dollar index rallied up above 76.4 immediately after the intervention, it is now as I write this (6:41 am EST) back down to 76.053, and looking soft.

On a philosophical note, I whole-heartedly agree with the Bank of Japan’s efforts to soften the yen during a crisis like this—that is part of a central bank’s inherent mandate: To protect the people from currency volatility, most especially during times of crisis. In such times of crisis and currency volatility, only traders (and foolish bloggers) stand to win big—while everybody else loses. That is simply not moral, or acceptable.

However, propping up a currency—the dollar—not because of a natural disaster, but rather because it has been mishandled to death, is just postponing the inevitable. Postponing the inevitable, and adding to the misery when the end finally comes.

The Federal Reserve has been mishandling the dollar since 1987, by keeping it artificially cheap—basically subsidizing the cost of money, with all the distortions that price subsidies naturally bring about. Now, they’re trying to prop it up, when it’s too late.

Update II: As I write (5:22 pm EST, Friday March 18), the dollar index is down to 75.571, the yen is at ¥80.58 per dollar, and the euro is at $1.4181.

This is a decisive break on the trendline. So barring any (massive) central bank shenanigans, next week the dollar’s gonna tank something awful.

Even so, don’t count out Benny and The Tools. Who knows what those crazies might pull, if they get desperate enough.

Update III: One Final Chart:

Notice: The chart is showing the 75.72 close on Friday—but the final number in after-hours trading was 75.572.

All I have to say is, Look out below!

What I’m doing: In case you missed it, read about my own game plan to prepare and invest for the coming dollar collapse in the United States.



  1. We'll have one more disinflationary fall, then a Japan like Bernanke response, then it's the final fall for the dollar. The big one.

  2. GL

    Holy Batman! I am going to have to take another shower. I am drenched in sweat after reading this information.

    Where is my tranquilizer?

  3. By the way, the elites told Lindsey Williams that if the dollar breaks 75, then it will be a rapid descent.

  4. GL:

    Great post! Seems like I am watching a historic, world-wide tragedy in real time, with you as our Mel Allen.

    Bracing for impact,

    C deK

  5. You have made a classic mistake and you will pay for it. You are supposed to make predictions far into the future. Then when they don't come true no one remembers. Most of us have no idea that in the late 60's and early 70's "experts" were predicting global cooling, the new ice age in just 10-20 years. Oppps! Doesn't matter, this time we are right and it will be globalwarming but like last time just give us lots of money and change your political system to socialism/communism and we can stop it.

    My theory/prediction (and I'm gonna remain anonymous) is that Japan's problems and Europe's problems will actually help the U.S. Not save the U.S. but make a slower less deep collapse. All we need now is for China to have an economic collapse and I think we could ride this out. It won't be great, not a bear market or full employment. Just better then it would have been if Europe had remained strong and Japan hadn't suffered this disaster.

  6. Disagree with your attempt to call the day of reckoning within 24 hours. It subtracts from your credibility, which is at monolithic proportions as far as I'm concerned. Recommend focusing on the who, what and the how versus the when.
    And as for "who"--I don't blame Bernanke nearly as much as I do Hank Paulson and the elected whores who responded to him pulling out the kneepads. If a grown man hits his knees for a policy decision, and you're not gay, you should be horrified at giving him what he's asking for. Bernanke has had few options--and the one that I'd have considered heroic (letting deflation run its course and letting zombie banks fail) would have gotten him fired, shot, or worse.
    I've grown new-found respect for Andrew Jackson lately.

  7. Gonzalo,

    I just wrote about this yesterday, you are correct.

    The Fed is in check-mate.

    This time around stagflation will lead to hyperinflation.

    The Fed can not raise rates because it would lead to multi-trillion dollar annual deficits:

  8. This shtick is getting a little old. I agree with both Anonymous comments: your predictions are really destroying your credibility. At least, you acknowledge your propensity for being wrong. Still "If the dollar doesn’t break down now, then it’ll break down the next time, or the time after that." is like saying a stopped clock is right twice a day.

    Since you are advertising your videos at the end of each article now, Upton Sinclair's quote about understanding something when your salary depends on not understanding it seems fitting.

  9. I said so yesterday, and watch the EU dump the PIGS- who is going to bail their bonds now?

  10. The Dollar will not break down. The strength of the Yen against the Dollar is temporary and related to hedge funds rushing to liquidate their cheap Yen loans.

    The collapse of the Dollar was predicted since 1980 on a continous basis. So far every generation of forecasters was proven wrong. Gonzalo is just the most recent proponent of the idea that the Dollar will break down. He is not the exception to the rule that all Dollar pessimists will be proven wrong.

    The reality is that all currencies are linked and are devaluing simultanously. The daily fluctuations are just noise. The euro is trading today around $1.40, roughly the level it traded 10 years ago. In between there was plenty of volatility - all noise from the long term point of view.

    All currencies devalue in concert against gold. The price rise of gold is just the reflection of the overissue of fiat money all over the world.

  11. Nevertheless, The Morgue (aka JPMorgan) keeps on manipulating precious metals, so that everything looks tight and neet :/

  12. Robert,

    The definition of Dollar breakdown is when the DXY goes below 71, its around 77 or so now. My bet is Dollar breaks down in 6 months.

  13. I agree with the other 2 Anonymous comments and also the comment by Robert.

    The largest currency circulating in the word, by definition - will collapse the slowest.

    I don't disagree with the view that there may be hyperinflation in the near-term future, but I would seriously refrain from making any predictions on complex systems, simply because I wouldn't want to sacrifice my credibility for the sake of timing.

    But GL is doing just the opposite.


    "Japan to Feel Out G-7 on Yen Intervention"

  15. If the dollar "breaks down" today, it doesn't mean an immediate economic catastrophe.
    It means that it will generally continue in a downward spiral.
    Eventually leading to hyperinflation.
    It may take a couple of years, a few months or a few weeks. Who knows?
    It depends on events.
    But, don't make a mistake, it will collapse.

  16. How about a "printer friendly" link to your posts?

  17. If the dollar were in imminent danger why are the 10yr treasury bonds rallying?

  18. @Anonymous 5:08 PM

    Because the Fed is buying?

  19. "Because the Fed is buying..."

    THAT - is a good one. And accurate to at least an important degree.

    Rob Kirby does excellent analysis of just this type of buying action from the Fed. Check him out.

    And speaking of 'credibility':

    Finger pointing at credibility should aim in the direction of the aforementioned Fed. For it is the 'credibility' of the Fed, the Treasury department and various agencies, etc., to make sure that 'credibility' is maintained in the perceptual eye of the American public and foreign investors.

    Jim Sinclair calls it: M.O.P.E

  20. Mr. Lira's predictions, while possibly early are nonetheless true. The Fed is indeed in checkmate. With QE the stock market remains somewhat stable for now, without QE we are not only not financing our debt going forward but the bid that is always in the market especially on Mondays goes away. The only question is exactly when will this take place, which is anyones guess. I think Mr. Lira should be thanked for the regular warnings. He is educating not only those in the know, but maybe some of the ignorant as well. This will be less people that are part of the problem when SHTF takes place which it most surely will. TR

  21. Gerrit,

    The Fed was buying in Oct, Nov, Dec, Jan.
    Yet rates were rising during that entire period.
    So the Fed's buying doesn't seem to adequately explain the movements in interest rates.

  22. GL,
    All respect to you sir...but...
    Have to disagree...not entirely.
    The chart and analysis you provide only partially shows the picture of the USD demise.
    Extend the timeline to yr. 2000.
    What is evident is ....the dollar...the world's reserve currency...the greenback...has broken down over 10 years...Quid Pro Quo.
    This timing game is nonsense. If you didnt realise that its been happening for the last decade then I ask you ...What planet have you been living on ? (not directed at you GL).
    The next leg down only completes another cycle...of which there have been many over that period.
    Its absolutley correct that all fiat currencies are losing ground - not against themselves - but in purchasing power. After all they are only paper..and paper is worth ...????

    Japan is a concern (read no show in next bond auction), so too is China, UK, Europe and Brazil.

    Denial...Denial...DENIAL !!!
    The "Elitists" are out manoeuvred. Game almost over....but it was fun while it lasted (67 years worth of it) !!!! MMMMMMMM...warm and fuzzy. Oooooohhhh that pile of shiny metal sitting in the corner looks glorious. Who owns that ??

  23. @ Anonymous
    With all due respect,
    The blame cannot be directed at Bernanke, Greenspan or PAULSON...or any other select individual.
    Circumstances that preceded the GFC and those that eventuated subsequent to it, are the manifestation of the international monetary system that we have become so accustomed to.
    A new world order is the only solution !!

  24. when the BP oil spill was bilging millions of gallons thru the pipe on tv, I couldn't help but think of all the waste created similarly by our gov't in the form of QE debt and Obama/Reid/Pelosi/Frank bs.

    And now the nuclear contamination spewing toxins all around kind of reminds us that the economy is toxic worldwide, its runaway and very hot.

  25. How would you like your change? As a dollar bill, and 2 quarters, and a nickel. It comes out to $1.55. Take the dollar and some change, but me I would rather have 155 pre1982 US Licoln Cents. Any date of Lincoln cents prior to 1982, except 1943 are 95% Cu,(copper). 155 US Cents made prior to 1982 contain 1 pound of pure .999 copper, worth around $4.00 in scrap. Talk about depreciation of that good 'ol dollar.

  26. No - the usd is not going to collapse / the G7 supported the yen today / and it is part of the same club supporting the JPM and the others / there will be an unwind that comes together, but they will not unwind the usd alone / it will come in the future - sorry to disappoint

  27. Actually, it doesn't matter if GL is wrong about today being the Day. I imagine he has enough credibility with us by now to indicate that it's going to happen DAMN SOON if he is saying this. Soon as I saw his post I thought: "Oh damn I really could have used another month".
    And with regards to him advertising his seminar on what to do to protect yourself, well, DUH!!! Surely if we've been following his blog for a while we are pretty sure SOMETHING BAD is going to happen? Don't you want to know what to do when it does? I paid the money for the seminar recording and was happy I did; it showed my my financial preparations were right, but also suggested things I hadn't thought of. He's probably saved my financial ar$e, and probably those of quite a few people.
    Incidently, I was just walking through a major shopping center (mall) after reading his post, and it felt damn creepy looking at all the shops and wondering how many would still be open in a few months.
    (Oh and love the spilled milk wallpaper. Nice one.)

  28. Soooo--------- at the end of the spiel it's all about you clipping $35 for 4? Videos.

    Any advice could have been said in the space you took with your original come in spinner headline. NOT impressed.Anyone with ONLY 10K plus a pittance in a Retirement A/C needs FREE advice not a haircut.

    PS -being anonymous is just easier -I'm in Australia & My comments can be taken (like yours) for what they're worth.

  29. It was nice to find a link from www.coinflation dot com to your site. I like the subject, but it lacked your usual hard core smarts. (Graphs are always appreciated).

    With that said, at least you did not do what Mish S. did in a recent price on Japan. After reading his rant of critism for the Japanese Govt, I felt like attacking his man-hood/brain-hood.

    Even with some of the "odd" and lacking expressions utilized in this peice, at least I am not finding myself nicknaming the GL a "-ICK." Mish in on my -ick list.

    My opionion from Kansas is that THE DOLLAR HAS BEEN EVAPORATING OVER DAYS, weeks, months, years....! That period of time, as well as the start time will be determined by who writes the history books, as well as depend upon whose history book.

    "Waiting" for the so-called dollar breakdown is like watching the helicopters drop undigestible sea-water on a the nucular plants of Japan, oh wait.... helicopter Ben Bernanke has already down that.....dropped bad dollars from the quick presses at the NASCAR treasury upon the entire global economy.

    Over and out from Kansas!

  30. Ok, so the UN has voted "all necessary measures" for the freedom fighters in Benghazi, Libya, because the dumbshit has been killing his own citizens.

    What I want to know is when is the UN going to vote to protect poor little me from the beating the Federal Reserve gangsters are perpetrating on me. Why isn't the rest of the world up in arms over the continual assaults that the fed has committed against me and my wealth and my well being for the past several years now.?

    Is there any way for me to request asylum in another country such as England or Spain. I only have a small amount of money, enough to feed and cloth myself, I would need some form of housing assistance.

  31. Today is not the day the dollar dies, instead it is just one of many days of it's very slow death. I became aware of the nature of money when I was just a kid and noticed that my savings did not collect near enough interest to keep up with inflation. My grandpa taught me to save any silver coin as a kid and it been the best thing he ever taught me. My name is a lesson and says it all.

  32. Gonzalo -

    While your assessment is right, the dollar will eventually collapse, trying to call it's demise is a fools's errand and here's why: The dollar is the world's reserve currency. The demises of the world's reserve currency puts the globe in uncharted economic territory. We're talking 2008 times, whatever, it will be a lot worse. This is common knowledge among those whose job it is to know such things. Meaning the central bankers all know that it would be catesrophic and they all know that they all know this. So this group will do everything possible to put off the inevitable. Hence the announcement of the G7 today to answer a "call for help" from the BOJ to weaken the yen. This is total BS. Japanese exports are the last think on the mind of the BOJ. Moreover, a stronger yen is in the best interest of the Japanese in order to rebuild. This has nothing to do with the yen and everything to do with the dollar.

    This type of coordinated intervention will continue until it can no longer continue (Stein's Law). This is because it prolongs the charade and those prprolonging the charade know what happens if it ends. So, back to my original point. You are correct, the dollar will collapse. But sitting in Chile observing the fundamentals, puts you at a distinct disadvantage for calling the timing because you can never know what the central bankers will do next and they will always do something until they run out of options.


  33. To Robert Happek

    On March 16, 2001, the dollar traded at $0.89 to the Euro, not the $1.40 that it trades at today. Get your facts straight man if you want to have credibility.


  34. To JMA,

    The co-ordinated intervention will prop-up only so much, it didn't do weel last time either. And yes the Dollar will go down fast and hard- reserve currency or not. Its not unchartered territory there will have to be a temporary peg to gold.In this day and age its relatively easy
    to replace the currency with several options-print or electronic cash cards or even iPhone cash. What I think is when the tipping point comes you will be amazed how quickly the dollar will die- nothing is to big to fail.

  35. What?
    Dollar is KING!
    Dollar will prevail!
    We dont need no gold and silver!
    That shit is only for retards!
    A dollar is a dollar, an ounce of gold is a piece of shit!
    The US is the richest country in the world, and you fucking bastards that disagree will fill all the power of our Army!
    Fuck all the wetbacks like GL, screw them all! They've been taking our freedom, but in no way our economy, we are standing strong and the American Citizen Obama WILL kick those bastards ass!
    The FED is the best thing this nation has ever had, and bastards like Ron Paul should be put on the electric chair for treason!


  36. Hmm... I bet it rallies here. I'm betting Fall/Winter is when we might see some disorderly action in the markets.

  37. @ Anonymous 7:07 PM

    Quote: "So the Fed's buying doesn't seem to adequately explain the movements in interest rates. "

    I owe you my thoughts /explanation:

    What I read from various sources is that the bid-to-cover seems to drop gradually, which can be explained by a weakening foreign interest in US bonds. As the FED does want to pick up as much foreign bids as possible AND keeping interest rates low, it has to balance it's burn rate vs the interest rate.

    With lesser foreign bidders it will result in higher rates or getting closer to take 100% of the auction.

  38. Wow! You are way early with this. The Japanese disaster has only accelerated things a bit. There are at least weeks, if not months yet to go, absent several more events of this scale.

    The dollar is a bit like a vampire clan, avoiding the sunlight, but this vampire clan has lots of friends to help them "make it in the shade". Unlike the vampyres of lore, these vampires prefer sucking wealth to blood, and get a little from most of us every day. Most victims know they are being tapped, but are unaware of how, so the Clans point them at scapegoats (unions, immigrants, pensioners, political opponents, etc,) to vent rage on. When the average victim figures it out, then they will try to change the "game". There are many other vampire clans (Euro, Yen, Pound, etc) and most have a mutual defence pact with the Dollar Clan. The Dollar Clan provides the primary muscle in this pact. Thus it is hugely unlikely that the dollar clan will fall first, or alone, or today!

    Best to stock up on garlic (gold) and stakes!

  39. You were right -- the dollar broke through the November low today. All bets are now officially off.

  40. I don’t know. I suspect that the G-7 will succeed this time, then when there is neither news nor a crisis, a drop will occur which the FED cannot recover from. Why? Because the insider rats will be deserting the sinking ship. The insiders want to keep the FED afloat as long as other people can be forced to bail it out.

    The japan jitters are reasonable; no one know how costly it will be for Japan to recover from the Tsunami. All the world’s currencies are unstable, so GL could be right. But, we need another week or so to confirm the trend. Eventually, the Fed and the G-7 will run out of options, but is that today or a year from now?

  41. Well by my calculations GL has just nailed it. Bulls eye. And a quick word to all those communists on here whinging about 35 measly dollars for Gonzalo's advice. If you think you are entitled to everything and everyone elses effort for free you have lived in the UK for too long , get a grip and respect the effort that goes into Gonzalo's work. The fact that you are on here reading is because you want his his insights. Cough up or shut up. Dollar just closed friday 75.68. Well below Gonzalo's chart support line. Reputation intact Mr Lira.

  42. To JMA

    You are right - my apologies. However, the Euro was worth $1.20 when issued in 1999. Despite the volatility, the Euro was trading at that level ($1.20) in 2004, 2005, 2008, 2009, 2010. Right now, the Euro is in an uptrend and trades around $1.40 after trading at $1.60 two years ago in 2008. By the way, if we replace the Euro by the German Mark before 1999, then the equivalent value of the German Mark (1 Euro = 2 Mark) was trading at $1.40 in the early 1990 - close to 20 years ago. These numbers do not paint a picture of the Dollar breaking down. To the contrary, the Dollar seems to be relatively stable but highly volatile against other currencies.

  43. Dear Anonymous Australian:
    $35 for Gonzalo's opinion is a bargain.
    I subscribe to numerous financial and political newsletters.
    I pay a lot, lot more than $35 for them.
    Gonzalo's insight and advice is worth a lot more than all of them.
    Quite frankly I don't want anything for free. It's usually garbage and I don't like to owe favors to anyone.
    Gonzalo's newsletter is the exception.

  44. Gl

    Your hyperinflation ideas were well worth the $35.

    My thoughts about the future are not as benign however. I am old enough to see what has been happening in the U.S. over time and am sorry to say that we are heaving toward a New World Order. (google: New World Order, you will be shocked)

    I am in the medical field and we have had forced flu vaccinations under threat of job loss, for a flu that never materialized. DNA testing is now done on infants under the guise of research. Privacy excuses are used to make it impossible for parents to guide their children's health choices.

    Out in the world, I have noticed more and more occult movies, news media implying good is bad and bad is good,and theft by bankers is ignored by the masses. Moral values are no longer admired. It is a self centered world with an undertone of darkness.

    The dictator you mention that is an inevitable result of hyperinflation will make Hitler look benign IMHO.

    This will not happen easily since I noticed when I was in a gun store that Glocks and ammo were flying off the shelf. The place is packed every time I go. I now have a taser, a gun, a shotgun and mace with a side order of bullets.

    When my husband and I were in Oklahoma, one of the cops who stopped us for a speeding violation, was surprised we were not carrying any loaded weapons with us. Californians cannot carry concealed weapons so we didn't bring anything with us. Our Oklahoma property manager, however carries a loaded weapon everywhere she goes and has a loaded gun every 50' in her house.

    Currently the deception of green shoots is pervasive. However, when Americans wake up from their naive deep slumber realizing how they have been double crossed, we will be in for interesting times.

  45. GL is not wrong. If you look at $USD on, you will clearly see that the dollar has broken beneath the long-term line of support (traced beneath the 3-year plot of the data). At the same time, it appears that the euro is headed upwards. For the time being, it appears that UST's are no longer in fashion as a refuge for safety. Indeed, only gold and silver seem to offer that promise right now.

    Personally, however, I am more concerned that the director of TEPCO (Tokyo Power Co) is in tears in front of the media. I interpret this act as a possible acknolwdgment that some of the nuclear power plant workers may have been exposed to grave health risks from radiation.

    If this turns out to be true, then we all owe these workers a debt of gratitude. Banks and hedge fund managers be damned! These folks are showing us what real "social commitment" means.


  46. Come on, it's not coincidence. Gonzalo adds his 'of course I might be wrong', but on the same day G7 jentervenes...

    and it does so most probably not because Japanese need it (weak Yen = inflation instead of economic progress and less purchasing power, doesn't make any sense) - they are nation of savers and they have lended a lot - so could they not liquidate their US treasurys... or EU bonds? Why to choose to print money ?

    So it seems there was an anonymous patient, requiring urgent money transplant procedure. Patient most probably comes from US or EU (not necessarily in that order) and for him 'to calm the markets' is the priority - not how to really help the tragedy.



    Jeffrey Robert Immelt is the chairman of the board and chief executive officer of the U.S.-based conglomerate General Electric. He holds an A.B. in Applied Mathematics from DartmouthCollege where he currently serves on the board of trustees and was president of his fraternity, Phi Delta Alpha, and an M.B.A. from HarvardBusinessSchool. On January 21, 2011, President Obama announced Immelt's appointment as chairman of his outside panel of economic advisers.. "Immelt will retain his post at G.E. while becoming "chairman of the Council on Jobs and Competitiveness, a newly named panel that President Obama is creating by executive order."


    Aris Candris became president and CEO of Westinghouse Electric Company on July 1, 2008. Prior to this appointment, Dr. Candris served as senior vice president, Nuclear Fuel, providing fuel fabrication, components and services to commercial nuclear power plants worldwide..He began his Westinghouse career in 1975 as a senior engineer in the former Advanced Reactor Division. Dr. Candris holds a B.A. from TransylvaniaUniversity in Lexington, Kentucky, and an M.S. and a Ph.D. in nuclear engineering from CarnegieMellonUniversity.


    Mr. Hackett was named Chief Executive Officer in December 2003 and assumed the additional role of Chairman of the Board in January 2006. He also served as President from December 2003 to February 2010. Prior to joining Anadarko, he served as President and Chief Operating Officer of Devon Energy Corporation following its merger with Ocean Energy, Inc. in April 2003. He currently serves as a director of Fluor Corporation, Halliburton Company and The Welch Foundation.


    John V. Faraci, 60, is the chairman and chief executive officer of International Paper since November 2003. Earlier in 2003, he was elected president of International Paper, and he previously served as executive vice president and chief financial officer from 2000 to 2003. He also serves as a member of the boards of the Grand Teton National Park Foundation, and the National Park Foundation. He is a trustee of DenisonUniversity and a member of the Citigroup International Advisory Board. Director since February 11, 2003. He attended DenisonUniversity, received an MBA from the University of Michigan and is a member of Lambda Chi Alpha Fraternity. He is a trustee of the American Enterprise Institute.


    Anthony S. Harrington is President and CEO of Albright Stonebridge Group, a global strategy firm, and a member of the Management Committee of Albright Capital Management, an affiliated investment advisory firm focused on emerging markets. The firm’s Chairs are Madeleine K. Albright and Samuel R. Berger. Previously, he served as U.S. Ambassador to Brazil during a time of unprecedented bilateral engagement between the two countries. He was nominated by President Clinton and confirmed by the U.S. Senate with bipartisan support in a record 12 days. Mr. Harrington is a member of the Managing Board of Civitas Group, an affiliated security industry firm, and a trustee of the Kenan Institute for Private Enterprise. He is also Co-Chair of the Brazil-U.S. Business Council and of the Advisory Council of the Brazil Institute at the Woodrow Wilson Center.

  48. What did GL mean by the dollar "breaks down"? If he means it heads down on a chart and never returns that high again, he could be right, but i'd be willing to place a small bet against. If he means we will look back at this day (3/17) and mark it as the beginning of the hyperinflationary demise of the dollar, then I'd say he's about four to six months early, (at least), barring further major disasters.

    OTOH if (pick three) MENA erupts into conflagration, the New Madrid, San Andreas or Casacadia have great earthquakes, Mt Fuji, Vesuvius, or Ranier have major eruptions, a "terrorist" nuke is detonated in a major city, or an unlikely Atlantic tsunami hits the East Coast of USA and Western Europe, (or insert your disaster here!) then the dollar could go down early.

  49. "GL is not wrong. “

    I agree that Gl is right in the log run. But picking tops and bottoms is difficult. I want to see it conformed.

    "Indeed, only gold and silver seem to offer that promise right now.”

    Food first, survival goods and Guns second, Silver third, Gold fourth, safe location fifth. You can’t eat Gold during an economic disruption. If you have Gold someone will want to take it from you. It can be real tough to relocate; I know some people who plan to ride out the crisis downtown in a big city. I wouldn’t want to do that, but you do what you can.

    Of course, I’m not planning for The End of the World as We Know It. I’m expecting a depression where the dollar is worthless. The economy and markets will recover when the government and the FED stops interfering.

    "Personally, however, I am more concerned that the director of TEPCO (Tokyo Power Co) is in tears in front of the media. “

    Don’t make too much of this; he was ashamed at having lied. The Japanese people are emotional underneath a calm exterior. Once the crisis was over, his honor and duty make him admit his faults.

    Times were scary and people were afraid. They were saying impossible things, like there would be a China Syndrome. There is no such thing as a China Syndrome.

    I don’t blame him for trying to prevent panic. But, he should have just told what he knew.

    "I interpret this act as a possible acknolwdgment that some of the nuclear power plant workers may have been exposed to grave health risks from radiation. “

    I don’t minimize the dangers. People could have been harmed if the radiation had been higher or the wind was in the wrong direction.

    "If this turns out to be true, then we all owe these workers a debt of gratitude. ... These folks are showing us what real "social commitment" means."

    I agree, PeteCA. There were some real heros there.

  50. GL- the fact that the Dollar could not rally even with G7 intervention in the Yen and actually slid further to a new 52 week low as the day wore on is most telling. The Dollar is finished.

  51. Dear Gonzalo,
    Very interesting article that you've published here. I've been watching this chart like a hawk, and one of the things that made me think it may be going to go up, was that Tricky claimed that they just may be going to put up European rates and Bubbles claims there is no inflation in the US, especially if you strip out everything that could possibly be going up.

    So everyone is long the Euro and short the Dollar.

    That's possibly when the situation reverses. It could be the biggest short squeeze of all time, at least since the bounce off the bottom in March 2008.

    In technical terms, there is currently on the USD chart, signs of a reversal. This is that the last 2 lows of the index are not matched by the corresponding lows of the RSI indicator above. This is termed a bullish divergence. However, if the dollar finally does its major collapse, then the world is really up the creek without a paddle and this divergence would be rendered invalid.

    My own view is that at some point we have to have some sort of engineered crisis to allow a transition to a new global currency and new controlling arrangement. There have been enough hints from the IMF to raise one's suspicions about what may be coming in terms of a new global currency - the SDR, plus or minus some backing from gold. Also the BIS, where all the major central bankers meet regularly, has been conspicuous by its accurate warnings of the dangers of credit bubbles ending in collapses. This is strange considering that the BIS is a mysterious organization with a past history of opprobrium for its wartime activities, whatever they were, and that Greenspan, among others, was on its board of directors. Who is controlling what? So maybe the BIS Is being groomed for the role of global central bank to take over from the Fed.

    It is just too bizzarre for the number of financial, economic and political crises that we have suffered over the last 10 or so years to just be coincidental: 9/11, tech bubble and collapse, property bubble and collapse, oil shock courtesy of the fall in the USD, private debt shifted onto the public books, risk of sovereign debt default, austerity measures in the Euro zone, similar measures in the US except for Wall St and US companies, US providing democracy in unsettled countries that just happen to have oil, now a soft commodity bubble, unrest in the MENA countries, massive government debt, unlimited money printing in the US and probably the ECB, China growing at unsustainable rates........................etc etc etc.

    We are being led somewhere but I'm not sure the destination is all that halcyon

  52. Wow, I read the full column and I am exhausted.

  53. yes ...

    my question is:

    are these coincidences manufactured by incompetentent leaders and coorps

    or are these coincidences manufactured by highly centralized, for lack of better expression, illuminati like group..

    a very pertinant question indeed

  54. Anonymous said,
    Live in Europe and in one of the better sections, places , stores and used car lots are closing like the birds are flying South, soooo, the Europeans are NOT in very good shape either . There are now loads of places for rent and for sale, as the Europeans tend to take care of each other and the sons and daughters move back home with the parents. People are taking less vacations, and also not spending too much on extras. Do not agree with you.

  55. Why= 80s = Eliminated the S&L competition

    Subprime has already eliminated 75% of Loan Brokers

    Vs 70s when we had 30,000+ Lending Institutions'

    Next GS *&* the other top 5 Banks will absorb Fanny & Freddie = who in the 80s

    thru 90s & Early 2000s were returning double digits returns and will again only

    No private investors and 3- 6 Banks Control all Real Estate Loans and eventually

    the entire Industry.

    Book Mark this and read at 1yr.,-2yrs.,-3yrs., and it will unfold and blow Your Mind

    This was "NO" Accident.


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