Adrian Ash of bullionvault.com writes Faber & Greenspan: Shills for Fed Snake Oil on Deflation and Hyperinflation.
The Fed wants you to believe hyperinflation is looming. Or at least, it should want that, if doubling its balance-sheet â€“ purchasing and lending against investment junk â€“ is going to work the wonders that modern central-bank theory says it can. And the Fed certainly wants you to believe it will stop at nothing to avoid deflation (“whatever means necessary” as the chairman put it back in 2002).
So anyone touting the hyperinflation risk in public is playing the shill, a decoy â€“ seemingly unconnected â€“ proclaiming the miracle powers of Dr.Ben Bernanke’s snake oil to CNBC anchors at every chance.
In fact, they’re doing the Fed’s work better than the Federal Reserve itself. Really.
“I am 100% sure that the US will go into hyperinflation,” as Faber told Bloomberg in late May, and again on June 29th. “The US central bank has structured and introduced policies without considering exponential credit growth and its consequences,” added the Gloom, Boom & Doom author in an interview with the Korea Times on Wednesday.
See what I mean about being a shill? It’s like he’s on the payroll…
“The United States will not raise interest rates for many years to come because it needs to pay off its huge debts,” he went on, recommending inflation-friendly assets such as equities and Gold Bullion. “In turn, too much money in the economy will raise costs of everything, including healthcare and education, giving rise to hyperinflation.”
There, now that’s the way to do it! Greenspan and Faber on song, while the Bernanke Fed tip-toes around stating its aim:
Spark inflation and leave it to burn. Because putting it out worsened both the Great Depression and Japan’s “lost decade” â€“ the one that started two decades ago and hasn’t yet ended. Everyone who’s anyone in monetary theory knows that.
For any serious investor interested in preserving their wealth, deflation and inflation must be considered as potential outcomes. An investor should not blindly follow any analyst or forecaster.
While we may experience deflation in the near-term as a result of credit destruction and delevarging, inflation still remains a threat. Howard Katz, another “shill”,Â had an excellent take on this in his recent piece Why the Fed is Depreciating the Currency:
First a little background here.Â Every time in economic history that there has been a significant increase in the supply of money there has been a corresponding decline in the value of the money.Â (By the way, the use of â€œinflation,â€ meaning a rise in goods, rather than â€œdepreciation,â€ meaning a fall in money was an early example of intellectuals twisting language to confuse us.Â There is nothing wrong with goods that causes prices to rise.Â It is always an increase in money.)Â There is a perfect correlation here.Â EVERY TIME THEY HAVE PRINTED MONEY PRICES HAVE GONE UP.Â There is not a single exception.Â Every real economist has studied the money fluctuations of American history.
Shill or not, it is pretty clear that monetary expansion since the US went off the gold standard in 1933Â has led to depreciation of the currency, or in other words, inflation of the price of goods.