Do you want to know what hyper-inflation looks like? Well guess what? Despite what the “experts” tell you, it is decidedly not a “thing of the past.” The most famous 20th century example was Weimar Germany, where stocks soared as the Reichsmark collapsed; but far more recently, the same thing occurred in 2009 Zimbabwe. In both cases, the illusory nominal stock gains were eventually swamped by permanent real losses relative to inflation – and precious metals – which is where many of the world’s Central bank juiced markets are likely headed in the coming years.
To wit, last night’s announcement that Argentina officially defaulted on its debt causing the Argentine Peso to collapse to new all-time lows (at least, all-time lows for this version of the Peso) – just as we have seen with the equally hyper-inflating Venezuelan Bolivar.
Above are five year charts for the Argentine Peso and Venezuelan Bolivar, respectively; and below, are the five year charts for the Argentine and Venezuelan stock markets. This is what happens when currencies implode as the cost of living (and social unrest) explodes, followed by draconian government actions that make life a living inferno. Make no mistake, this is going on in many other places as we speak – such as “BRICS” like South Africa – where the Rand is plunging; and “superpowers” like the United States – where due to its dwindling “reserve currency” status, the dollar’s losses thus far have been principally against items of real value as opposed to other fiat currencies . And thus, to our readers around the world all we can say is this, “coming soon, to your nation.”
It’s Thursday morning, and said “superpower” is reeling from a powerful cocktail of “horrible headlines” that even a massively manipulated, hyper-inflated stock market can’t hide. To start, yesterday’s comical “4% GDP” print was pure fraud, as we discussed here and John Williams of Shadow Stats here…
– 2Q GDP Surge Not Credible, Significant Downside Revisions Remain in Offing
– Actual Economic Activity Remains in Serious Trouble
–Shadowstats.com, July 30, 2014
Moreover, atop the Argentine default, the U.S. and Europe have stepped up sanctions against Russia which promises to forcefully retaliate – whilst Gaza strip fighting is exploding out of control. Meanwhile, Portugal’s banking crisis is acting anything but “contained,” and the ECB’s “deflation” propaganda is ramping up amidst record French unemployment as it prepares to launch a $1 trillion QE program in the near future. Heck, the dysfunctional House of Representatives even voted last night to sue the President calling to memory the ugly, nation-dividing Congressional impeachment debates following the Monica Lewinsky affair. In other words, America’s “island of lies” is on the verge of being isolated further, as the “realization of reality” of global economic collapse broadens.
As I write, gold is $1,295/oz., and silver $20.70/oz. – in both cases, well above both their respective 50-day and 200-day moving averages. As Miles Franklin Blog readers know well, we have little faith in technical analysis given today’s rigged markets. However, ultra-long term charts are far more difficult to manipulate; and thus, it’s difficult to argue with the fact that gold and silver possess perhaps the most bullish long-term charts in the history of financial markets – as opposed to U.S. stocks, which are more “overbought” than at even the 2000 internet mania peak. More importantly, given this week’s confluence of “key attack events,” including Monday’s COMEX options expiration, yesterday’s GDP report, FOMC policy statement, and COMEX “first delivery date”; and tomorrow’s NFP employment report, the fact the Cartel hasn’t been able to breach even short-term technical supports speaks of how difficult their unwinnable suppressive war is becoming. And given yesterday’s well below expectations ADP report, the prognosis for a successful PM raid following tomorrow’s NFP report doesn’t appear good in our view. And if it indeed isn’t, don’t be surprised if a year’s worth of PM “doom and gloom” rapidly morphs to frenzy buying and supply shortage fears.
To that end, let’s go back to yesterday’s pitiful FOMC statement. In last month’s “Yellen’s last stand,” we indicated how desperate the Fed’s predicament was becoming; as no matter how many rigged “diffusion indices” and “jobs numbers” were published it couldn’t mask the collapsing U.S. economic condition – even with relentless PPT equity support and Cartel naked shorting. The CEO of Walmart said so himself (and was promptly fired for doing so), and last week’s plunging Amazon.com earnings validated further that “need or want, demand is dying.” Perhaps this is why, just two weeks ago, Whirlybird Janet’s semi-annual Congressional testimony highlighted “considerable uncertainty” in the Fed’s economic outlook, yielding our “contrary” opinion that yesterday’s statement, too, would be ultra-dovish.
And we weren’t disappointed as beyond the veneer of another $10 million of “tapering” propaganda, the reality of the dire U.S. economic situation was revealed by Yellen’s “shot heard round the world” statement that “a range of labor market indicators suggests there remains significant underutilization of labor resources” – and thus, that “highly accommodative policy will be appropriate for a considerable time after the asset purchase program (QE3) ends.”
To wit, it was just a year ago when Helicopter Ben said the Fed would raise rates once the “unemployment rate” fell to 6.5% – not to mention, when CPI “inflation” exceeded 2.0%. Today, with said unemployment rate at 6.1%, the Fed has backed off the former “condition” entirely, while the CPI rate – and yesterday’s GDP deflator – are equally rigged at exactly 2.0%. And yet, still no rate hikes or even a time table for such. Which is exactly what we long ago called for ZIRP to infinity; i.e., the inevitable end of every fiat currency Ponzi scheme throughout history.
Pathetically, the best spin money can buy – recall, no less than 73 highly-trained propagandists attend each FOMC meeting – was “the Committee currently judges there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions.” And thus, seven billion people saw the Fed in all its “naked emperor” glory; that is, hopelessly incapable of fixing the catastrophe it created and less and less able to even pretend it is anything but clueless.
In our view – supported by thousands of years of economic history – said “significant underutilization of labor resources” may well be remembered as one of history’s most infamous economic statements. In other words, when today’s “underutilization” is compared to what’s coming, we’ll fondly remember the 2014 bubble peak as the “good old days” when only 34% of the employable population was unemployed, only 52% of citizens were receiving entitlements, and someone was still receiving company-sponsored health insurance.
It’s one thing for “gloom and doomers” like us to speak of weak economic conditions, but when the economy’s chief stewards repeatedly do so – in plain indisputable language – the price for not paying heed can be catastrophic. You may only have one final chance to protect yourself from the aforementioned hyperinflation that will inevitably arrive; and in our view, its arrival will be far sooner than most can imagine. And if you do decide to act, we sincerely hope you’ll give Miles Franklin a call at 800-822-8080 and give us a chance to earn your business.