Jim Willie, publisher of the Hat Trick Letter, writes that the current policy of quantitative easing is essentially hyperinflation to oblivion, especially considering that the US government really has only one of two options:
- Quantitative easing is stopped and liquidity is pulled from the system due to political pressure and other factors, leading to a very rapid collapse of stock markets and asset prices, likely around the entire globe. (This is a scenario recently discussed by Chris Martenson in The Coming Rout)
- Quantitative easing continues, resolving nothing, as has been the case for the last two years. The only benefit will be to those who receive the easy money from the Fed. This will continue to drive prices through the roof, eventually leading to hyper-inflationary price rises.
Mr. Willie, who in 2009 penned an essay about economic hitmen, discussing the Third Parties Rumored to be Attacking US Dollar, Treasury Bonds and Suppressing gold, analyzes where we are nearly two years later, well on our way to the disaster he forecast in prior commentaries.
The Hitmen Cometh: Capital destruction is the main byproduct of monetary inflation, a concept totally foreign to the inflation engineers at the USFed and its satellite central banks. They are agents of magnificent systemic devastation. In the wake of each QE round are discouraged creditors who turn away in disgust. The damage and inflation feeds upon itself in stages of intense wreckage. The motive, need, and desperation for QE3 is being formed here and now, to be announced by late summer probably. Prepare for QE to infinity, endless hyper-inflation, a process that cannot be stopped, as the urgent needs grows. Any attempt to halt the process results in almost immediate total annihilation. So continuation of QE rounds serves to manage the deterioration process and guide the financial structures gradually and orderly into oblivion.
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The United States has become a Weimar nation with gradual global recognition. Instead of a recovery, it slides into the Third World. Thus the need for the US Fed to cover the next US Treasury auction in full, or almost in full. It is deeply committed to monetizing the entire USGovt debt. Call it Weimar, Third World, Banana Republic, whatever!!
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…the inflation effect has crossed from the monetary side to the price systems, hitting the entire cost structure in a profound way. The moron bankers strive to cut off the process from handing higher wages to the workers, so that they can afford a higher cost of living. The leaders thus strive to bankrupt the Middle Class, hardly a pursuit in commitment of economic recovery. The cost squeeze is deeply felt by both businesses and households, businesses that cannot hold their workers as profits erode badly, and households that cannot maintain their spending patterns as incomes are devoted increasingly to food, fuel, clothing, insurance, and everything else. Tax revenues from wages and corporate profits and capital gains are descending into the gutter, not available to cover the US Govt deficits. Witness the death of the US Economy in hyper-drive, pushed by the US Fed Quantitative Easing.
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The entire population is aware, except for the US Fed, the Wall Street master, and banking elite. Actually, they are aware, but they cannot speak about the scourge they unleashed since they would invite criticism and turn the blame onto themselves for destroying the United States financially, economically, and systemically. The moral fiber is long gone among leaders, as the US nation is being recognized as a fraud king playpen. The end result is that in the cycle, movement from US Treasuries to the US Economy is not happening during this death spiral, as it normally does. Instead, the next bubble is in the entire commodity arena. Beware that such a trend is highly destructive, since it erodes the profit margins and disposable income, thus causing deep recession if not systemic collapse.
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The next bubble in commodities will be negative, harsh, and highly destruction, as they will lift costs without a corresponding rise in wages. That event has already been triggered.
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Some advice. As the movement swirls, as the next QE program details are revealed, as the central bank model is shattered in discredit, as the global monetary system crumbles before your eyes, as sovereign debt worldwide loses its exalted safe haven security, as your personal budget finances erode beyond your worst nightmare, invest what is left of your life savings in Gold and especially Silver. In time, they will be the primary portions of your portfolio with surviving value. Each will rise, but Silver will do a moon shot!!
As we previously discussed in our commentary on Chris Martenson’s analysis The Coming Rout, we would not be at all surprised to see a pullback in global equity and commodity markets as the Federal Reserve comes under pressure, politically and from Main Street, going forward. The American population – at least some of us – are realizing that all of the monetary actions of The Fed thus far have yielded no results other than to send prices on essential goods like food and energy soaring. The outcry can already be heard, and as gas prices continue to rise, the voices will only get louder.
The Fed and US government may attempt to control those rising asset prices by blaming speculators (as they did in 2008), implementing regulatory and trading rules (as they did in 2008), and removing some of the liquidity in the system (temporarily pausing the policy of quantitative easing), but doing so will prove that the so-called recovery stemming from green shoots in 2009 is nothing but a farce.
Our view is that the policy of the Federal Reserve, US Treasury, Obama administration and central banks of the world, will quickly revert back to one of quantitative easing as soon as asset prices take a hit and the banking establishment, especially those banks doing God’s work, face the threat of being exposed for their complete and total insolvency. They will panic and force the issue as they have done for the last several years.
Monetary easing and the Federal Reserve buying US Treasury dent is now policy. There may be a temporary pause to Fed action in the near future, but we expect no change in how the “crisis” is approached in general.
As suggested by Jim Willie, the event has already been triggered. We will, more than likely, experience a financial and monetary collapse this decade so severe that the United States’ economic, financial and political systems may very well be unrecognizable by 2020. The matter essentially rests in the hands of those nations that determine our credit limit, such as China, Russia and Japan. They are fully aware of the inherent problems with US monetary policy, so there is no realization that they need to come to – they simply need to act on that realization, at which point the game is over.
and then the other game begins…
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living within the bounds of Nature.
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Good luck all! Be Prepared!
Wake me up when silver hits $50 & gold hits $1650-4500. You got insurance right?
We are so screwed!! Now with the earthquake in Japan, they can not afford to buy any bonds. China and Russia won’t if they had half a brain.Europe was hoping Japan would help them out. The whole world is essentially broke and everybody knows it! Next will be the derivative market which will spell the end. Try to pay off your house or find a relative with one and some arriable land if possible and talk it over with them. Make sure you have something to bring to the table be it tools,skills,metals,food,etc. A mooch will not be welcome. Be extra observant for any obvious signs of collapse and make sure to have a G O O D plan. I hope none of this happens but I for the life of me can not see a viable option. If you do please advise so that I can sleep better. Thany you all and God BlessÂ
Comments….. all i can say is line china, russia and japan up at the god damn dicount  window, and make them buy 100 year treasuries(coming soon) or we nook their a$$es, hell why not do 1000 year bonds, you know, like a 1000 year (reich) bond!
There is little doubt in my mind that we are indeed living in END TIMES. We are now seeing just the tip of what the world will experience – hell on Earth and no clear answers or solutions to be found. Find strength in yourself, your family and your community. God only knows that we will all NEED it. Good luck America and keep preparing.
I just don’t get how the Bernakes and the other in Washington can think that if we keep getting cash advances (QE) on the credit card to maintain out lifestyle that it will be fine once we get our next good raise (economic growth).
I sometimes feel like I slipped into an alternate universe where up is down and black is white…so QE is growth.
How can this end well? How can people sit around and say “yep another trillion and we will have a recovery” …”ok this time another trillion and we will have a recovery”…..”ok this time it will really happen”….
What we have seen in Japan was mother nature…the tsunami we have coming is our own making. The pictures may not be of a wall of water and debris wiping out towns.
But what is coming will be much more devastating to many innocent and unprepared fellow Americans.
No need to say get prepared…because if you are here you know.
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All of the QE is going to be converted into fresh, crisp ten dollar bills; the printing of which will be so manic that they overflow and create a gigantic paper tsunami 57 feet high and a thousand miles long which flow out across the land purchasing everything in their path. I’m pretty sure Nostradamus predicted this would happen but we will only know after the fact when we force the text to fit the circumstances of this particular event.
Wonder how much silver Jim Willie owns?
SHTF Times: “Gecko Greed: The National Debt” says that the debt will never been paid, that the NWO will seek to impose a new “contract for America” that eliminates the national debt ……..
and dissolves the US Constitution. Are you ready to sell your soul America?
I wonder if they’ll be putting obama’s face on the new trillion dollar bills?
BJ, maybe he’s bookin for this spot instead?:
http://thedailybell.com/1849/Why-Not-a-Global-Currency.html
I doubt it though, seems too ambitious for him.
And then there’s this, especially the phrase, LET’S MAKE A DEAL, but this is the bottom line:
Five Principles That Made America Great:
“The standard belief is this: “Our kids will have to pay off this debt.” No, they won’t. They will default. It’s the oldsters who will pay the price of their own folly…”
http://www.lewrockwell.com/north/north956.html
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In the meantime, there’s this action:
http://www.youtube.com/results?search_query=grocery+store+accepting+silver+coins&aq=f
I think the constitution was dissolved in 1860…..
@Bill:Â More appropriately his wife’s butt; far more descriptive.
you should do a full home security inspection and then reinforce your doors and windows and turn your bathroom into a safe room by adding dead boly and solid core door with steel re-enforcement in striker plate frame… just saying for less than a 100. you can ensure your and your families safety and it’s worth it as times will get worse here real soon… buy a hand gun ammo and mace.
your gonna need it…
arm up stock up prepare, preditor or prey the choice is yours!
Comments…..Bill J, if his face is on there, it sure will give me greater pleasure to use it as a$$ wiping material, or light the coals in the BBQ. This article is the same thing we see and hear at these sites from anybody working in finances. It only has a different set of clothes on it. Most of us that come here to read are already or are getting prepared and know that whats going on, will end very badly. Ive resigned myself to the fact that I just don’t have enough bullets, time, or me to deal with these SOBs that caused all of this, and that my time is better spent on taking measures to ensure my family is ready. It is my hope that this all pans out for us. If not, then maybe I’ll meet one of those responsible pushing a shopping cart down the road and when the commercial is over and the movie comes back on, you,ll see me pushing the cart with a smile on my face and the buzzard’s already working on him. Best wishes to all.
@ Bill J… Lol, indeed, who will own the lucky face on that bill? After reading all this stuff and whining to my wife about the mortgage that I can’t get her to even think about getting rid of, I enjoyed this last comment of yours… at least for a temporary light hearted moment. Thing is she has acres in NH that are of no interest in preparing for a “whenif”. Everyone has their little nigtmares I suppose. Anyway, thanks. 🙂
These commodities bubbles they’re talking about: Are they expecting the current interest in silver to be a “bubble”? I can’t imagine why silver would ‘naturally’ go down at a time like this, but would they have any incentive to ‘make’ it go down? How would they do that? (at the risk of seemingly displaying breathtaking naivete…)
Suzy,
You are not being naive at all, it is a good question.
A couple of points, first, it is becoming widely publicized that JP
Morgan Chase and HSBC are shorting the silver price in an attempt to lower the price. They have been wildly unsuccessful at this as silver has more than doubled in less than a year. Silver will go much much higher due to this artificial supression.
Second, in terms of other commodities, like food and energy, I would expect that bubble to burst as soon as the Fed stops monetizing our debt and the government starts reducing our debt. As we both know, neither of these things are going to happen.
Here is a link to the backstory on this supression: http://goldsilverrealestate.com/?p=192
We have passed all of the exits for fiscal and monetary responsibility, and are now going full speed towards the last exit, hyperinflation.Â
During hyperinflation the costs of all the things we need, like food and energy will go up in price, all of the other things that are non-essential we go down in price.
@ Suzy ~
At this point in time, there is NO way for the PTB to “make” the price of silver go down. I am reading out there that the COMEX is paying upwards of an 80% upcharge to those willing to take FRNs instead of delivery of actual silver delivery. THEY DON’T HAVE THE PHYSICAL SILVER TO DELIVER!!!!! They are so ‘short’ in their attempts to drive down the price of silver that the big banks are now really at risk.
What happens when the idiots holding paper silver finally realize that the piece of paper that they are holding in their hand doesn’t represent silver; it’s only a piece of paper. Silver is currently leveraged at a rate of at least 100:1; they have sold 100 ounces of paper silver for each ounce of physical silver that they hold.
Next Christmas, I rather expect that we’ll see banksters and stock-marketeers hanging there from lamp posts instead of Christmas Decorations.
Gotta go now; I’m late in getting out there to the garage sales. Looking for sterling silver flatware, 92.5% pure silver. I frequently find 1-5 odd pieces at a time from broken sets for well below spot. Check it out, give it a try.
Bad part to that MM, is you have to find someone that values the silver as a antique or fixture if you dont have a refinery nearby to buy it from you for melt value
After the “fiat” dies, what are we to use to buy a bottle of water? If fiat credit did not exits now; Would we “canuckleheads” be buying these houses at these prices? http://www.greaterfool.ca/ How many onces of lead, copper, silver or gold are these houses worth?
Thanks guys. The only second-hand silver flatware etc I’ve seen lately are the crappy plated ones with the surface flaking off, that were typical wedding gifts 20yrs ago. Even the charity stores know what real silver is and price it accordingly.
I’m glad the small amount of silver I have now is going up in price, but as I’m hoping to keep it forever and add to it, I’m more interested in my continuing ability to afford it!
Exciting Times…. Man its Good To Be Alive!
People keep saying there is going to be hyperinflation and to buy silver or gold because it will be part of that hyperinflation. Yes, it will. But if the economy crashes, the gold and silver you have will be worth exactly it’s weight. that’s the whole point of money and you have heard the old saying…”It’s worth it’s weight in gold” – and that’s how gold used to be bartered. Then it became face value. If you spend a hundred bucks to buy a silver dollar and bring it to my farm, you aren’t going to get twenty chickens. Unless you have something I want to eat to barter, you are going to get NOTHING for it and you will NEVER get more than face value for it….and probably weight instead of face value. I can’t digest silver and you can’t digest lead, and that’s going to be the bottom line.
I have no gold or silver. But I have a pallet of ammunition I paid a dime a round for ten years ago that now costs $2 a round.
If the economy really crashes, hard and finally, things will be worth their WEIGHT in gold.
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Good points, Tom, but thinking about this… the doctor and the dentist will probably have all they can eat and then some from bartering with the food growers. He might want a coin to trade for something a little higher up from the bottom rung. People with things good useful things and services are going to have stuff we need/want unless you are just going to live in your bunker. You’re okay as long as your health and peace of mind hold out. Maybe just a little gold/silver wouldn’t be all that bad. 🙂
…also was thinking there would be many growers so there would be many sources of chickens/providers of chickens, so when it comes time to barter, the value may not be up to what you are needing – a hammer, fencing, horse shoes, I don’t know… at some point the reason things are compared to gold will show when gold speaks louder than chickens. I think there is definitely a place for that. Otherwise, since I have bigger guns, I’d be curious as to the address of your farm. 🙂
I heard a very interesting radio program last night w/ Dr. Stan (Monteith). He said that Lindsey Williams said a conservative lady who was a friend of Janet Napolitano was traveling to D.C. and Janet called her and said “when you get to D.C. call me because I want to take you and your husband out to dinner.” So the lady did that, and ended going out to dinner w/ Janet Napolitano. Janet told her “as soon as you go back home, go out and buy (stock up on) 6 months of food.” When she asked Janet why, the reply was “I can’t say.” (or words to that effect). Dr. Stan says “they know a crisis is coming.”  He also told of how the US govt. is stocking up on freeze dried and dehydrated foods.  Yeah, they know a crisis is coming. Sadly, it will probably be a man-made crisis.
heard someone else say they will use a gun to get what they need (food) after the collapse.
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I guess it’s our job to rid the world of these parasites first off – the looters, and people who believe their guns and ammo give them the right to steal from those of us who were smart enough to prepare in the RIGHT way.
Now that the tsunami has neutralized Japan, maybe they wont be taking out our currency any time soon. Was this earthquake HAARP for that purpose?
In regards to Japan, they hold a little over 1 trillion in our (U.S.) gov debt. I’m sure they’ll be holding off on buying any more for a while, probably even cashing some of that in. Fed’s going to be wearing out the ‘0’ button on the computer keyboard real soon.
Oh, and if they do start printing out trillion dollar bills, no matter who’s face or ass is on it, just hope you can hold out long enough to get one of those in your hands. You’d be paying off your mortgage and credit card debt for the value of a steak dinner. For all the human suffering hyperinflation would bring, it usually brings total collapse for creditors.
About the only good thing that comes from monetary collapse.
Bill, don’t you think the rules would be changed in the (real) amount due mortgage holders to protect them in this event? They will surely try.
Bill J-
Not sure your “advice” is accurate, and hopefully those reading it don’t go out and extend themselves further into debt (or continue to hold onto debt they could expire) counting on repaying it with a hyper inflated currency.
There won’t be any “free-lunches” for those currently in debt. Â Just assume that all debts will be “indexed” to the rise in the currency. Â So for those with a 100,000 mortgage under today’s value of the dollar, when hyperinflation takes over, and the dollar is now worth 1/10th of its value, expect your debt to get reset to $1M in step with the currency decline.
Either way, you’ll still be in debt at the same “ratio” to whatever currency soon replaces the USD FRN’s.
Best thing to do is GET OUT of DEBT or as close as you can.
Dad
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@Bill J:
They may wear out that 0 button on the keyboard. But two issues, most keyboards come with 2x zero buttons and keyboards are only $9.99. So no, they’ll be putting on those zeros for a while yet I fear. 🙂
This preparation stuff is sure expensive. Sure would be nice to ditch my mortgage and spend it on silver, bullets and food instead. Would it be a wise strategy just to pay a portion of your mortgage every month (just enough not to be 1st on their foreclosure list) and use the extra money for preparation?
Comments…..
@Dr. Tom,
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Wise up buddy! The silver and gold represent value. If you won’t take my silver round I can’t buy your chicken because I don’t have anything you want. So, you figure out many chickens a round buys. I’m a gunsmith, I may not wan’t any chickens to fix your shotgun. I may have my own chickens. But, I’ll take your silver round instead. Then, later, when I need a chicken but you don’t need a shotgun fixed, I can give you the silver round.
Its worked like this for thousands of years. Right now everyone agrees on worlthless (and getter more all the time) FRNs. The fact is gold and silver are worth something because they can’t be counterfeited VERY FAST! Unlike FRNs that can roll off the prinding preses or be electronically printed at trillions per minute, effortlessly, you can only dig up so much silver and so much gold and it takes time and effort. This is why it is valuable. Its incorruptible to some extent. FRNs and other fiat currency is not. Those at the top can scam the world, have scammed the world.
Good luck with your plan, however, all that ammo may not do you all that much good: how many people are you going to have to shoot? Are you going to run a war all by yourself? Anyone that has more that a couple thousand rounds and doesn’t plan on using it for trading, IMHO is being an “ammotard”.
I’m definately not telling people to get themselves into more debt in the hopes they can have it all disapear “if” there’s a currency collapse during their life time. Just stating what does happen to debt during hyperinflation. I would tell anyone that asks that their top priorities would first make sure they would be prepared for high inflation (food,supplies) then do everything possible to get rid of all debt as it does nothing but inslave you in the long run.
People need to understand that governments and central banks love inflation – it enriches them. But it only works when they control it at the rate that works best for them. Problem is that after so many years of trying to assert that control,( printing/creating more currency and extending debt) the danger of currency collapse builds up. It’s inevitable. It ends the same way whether you’re the most powerful nation in the world or an individual. It only works until your creditors no longer trust your ability to pay and refuse to continue raising your credit limit. At that point, if your success is based on going further and further into debt you’re finished. It happens millions of times every year to individuals and businesses that do it. It happens eventially to every single nation that does it. There is  no escaping it.  But I don’t want people to think I’m waiting for it in the hopes it will somehow make my life better. A currency collapse is almost always followed by extreme suffering, chaos and death for many. All I want to get across is be prepared for it, but pray it never happens.
yourdaddy: the principle on mortgages and unsecured debt don’t get indexed for inflation ( at least not now). About the only thing that could cause your loan to increase during hyperinflation would be a vairable interest rate or refinancing. One of the consequences of hyperinflation, or inflation for that matter, is the devaluing of debt. Hyper inflation is always disasterous for creditors. As low of an opinion as I have of the banking industry, I don’t think for a minute they would want hyperinflation. To them it’s worse than deflation which is why they will do anything possible to not let it happen.
No one should risk losing their homes or destroying their credit to buy more preps in the hopes their debt is going to disapear. It’s too unpredictable to know when it will happen. The Germans never saw it coming even though it took only a few years to manifest. The Romans were able to pull it for centuries.
I don’t know whether to scream, cry or both. I guess I’ll just keep prepping and hope for the best. But it really doesn’t look good does it?Â
I weep for our children. At least we experienced the good times. They’ve been robbed.
prepping ideas I’m working on this year:
1)Emergency medical training (first responder,CPR,EMT)
2)getting more $ out of the country
3) junk silver
4)food stores raised to 6mo supply (from 3mo currently)
5)increase bulk rice in storage
6)secure storage systems for guns/ammo
7) perimeter security
8) new knife for bugout bag (probably K-Bar Tanto)
looks like America is going the way of mexico in the mid 1800s: we’re borrowing our sovereignty right out from under ourselves. i wonder who will invade us first?