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HYPERINFLATION

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http://georgewashington2.blogspot.com/2011/08/average-life-expectancy-for-fiat.html

 

The Average Life Expectancy For A Fiat Currency Is 27 Years ... Every 30 To 40 Years The Reigning Monetary System Fails And Has To Be Retooled

 

 

David Galland notes:

 

Monetary scholar Edwin Vieira ... pointed out that every 30 to 40 years the reigning monetary system fails and has to be retooled. The last time around for the U.S. was in 1971, when Nixon cancelled the convertibility of dollars into gold. Remarkably, the world bought into the unbacked dollar as its reserve currency, but only because that was the path of least resistance. But here we are 40 years later, and it is clear to anyone paying attention that the monetary system is irretrievably broken and will fail.

What will replace it is still unclear, but I suspect that when the stuff really hits the fan and inflation rages the government will try the approach taken by the Germans to end their hyperinflation back in the 1920s, coming up with the equivalent of the Rentenmark – a dollar that is loosely linked to some basket of commodities and financial instruments. It won’t be convertible, because it would be impossible for bank tellers to exchange your dollar for a cup of oil, and a coupon off of a bond, and a chip of gold, or whatever makes up the basket – but it might restore some semblance of confidence in the currency. That’s one option. Another is that some government decides to make its currency convertible into precious metals; but that will only happen when all other less fiscally restraining systems have been floated and failed. Simply, at this point we can’t know what will replace the current monetary system, or when. All we can know is that the status quo cannot and so will not survive this crisis.

 

Regardless, between now and the point in time where the Fed throws in the towel on today’s fiat monetary system, you would have to be naïve in the extreme not to expect volatility, uncertainty, and wholesale financial dislocations.

 

Chris Mack writes:

 

According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value.

 

20% failed through hyperinflation,

21% were destroyed by war,

12% destroyed by independence,

24% were monetarily reformed, and

23% are still in circulation approaching one of the other outcomes.

0% have ever ended in DEFLATION

 

 

The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value.

Given the undeniable track record of currencies, it is clear that on a long enough timeline the survival rate of all fiat currencies drops to zero.

 

And Jeff Clark points out:

 

History has a message for us: No fiat currency has lasted forever. Eventually, they all fail.

 

BMG BullionBars recently published a poster featuring pictures of numerous currencies that have gone bust. Some got there quickly, while others took a century or more. Regardless of how long it took, though, the seductive temptations allowed under a fiat monetary system eventually caught up with these governments, and their currencies went poof!

 

You might suspect this happened only to third world countries. You’d be wrong. There was no discrimination as to the size or perceived stability of a nation’s economy; if the leaders abused their currency, the country paid the price.

 

As you scroll through the currencies below, you’ll see some long-ago casualties. What’s shocking, though, is how many have occurred in our lifetime. You might count how many currencies have failed since you’ve been born.

 

So what’s the one word for the “thousand pictures” below? Worthless.

Yugoslavia – 10 billion dinar, 1993

 

Zaire – 5 million zaires, 1992

 

Venezuela – 10,000 bolívares, 2002

 

Ukraine – 10,000 karbovantsiv, 1995

 

Turkey – 5 million lira, 1997

 

Russia – 10,000 rubles, 1992

 

Romania – 50,000 lei, 2001

 

Central Bank of China – 10,000 CGU, 1947

 

Peru – 100,000 intis, 1989

 

Nicaragua – 10 million córdobas, 1990

 

Hungary – 10 million pengo, 1945

 

Greece – 25,000 drachmas, 1943

 

Germany – 1 billion mark, 1923

 

Georgia – 1 million laris, 1994

 

France – 5 livres, 1793

 

Chile – 10,000 pesos, 1975

 

Brazil – 500 cruzeiros reais, 1993

 

Bosnia – 100 million dinar, 1993

 

Bolivia – 5 million pesos bolivianos, 1985

 

Belarus – 100,000 rubles, 1996

 

Argentina – 10,000 pesos argentinos, 1985

 

Angola – 500,000 kwanzas reajustados, 1995

 

Zimbabwe – 100 trillion dollars, 2006

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A good place to start on your journey of conscious awakening and search for enlightenment would be to understand the use of 'colourable language 'and 'words of ART'.The best place to start is at the very beginning of your journey when you were brought into this dimension.......WHERE YOU BORN.......OR BIRTHED......or perhaps BOTH.???

This is where the colourable language and words of art begin.

Undestanding these concepts will open the ESOTERIC world of the SYSTEM and how you appear and exist in it.

And there I was thinking post 100 would be my last. Was I BORN, or BIRTHED, or BOTH?

 

How does one begin to address such questioning?

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And there I was thinking post 100 would be my last. Was I BORN, or BIRTHED, or BOTH?

 

How does one begin to address such questioning?

You are BORN as a MAN or WOMB-MAN under NATURAL LAW.(The system cant control this because they DID NOT create it.)

You are BIRTHED as a PERSON (legal fiction) under their ARTIFICIAL CONSTRUCT.(The system can control this because they DID create it.)

So you are BORN and BIRTHED.

Two worlds 1. NATURAL and 2.ARTIFICIAL.

Two of you 1.FLESH and BLOOD and 2.A PIECE OF PAPER (BIRTH CERTIFICATE)(AKA STRAWMAN)

THE OCCULT WORLD OF COMMERCE by Jordan Maxwell & Jason Whitney

http://video.google.com/videoplay?docid=5293846372680296406

 

 

This is the Maxwell-Whitney lecture on etymology (word meanings), Freemasonry and the Court system. Jason Whitney presents brief yet elaborate audio-visual occult/esoteric roadmap to understanding how our legal/banking systems are fundamentally predicated upon one thing, "commerce,” and the regulation thereof. The questions to consider are however, who is doing the regulation, what sort of regulation is being done and who has reaped the benefits from such regulation? Jason Whitney further asserts that the extraction of money "energy" from society is made possible by and through corrupt judges and other judicial henchman demonstrating the economic element of their criminal enterprise and how the fines, fees, restitution and forfeitures received by the courts have been deviously embezzled by Judges and their co-conspirators. The occult dynamics, esoteric concepts and other intrigue presented by Maxwell and Whitney is fundamentally essential for anyone who desires a greater insight as to how our out-of-control legal/banking construct is designed and operates in America. This presentation addresses: Man as a Word-Controlled Creature Civil Law vs. Admiralty/Maritime Law Maritime/Admiralty Law Superimposed over Civil Law One's Mother as a Merchant Vessel Giving Birth as a Commercial Maritime Concept Hospitals and Energy Farms Spiritual Beings vs. Human Beings Freemasonry, Banking and the Court Connection Judicial Slush Funds The use of Public Records Act Requests«

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Austan Goolsbee's face says it all...

 

http://www.youtube.com/watch?v=-_N0Cwg5iN4

Straight from the horse's mouth, beautiful. I have always said that too, and found any credit rating posturing funny, BUT we recently had a Tea Party induced hickup that almost caused Charles Ponzi to take a break from his very own scheme. That would have caused a little gridlock in Greenspan's theory. But, after all, it hasn't happened now, so the printing can resume. This means that we can watch the house slowly burn down while the fire insurance on the house is still sold for pretty cheap. Wonderful!

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The fractional reserve banking system does not need laws to exist

 

It has been around since humans began recording debits and credits.

I thought FRB was a fairly new Italian invention. Oh, wait, no, it is actually a British invention of the last 300-400 years. Hmm, maybe it is too early to say. But given how Britain and Italy are doing financially, and given a history of bank runs and hyperinflations, FRB seems to be a rather dangerous modern invention -- a little like Hydrogen-filled Zeppelins.

 

http://people.brandeis.edu/~cecchett/Textbook%20inserts/A%20Brief%20History%20of%20Banking.htm#_ftn6

During the 17th and 18th centuries the Dutch and British improved upon Italian banking techniques. A key development often credited to the London goldsmiths around this time was the adoption of fractional reserve banking[6].

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I thought FRB was a fairly new Italian invention. Oh, wait, no, it is actually a British invention of the last 300-400 years. Hmm, maybe it is too early to say. But given how Britain and Italy are doing financially, and given a history of bank runs and hyperinflations, FRB seems to be a rather dangerous modern invention -- a little like Hydrogen-filled Zeppelins.

 

http://people.brandeis.edu/~cecchett/Textbook%20inserts/A%20Brief%20History%20of%20Banking.htm#_ftn6

 

I am not a history buff but it appears fractional reserve banking was banned in europe

because usury was heresy from 1311. The UK got its own Usury laws from at least 1545 that were only changed in 1811.

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I am not a history buff but it appears fractional reserve banking was banned in the UK from around 1545? because Usury was banned then. It was only in 1811 in the UK that the law changed.

 

arse. elbow.

 

The Bank of England was formed in 1694 to institutionalize fractional-reserve banking.

...

Then, the inevitable happened: There was a run on the bank, and the Bank of England could not produce the coin.

...

The Cabal is a partnership, and each of the two groups is committed to protect each other, not out of loyalty, but out of mutual self interest. They know that, if one falls, so does the other. It is not surprising, therefore, that, when there was a run on the Bank of England, Parliament intervened. In May of 1696,
just two years after the Bank was formed
, a law was passed authorizing it to "suspend payment in specie." By force of law, the Bank was now exempted from having to honor its contract to return the gold.

 

— G. Edward Griffin; The Creature From Jekyll Island

 

the above also demonstrates how the ponzi of FRB is only kept going by state intervention.

 

btw, FRB is always illegal, because it is fraud, but laws don't always apply to the politically-favoured.

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FRB is always illegal, because it is fraud, but laws don't always apply to the politically-favoured.

 

FRB is just a business practice that enables investors to receive interest on the money they give

to the bank for the bank to use in its loan business.

 

In theory it ought to be possible to explain to even the thickest of the various customer types what the bank is doing and

therefore it ought to be possible to falsify the claim FRB is always fraud.

 

Some people are however particularly thick and life is itself a compromise.

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Uh, oh, the deflation scare seems to be over.

 

I am sure they're going to drain shed loads of money soon. Maybe they start today. I mean, who cares about stock markets selling off 80%, right? :lol: These are all temporary measures, remember? Just like Nixon closing the gold window was temporary. The proof is that gold today sells at $42.22 an ounce. Hey, wait...!!! :wacko:

 

http://gold.approximity.com/since1985/US_MZM.html

US_MZM.png

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They're going to print, print and print, and then they will print some more.

 

The fact that this is a Bloomberg headline tells you that the fertilizer has hit the fan a long time ago. The problem only is that the splatter is still dripping.

 

http://www.bloomberg.com/news/2011-08-07/g-7-vows-to-take-all-necessary-measures-to-stabilze-economies-markets.html

G-7 Vows to Take ’All Necessary Measures’ to Stabilize Economies

 

Group of Seven nations sought to head off a collapse in investor confidence after the U.S. sovereign- rating cut and a slump in Italian and Spanish debt intensified threats to the global economy.

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More deflation problems in China:

 

http://www.bloomberg.com/news/2011-08-09/china-inflation-quickening-to-6-5-limits-policy-response-to-global-crisis.html

China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing to support growth as plunging stock markets signal the global recovery is weakening.

Oh, wait...!

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The things one finds when Googling. Just a summary of what (most of) you guys have been saying all along, but simple enough for anyone to grasp. Chilling too.

I particularly liked the last sentence.

Apols if posted before.

 

Only two endgames have occurred in the history of paper money systems and only these two are theoretically possible. First, the printing of money and the artificial lowering of interest rates are terminated voluntarily. The system is returned to hard money of essentially inflexible supply, such as a proper gold standard, in which investment is based on saving and the two are co-ordinated through uninhibited market prices. The unrestricted and undoubtedly painful liquidation of accumulated misallocations of capital is allowed to proceed, bringing asset prices and capital structures again in line with the pool of available savings. Second, the unsustainability of present structures is not acknowledged. Instead, ever more aggressive money injections and increasingly other interventionist policies are used to postpone the inevitable correction ever further and thus make the underlying distortions ever bigger. As ever more money is printed to simply sustain the mirage of solvency of sovereign states and banks, the public loses faith in state fiat money and tries to disengage from it. The system ends in hyperinflation and economic collapse. Then, the misallocations will finally be liquidated but now in form of a total currency collapse with considerable damage to the entire economy and, in fact, the social fabric.

 

We explain why the second outcome is considerably more likely today. We show that the dislocations that have accumulated in the present system of elastic money are most certainly larger than they were at the start of the Great Depression in the 1930s. With the policy establishment beholden to the standard macro-paradigm and unlikely to give up the tool of elastic money or their belief in the manageability of the economy, we will witness the nationalisation of money and credit. As overleveraged private institutions will find it difficult to expand their balance sheets further, lending and borrowing will increasingly be conducted by state entities, such as the central bank and state-owned financial institutions. States will also increasingly use the printing press to fund their expenditures. Large-scale debt monetisation will occur under the cover of policy ‘stimulus’ (‘quantitative easing’), a process that is already well advanced. This must ultimately lead to an inflationary meltdown.

 

While it appears exceedingly unlikely that a more benign outcome is still possible, the only hope is that, as the catastrophe unfolds, the market will re-monetise the precious metals, in particular gold, and when state paper money collapses once again, an entirely private monetary system will arise, based on privately-run gold depots and privately-run international payment system. This would provide a stable, de-politicised system of hard-money for an increasingly international division of labour to replace the current patchwork of highly unstable local state paper monies.

 

http://papermoneycollapse.com/book/chapter-outline/

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Even the numbnuts have come to realize today that the gate to hyper-inflation is open wide. For everyone else, this was clear anyway.

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Wouldn't you have to agree that it suits pefectly the purposes of Bernanke to have inflation expectation, even hyper-inflation expectation, dominate the mind-set of investors? Don't you see a manipulative element at all in all of this.... which will pull out all stops in the attempt to avoid a liquidity trap? Velocity of money still low.

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Wouldn't you have to agree that it suits pefectly the purposes of Bernanke to have inflation expectation, even hyper-inflation expectation, dominate the mind-set of investors? Don't you see a manipulative element at all in all of this.... which will pull out all stops in the attempt to avoid a liquidity trap? Velocity of money still low.

Too much double think. Let it go. Humanity is simpler than that.

 

Occam's razor. lex parsimoniae

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Too much double think. Let it go. Humanity is simpler than that.

 

Occam's razor. lex parsimoniae

Ah yes, the re-assuring simplicity of a science.

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Two more articles and deflation/inflation

 

First up Mish claims deflation victory and gives Eric Janszen a "Special Mention":

MIsh - Link

 

Next it is Eric Janszen of ITulip - Robust defence

ITulip Link

 

The nub of it as far as I can see is:

Mish says debt deflation crashes asset prices and consumer prices are less important

EJ says government will increase monetary inflation and deficits to counteract private debt deflation which will lead to a price inflation spike (not hyperinflation - I just thought this was a good thread to post on).

 

Some random quotes:

 

Mish: Deflation definition

Deflation is a net decrease in money supply and credit, with credit marked-to-market.

 

Mish: Price myopia

People tell me all the time, "all I care about is prices". If they really mean it, they are fools. Without credit expansion there is little hiring. Without hiring and money to pay for things, consumers cannot pay back loans and asset prices in general, crash.

...

This is far more important than the price of gasoline hitting $4 or the price of carrots rising 50% to $2 a bunch. Yet, inflationists constantly fret about prices, ignoring far more important credit conditions.

 

EJ: prices are what matter:

Producer and consumer prices are how we measure the impact of inflation on the economy.

... if inflation and deflation don't cause prices to rise or fall, what relevance do they have? Who'd care?

 

EJ: deflation, debt deflation

But no one disputes the fact that when the money supply is too big, too long for the economy that inflation follows, sooner or later, and conversely if the money supply is too small then prices eventually fall.

...

The term "debt deflation' refers to the condition of a shrinking level of credit outstanding because old debts are being repaid faster than new debts are being taken on. This is related to the money supply and indirectly, through changes in the money supply, to consumer price inflation. But deflation and debt deflation are not equivalent.

 

The way the government manages debt deflation in the private credit markets is via monetary inflation, created by the central bank, and via deficit spending by the federal government.

 

Mish:

From a practical standpoint of economic analysis of the economy, debt-deflation (deflation) and consumer deleveraging is of paramount importance and is likely to remain of paramount importance for some time, no matter what definition one assigns to the process.

 

Austrian economists, as well as hyperinflationists with myopic eyes focused solely on money supply instead of debt, and everyone with ill-conceived notions of the power of the Fed, better figure that out in a hurry or they risk more horribly blown macro calls.

 

EJ:

In addition to your confusion about the nature of our money system, the relationship between the money supply and inflation, and the relationship between public and private credit, the fatal flaw in your analysis that causes you to continue to chase the deflation fairy and make dead wrong economic forecasts is that you do not distinguish between credit and money in the financial economy as it relates to asset price inflation and credit and money in the productive economy as it relates to goods and services price inflation and wage rates.

 

If you did, then you'd be able to forecast asset price deflation the housing and stock markets coincident with producer price inflation instead of coming up with your own personal definitions of inflation and deflation and re-writing your past predictions.

 

In sum:

No gold standard, no deflation.

Inflation is a process that starts with too much money and ends with higher prices.

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DOUBLE POST.

 

I think house prices might continue to fall nominally for a while. I also think real interest rates might go more negative. Because they're throwing not only the sink at it but also the rest of the kitchen, it is a very slow process. The same applies to the onset of hyper-inflation.

 

A mistake almost all of the good forecasters have made (e.g. Jim Sinclair) is that they have overestimated the speed of the process. I made this mistake too, by the way. The delusion out there is huge, i.e. it perishes very slowly (but perish it does indeed!) and all moral principles have been thrown overboard (this will continue) to cover up (i.e. paper over) the gravity of the situation.

 

At the moment, inflation in necessities is very high while there is some price deflation in disgressionary goods like (owned) property, luxury items (second homes, yachts, iPoops). This has been predicted by a lot of people (including me) and should be seen as the rosiest time of this unfolding inflationary catastrophe. I fear and predict that it won't last though. Forward looking assets like gold and silver, however, and keep in mind that these are bought by generally better informed people, are discounting for much higher future rates of inflation. They will continue to function as an insurance and will protect capital.

 

It has been discussed many times before on here that (and why) houses will suck big time as a hedge against hyper-inflation. However, if most of your assets are in highly liquid high quality assets (i.e. precious metals), it might turn out as a brilliant investment to buy a house on a fixed(!!) interest mortgage in the early stages of the truly hyper part of the inflation catastrophe that we are in.

 

My 2 pennies worth. "HPC" is still possible even in nominal terms. More probable is a grinding Japanese-style deflation in house prices over a decade or two. That said, the crash has occured, and is proceeding, in terms of gold.

 

Note to Goldfinger: how about changing the title of the thread to HVC [House Value Crash].... there always seemed something incongruent about hyper-inflation mixed in with HPC. :)

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100% guaranteed.

 

I would only add: given how much the central banks are pushing this pram, the baby will roll down the hyper side of inflationary hill. It takes time though, but all the ingredients are in place already.

 

EJ:

 

If you did, then you'd be able to forecast asset price deflation the housing and stock markets coincident with producer price inflation instead of coming up with your own personal definitions of inflation and deflation and re-writing your past predictions.

 

In sum:

No gold standard, no deflation.

Inflation is a process that starts with too much money and ends with higher prices.

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This guy should get a subscription for Prechter's newsletter and he would see in an instant that deflation is his problem, not inflation. Prechter's valuable truths can be accessed through a link at the top of this forum. Can anyone tell Leung please? Thanks. I am getting tired of all these peasants who think inflation is a problem. They're deluded, it's deflation. That they pay higher prices is irrelevant to the superior deflation theory. This peasant should have shorted gold all the way since $400, then he would be able to cope better with the indeflation that is gripping the system.

 

http://www.bloomberg.com/news/2011-08-22/hong-kong-s-worst-inflation-since-1995-may-boost-recession-risk.html

Hong Kong’s ‘Scary’ 7.9% Inflation May Fuel Wages Even as Recession Looms

...

Low-income earners, like Nay Leung, 49, an immigrant from neighboring Guangdong province who works as a cleaner and a food deliverer, say that rising prices for everything from food to school books are too much to bear.

 

“I feel more and more like I am living like a beggar,” Leung, who lives in Kwun Tong district, said in an interview in June.

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