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“The crucial passage comes in Chapter 17
entitled "Velocity". Each big inflation -- whether the early
1920s in Germany, or the
Korean and Vietnam wars
in the US
-- starts with a passive expansion of the quantity of money. This sits
inert for a surprisingly long time. Asset prices may go up, but latent price
inflation is disguised. The effect is much like lighter fuel on a camp fire
before the match is struck.
People’s willingness to hold money can change
suddenly for a "psychological and spontaneous reason", causing a
spike in the velocity of money. It can occur at lightning speed, over a few
weeks…
"Velocity took an almost right-angle turn
upward in the summer of 1922," said Mr. O Parsson. Reichsbank officials
were baffled. They could not fathom why the German people had started to
behave differently almost two years after the bank had already boosted the
money supply. He contends that public patience snapped abruptly once people
lost trust and began to "smell a government rat".
Some might smile at the Bank of England
"surprise" at the recent the jump in British inflation. Across the
Atlantic, Fed critics say the rise in the US
monetary base from $871bn to $2,024bn in just two years is an incendiary pyre
that will ignite as soon as US
money velocity returns to normal.
Morgan Stanley expects bond carnage as this catches
up with the Fed, predicting that yields on US Treasuries will rocket to 5.5pc…
Near civil war between town and country was a
pervasive feature of this break-down in social order. Large mobs of
half-starved and vindictive townsmen descended on villages to seize food from
farmers accused of hoarding…
Grand pianos became a currency or sorts as
pauperized members of the civil service elites traded the symbols of their
old status for a sack of potatoes and a side of bacon. There is a harrowing
moment when each middle-class families first starts to understand that its
gilt-edged securities and War Loan will never recover. Irreversible ruin lies
ahead. Elderly couples gassed themselves in their apartments…
Great numbers of people failed to see it coming.
"My relations and friends were stupid. They didn’t understand what
inflation meant. Our solicitors were no better. My mother’s bank
manager gave her appalling advice," said one well-connected woman.”
(emphasis added)
“The Death of Paper Money”
Ambrose Evans-Pritchard, The Telegraph, London,
7/25/10
“…it is difficult enough to convince
some people that the economy is in fact not providing the security they
desire, but is actually destroying their future completely. To explain to
them that this is deliberate, that the economy is designed to self-destruct,
that is another prospect altogether…
Many people hit a proverbial wall on this issue
because they simply cannot fathom that certain groups of men (globalists and
central bankers) view money and economy in completely different terms than
they do. The average American lives within a tiny box when it comes to the
mechanics and motivations of finance. They think that their monetary desires
and drives are exactly the same as a globalist’s. But, what they
don’t realize is that the box they think in was BUILT by globalists.
This is why the actions of big banks and the decisions of our mostly
corporate establishment run government seem so insane in the face of common
sense. We try to rationalize their behavior as “idiocy”, but the
reality is that their goals are highly deliberate and so far outside what we
have been taught to expect that some of us lack a point of reference. If you
cannot see the endgame, you will not understand the steps taken to reach it
until it is too late…
Our government, both major parties, is owned lock
stock and barrel. This is why there are no satisfactory answers for the
questions posed above. Elements of the U.S. Government including almost every
president since 1912 have not only turned a blind eye to Globalist
activities, they have offered their full support to the bankers…
Corporate globalists believe in global government on
their terms and they barely try to hide it. If someone thinks this sounds
“fantastical” then they haven’t been paying the slightest
attention. When one understands how Elites view economy, and realizes their
primary motivations, the fact that they purposely triggered a collapse is
perfectly logical…
We once took a feared king to task. Are a bunch of
frothing corporate bankers really so daunting? All that is needed is a
principled movement with the will to see justice done, and I believe we have
that already.
“The Purpose Behind Engineered Economic
Collapse”
Giordano Bruno, Neithercorp Press, 8/17/2010
“The Obama administration appears to be
proceeding with a novel way of financing trillion-dollar budget deficits by
forcing IRA and 401(k) holders to buy Treasury bonds by mandating the
placement of government-structured annuities in their investment accounts.
The requirement to invest private retirement assets
has been cleverly buried within plans to create "automatic IRAs"
that would mandate employer groups enroll all employees in 401(k) or IRA
plans.
The U.S. Department of Labor released yesterday an
agenda for an upcoming joint hearing with the Department of the Treasury
scheduled for Sept. 14 and 15 on whether government life-time annuity options
funded by U.S. Treasury debt should be required for private retirement
accounts, including IRAs and 401(k) plans.
WND reported in January that Assistant Labor
Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry
are planning to stage a public comment period before implementing regulations
that would require private investors to structure IRA and 401(k) accounts
into what could amount to a U.S. Treasury debt-backed government annuity.”
“Government wants your 401(k): Hearings set on
plan to require Treasuries in 'automatic IRA'”
Jerome R. Corsi, WorldNetDaily, 8/26/10
Why all the concern about Inflation, much less Hyperinflation?
Isn’t the Private Sector Massively deleveraging? Yes.
Hasn’t M3 been dramatically dropping in recent months (a Major
Sign of an Economic Depression BTW)? Yes.
Isn’t the U.S.
and Key Major Nations GDP dropping (Real U.S. GDP is a Negative Number per
Shadowstats.com – see below)? Yes.
But consider that all of the aforementioned are Symptoms of a
Stagnating Economy.
And it is entirely possible to have a Stagnating Economy with
Inflation or even Hyperinflation.
Indeed, we already have a word for it: Stagflation.
And there are already Signs.
The Public Sector, especially in the U.S.A.
and Europe, is leveraging UP.
Massive Central Bank and Major Government Stimuli resulting in The
thus-far-“Inert” (see Quote above), but Burgeoning Repositories
of Fiat Currencies which lie in wait, an Eerie Simulacrum of the two Year
Calm before the Hyperinflationary Storm in the Weimer Republic.
And another sign -- Real U.S. Consumer Price Inflation is already
8.57%. Indeed, it is at this point that we need to look at the Real Numbers,
not the Bogus Official ones.
Shadowstats.com calculates the Real Numbers for the U.S.
the way they were calculated in the 1980’s and 1990’s, before
systematic Official Data Distortion and Interventions began in earnest.
Official Numbers
vs. Real Numbers (per
Shadowstats.com)
Annual U.S. Consumer Price Inflation reported August 13, 2010
1.24%
8.57% (annualized July 2010 Rate)
U.S. Unemployment reported August
6, 2010
9.5%
21.7%
U.S. GDP Annual Growth/Decline
reported August 27, 2010
2.98%
-1.25%
U.S. M3 reported August 14, 2010
(Month of July, Y.O.Y.)
No Official
Report
- 5.38 %
Indeed, with Stagflation already with us, can Hyper-Stagflation be far
behind?
Unfortunately, the likelihood of Hyper(Stag)(in)flation is all too
high.
And if Hyperinflation looms (such as described in “When Money
Dies: The Nightmare of the Weimar Hyperinflation”), then we are
facing a likely Monetary “Velocity-Armageddon” Spike.
And in that event, interest rates will likely launch into the
Stratosphere. And the Value (Purchasing Power) of Treasury Paper to which
Corsi refers above (as the prospectively required Investments for 401(k) and
IRAs in the U.S. Treasury Securities) plummets. Sayonara to the Retirement
Plans and Asset Values of Millions of Savers and Retirees.
So what are the Antidotes to such a Monetary Velocity Spike?
Consider:
A Monetary Velocity Spike Occurs when the populace-at-large losses
confidence in Fiat Currency.
If a loaf of Bread cost $10 yesterday and cost $20 today, I am
impelled to expend all my remaining Fiat Currency (for Bread or other
tangibles) ASAP, before its only value is as Zimbabwe Toilet Paper, as it
were.
Note the Key Feature of a Velocity-Spike is a demand for Tangibles and
Disdain for Fiat Paper.
So what Survives this Fiat Currency Velocity-Armageddon?
Three Categories of Tangibles Survive, and not only retain Purchasing
Power Value, but actually see it enhanced. Gold, Silver and Essential Goods
such as Food.
Deepcaster has long been, and still is, an advocate of Gold and
Silver, as not only the best hedges against Inflation or Deflation, but also
those Investments with the best profit potential. Indeed, The Ultimate
Monetary Metals, are our #1 and #2 Selections as the best Fortress Assets for
Profit and Protection.
Therefore, Deepcaster has two open ‘Buy’ Recommendations
on a particular form of these Metals. And, as Regular Readers know,
Deepcaster has for weeks maintained these open ‘Buy’ Positions
notwithstanding ongoing and prospective Gold and Silver Price Suppression
Attempts by the Fed-led Cartel* of Central Bankers.
Importantly, we assert (as our regular readers already know) that a
Fed-led Cartel of Central Bankers and Allies has for years been suppressing
the prices of Gold and Silver to prevent their attaining wider recognition as
the Ultimate Stores and Measures of Value rather than their Treasury
Securities and Fiat Currencies.
*We encourage those who doubt the scope and power of
Overt and Covert Interventions by a Fed-led Cartel of Key Central
Bankers and Favored Financial Institutions to read Deepcaster’s
December, 2009, Special Alert containing a summary overview of Intervention
entitled “Forecasts and December, 2009 Special Alert: Profiting From
The Cartel’s Dark Interventions - III” and Deepcaster’s
July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco;
Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes
& T-Bonds" in the ‘Alerts Cache’ and ‘Latest
Letter’ Cache at www.deepcaster.com. Also consider the substantial
evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for
information on precious metals price manipulation. Virtually all of the
evidence for Intervention has been gleaned from publicly available records.
Deepcaster’s profitable recommendations displayed at www.deepcaster.com
have been facilitated by attention to these “Interventionals.”
Attention to The Interventionals facilitated Deepcaster’s recommending
five short positions prior to the Fall, 2008 Market Crash all of which were
subsequently liquidated profitably.
However, regarding Gold and Silver, as we indicated several Months
ago, The Cartel’s* Precious Metals Price Suppression Capacity has been
weakened considerably by Recent Revelations catalyzed by GATA, Deepcaster,
and others, that e.g. certain Major Gold Repositories have very little of the
actual Physical Metal that they claim they have.
This has, thankfully, led to an increased demand for delivery of and
possession of Physical Gold and Silver.
Deepcaster sees this September, 2010 period as critical for The
Cartel. Will they continue to be able to suppress Precious Metals Prices? The
next few weeks should tell the tale. [To see Deepcaster’s forecast
regarding whether The Cartel will be able to reverse the, thus far
relentless, advance of Gold and Silver, see our latest Forecast in the
‘Alerts Cache’ at www.deepcaster.com.]
Indeed, GATA Board member Adrian Douglas makes a very strong case that
The (Second) London Gold (Price Suppression) Pool is likely to fail imminently,
thus propelling Gold and Silver to New Highs, very soon.
In any event, in the Middle and Long Term, Gold and Silver are the
World’s Best Bets to rise dramatically in terms of all Fiat Currencies.
Thus they are the best Antidotes to a prospective Monetary
Velocity-Armageddon.
And, in light of the foregoing observations, the prospective
Government-Mandated Retirement Fund “Investments” in Treasury
Securities are not any kind of Antidote but rather look much like a
Confiscation and Asset Degradation.
Morgan Stanley has it right (above), and we repeat: ”Morgan
Stanley expects Bond Carnage as this catches up with the Fed, predicting that
yields on U.S. Treasuries will rocket to 5.5 Percent…”, as, we
might add, their Values Plummet.
We are duly warned.
Best regards,
Deepcaster LLC
Deepcaster.com
Wealth Preservation - Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
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