Stacy Summary: The gripping hyperinflation debate between Rick Ackerman and Gonzalo Lira enters Round 3 (technically it’s round 2, but no round 2 ring girls had silver star in belly button and silver heart around neck):
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The problem at the Fed is that long rates are driving higher – responding to the overall loss of confidence in the US government bond market – posing a risk to the balance sheet of the Fed – precipitating the need to launch QE3 to buy back lots of bonds and keep those rates low (the US is now the biggest buyer of US bonds, pulling ahead of China recently). So why not just reverse course and start raising rates? Why not just do a Volcker, take the hit, and rebuild? The answer is what I call the ‘Porcupine dilemma.’ Once swallowed, these low interest rates are not easily coughed back up. Contrary to Ben’s claim on “60 Minutes” recently, he can’t just gradually reverse course, start raising rates, and start recalibrating the economy in 15 minutes. No. The clue is in the debt needed to fund $1 of GDP that has gone from a – 1:1 ratio to a close to a 6:1 ratio – during the past two decades; i.e., the amount of debt that has been created is geometrically (astronomically) higher than the recent, simple, linear move down in rates would suggest. Ben has swallowed a porcupine. And there is no way this thing is coming out the way it went in. The only way forward is hyperinflation.
“I see hyperinflation ahead.”
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Posted in Headlines
Tagged ben bernanke, hyperinflation, max keiser, porcupine dilemma
Stacy Summary: The achilles’ heel for the US economy is income and that the bottom 99% are ideologically opposed to true free markets, real capitalism and sharing in productivity gains, preferring, instead, to throw their lot as serfs behind their oligarch/Lord of choice, I don’t see the situation correcting. It will have to collapse in the hyperinflationary great depression Williams sees.
TER: Can the governments pull any more stimulus levers yet this year?
JW: Oh, I think they’ll try, but nothing much they can do will have anything other than short-term impact. If they write everyone a check, people go out and buy things. That would give the economy a quick boost but do nothing to change the underlying fundamentals or to correct the structural problems in this recession. Those are tied to the lack of robust growth in consumer income. Continue reading
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Posted in Headlines
Tagged depression, great depression, hyperinflation, income, john williams, money supply, serf
Stacy Summary: We look at the latest scandals of fetishes for black swans; American youth unconcerned by the coming collapse of their Social Security they bought and paid for; Tony Blair’s 2007 photo op with Colonel Gaddafi and the farting camels of Tripoli. In the second half of the show, Max talks to Ned Naylor-Leyland of Cheviot Asset Management about the silver market.
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Stacy Summary: Fantastic piece from Ambrose Evans Pritchard today, The Death of Paper Money. He offers a few terrifying quotes from a book about when hyperinflation hit suddenly in Weimar Germany:
Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.
At the moment, we are all waiting nervously as the over trillion in new money supply just sits there on the banks balance sheet. In the UK, they are now ordering banks to begin circulating that money in a manner not to dissimilar to the knife-point hold ups on the streets of Germany.
When velocity returns, good luck to one and all.
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Stacy Summary: These headlines contradict any pronouncements on ‘green shoots’ and ‘bottoms.’ Speaking of bottoms, did you see the Bruno / Eminem clip? You will have to hunt that down for as soon as it goes up on Youtube, Viacom has it taken down. Also, I am looking for interesting New Zealand, Australian and/or other Asia Pacific headlines for our show this week.
[Denninger's] Disclosure: Short the American people, who appear to be as dumb as a box of rocks for putting up with this crap.
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Posted in Headlines
Tagged black swan, bond vigilantes, bradford & bingley, fdic, gilts, hyperinflation
Stacy Summary: It is starting to look a lot like neo-feudalism.
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Posted in Headlines
Tagged bankers, calpers, comex, costa rica, deutsche, ecb, ecb gold sale, french revolution, gordon brown, hyperinflation, job losses, malaysia, max keiser, new world order, passive investors, pension funds, phillipines, populist rage, printing money, quantitative easing, recession, royal bank of scotland, sir fred goodwin, tax havens, uruguay, weimar
Rick Ackerman
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