THE ROAD TO HYPERINFLATION, IN SIMPLE PICTURES
Sometimes, even the most poetic, concise text doesn’t do
justice to simple graphics. Sure, I could write of this weekend’s dangerous
expansion of “Cold War II” – which we can only pray doesn’t turn “hot”; or
the most pitched Israel/Hamas battles, yielding 450 casualties, since the
1967 war. Heck, I could write entire articles on a half dozen topics related
to Friday’s “horrible headlines” alone; from St. Louis Fed President Bullard
warning of a U.S. bond bubble whilst IMF head Lagarde spoke of a global stock
bubble; or Portugal’s largest financial institution, Banco Espirito Santo,
officially declaring bankruptcy, to be shortly followed by Flint, Michigan;
or the Bank of Italy reducing its 2014 GDP growth expectation from 0.7% to
0.2%; or the largest ever decline in Chinese home sale prices; or the lowest
U.S. consumer sentiment reading in a year.
Suffice to say, we have written of all these issues ad
nauseum, and will continue to do so as significant developments unfold. And
thus, we will “change it up” today, by posting pictures “telling a thousand
words” of how global Central banks are fostering the hyper-inflation that
will shortly destroy the purchasing power of all fiat currencies,
particularly the “reserve currency” dollar.
First off, the so-called U.S. “recovery” that will
shortly be recognized as having never occurred – en route to a collapse far
more catastrophic than 2008 – as this time, there will be no way to “save the
system” with fresh money printing. As we wrote in “Island of Lies,” the only
place “positive economic data” has emanated is the U.S. BLS’ fraudulent jobs
data, and equally rigged, completely meaningless “diffusion indices.” Well,
the below chart incorporates the sum total of all U.S. economic data; and as
you can see, it hasn’t had this long a streak of “negative surprises” since
2008 (hint, hint).
Worse yet, the so called “hope” tied to surging auto
sales has been decidedly dashed, as not only is manufacturer “channel
stuffing” at record levels, but the rapidly expanding “subprime auto bubble”
has nearly reached the pre-collapse levels of 2006-07.
By the way, does anyone still believe housing is
“recovering?” If so, check out this horrifying chart, depicting how even
after the last three years’ Fed-inspired bubble of high-end homes, starts sit
at lows surpassed only by the 2008-09 bottom. And as you can see, per the 11%
June plunge reported last week, housing starts are rolling over anew. Recall,
housing related businesses have been the primary driver of the so-called “recovery”;
and then, determine what you think will happen next…
…not just here, but everywhere…
If you ask industry propaganda outlets like the National
Association of Home Builders, they’ll tell you all’s well. Of course, one
look at this chart, and you’ll see why the NAHB is one of the most
discredited organizations in America – and a major reason why the mid-2000’s
housing bubble blew out to epic proportions.
As for the lethal combination of recession and inflation,
what better proof can one demonstrate than the table below, of how Americans
are spending significantly more on “need versus want” items, and
significantly less on discretionary goods?
…which shouldn’t surprise anyone, given real energy
prices, for example, just hit an all-time high (yes, this chart covers 150
years of prices)…
Any “growth” the world has seen since the system
permanently broke in 2008 has been due to massive debt accumulation; and no
chart tells this better than the government-fostered, suicidal “growth” of
China’s historic construction bubble.
And finally, the endless array of market “dislocations”
caused by unfettered money printing – from these gross depictions of how IBM,
one of America’s greatest companies, has destroyed itself from within; to the
below, damning charts – depicting the massive divergence between the S&P
500 and global economic performance since QE3 was launched, in terms of
absolute gains, P/E expansion…
…and the “dash to trash” that typically accompanies
market tops…
And last but not least, the two horrifying charts below,
as supplied by American’s greatest mining analyst, Steve St. Angelo. Yes, the
world’s five largest gold miners, accounting for 35% of global production,
reached new all-time productivity lows in 2013 – producing a measly 1.2 grams
per tonne, down 29% from 2005’s level of 1.68 grams per tonne. Moreover, the
number of tonnes of ore processed surged by 28% – depicting just how rapidly
production costs are escalating, and calling into serious consideration the
topic of “peak gold.” To wit, energy costs comprise roughly a quarter of
mining costs alone; and thus, the aforementioned real energy price chart
couldn’t be more ominous.
Well, that should be enough to digest for now. Frankly,
it is beyond us how this deadly economic game has lasted this far; and now,
more than ever, we are convinced the “end game” of catastrophic, global
currency depreciation is upon us. Only you can take steps to protect yourself
from this inevitability; and the longer you wait, the more likely your
ability to do so will permanently vanish.
