The Fed’s response has been adolescent in the sense that it has permitted major damage by allowing the credit boom to happen. Right under its nose, the broad money supply (M3) doubled in the last eight years, from $7 trillion to $14 trillion, but it is trying to fool the market into thinking this statistic is irrelevant because it was vigilant and never allowed inflation to surface.
[Read more...]Sovereign Debt Default: Learning from Argentine Mistakes
April 12, 2010 By Leave a Comment
Argentina is for economists with a sense of humor, if there are any left. It’s for anyone who likes a good drink and a good laugh. And for anyone who wants a peek at the future.
What do defaults look like? Look at Argentina. The Argentines pulled off the biggest default on sovereign debt in history. In 2001, they defaulted on $132 billion in loans. Later, they negotiated a settlement that left lenders with their worst haircut ever.
[Read more...]Ballad of a Heartbreaking Money Supply
March 29, 2010 By Leave a Comment
As much as I scream in Loud Mogambo Outrage (LMO) about the sheer amount of money that is being created that will create horrendous inflation in prices, using whatever data that I can easily get my hands on or, better yet, falling into my lap, or, as a last resort, just making up facts and figures to prove my point, I may, for once in my over-the-top, obnoxious and irritating life (“The Way Of The Mogambo (TWOTM)”), be understating the case! Understating it!
[Read more...]US Inflationary Excesses: Understating the Obvious
March 24, 2010 By Leave a Comment
Being a guy who understands that inflation in prices is the cause of economic misery, and also being a guy who spends a lot of his Precious Mogambo Time (PMT) politely informing people that they are morons for not buying gold, silver and oil to protect themselves from the inflation that must – must! – result from the Federal Reserve creating so much excess money and credit, I was very, very, VERY interested in the U.S. Bureau of Labor Statistics report that their Consumer Price Index for All Urban Consumers (CPI-U) increased 2.1 percent from this time last year, “before seasonal adjustment”, which I think is a load of hooey.
[Read more...]Hyperinflationists Have it Wrong
March 24, 2010 By Leave a Comment
There are undoubtedly many people in long gold positions wondering whether the old yellow dog is going to get up and bark again anytime soon. Although hyperinflation hyperventilation has been catching on in recent months, especially amongst the deficit errorists, gold has been dead money since late November 2009.
[Read more...]Is Your Money What You Think It Is?, Part II
March 18, 2010 By Leave a Comment
Doug: There’s a titanic battle right now between the forces of inflation and deflation. When a big corporation like General Motors, or Fannie or Freddie, defaults on its debt, hundreds of billions of dollars disappear. Assets people thought they had and could have been converted into cash disappear. That’s deflationary. In a sound banking system, in which money is a commodity like gold, money can’t disappear. It can change ownership, but it can’t disappear. But in our current system, it can dry up and blow away as easily as it can be created.
[Read more...]Underreported Money Supply may be Disguising Hyperinflation
March 4, 2010 By Leave a Comment
Is annualized M1 money supply growing at three times the rate the Federal Reserve is reporting? This is a critical question recently explored by Zero Hedge, which believes the actual growth rate of US dollars “is approaching hyperinflationary levels.”
According to Zero Hedge:
[Read more...]Seeds of War
February 28, 2010 By Leave a Comment
A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald’s The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.)
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A Look at Empty Store Shelves in America
The National Inflation Association has produced a new video looking at how hyperinflation can lead to a run on stores. They paint the kind of picture where people are trampling one another to stock up on basic goods, like water, before their dollars lose purchasing power.
Using a recent real-life example from Massachusetts in May of 2010, the clip below shows what empty retail store shelves look like in the US, and also people so desperate for supplies that the National Guard has to be called in to keep the peace. Despite the over-the-top tone of the cautionary tale and the survivalist advice it’s an interesting video.
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