Thursday, May 14, 2009

Stress Tests, Hurricanes, and Food Storage: Can You Hear that Hyperinflation Coming? Wait for it... Waaait for it...

The recent stress tests conducted on America's largest banks is a brazen attempt to convince us that our economic situation is not nearly as bad as it really is. Of particular note is the fact that the Federal Reserve has not accounted for nine trillion extra dollars that it has created and disbursed in the past eight months. That much funny money added to the system means that hyperinflation is coming. Increases in your salary will not keep pace with the dramatic increase in the cost of just about everything. If you don't have a significant reserve of food on hand, now would be an excellent time to correct that oversight.

Yesterday, U.S. Treasury secretary Timothy Geithner tried to instill consumer confidence by claiming that consumer confidence is up. At the same time Geithner was hoisting his pom-poms, the Dow Jones fell nearly 200

You are living through the most extravagant economic scam in the history of the world. Hopefully you've noticed that the fraud has spanned both a Republican and a Democrat presidential administration.

points. Geithner should know better. Geithner is a bald-faced liar. Geithner helped create the crisis that we are in.

You are living through the most extravagant economic scam in the history of the world. Hopefully you've noticed that the fraud has spanned both a Republican and a Democrat presidential administration.

In the past eight months, the Federal Reserve has infused nine trillion extra dollars into the world economy. That portends

After a hurricane, the unusually high prices of things gradually return to normal. After hyperinflation, the same thing will eventually occur. To be avoided in the midst of either, however, is the panic caused by a lack of preparation.

world economic disaster. The inspector general at the Federal Reserve has no idea where all of this funny money went. But if you wait long enough, those chickens will start coming home to roost in the form of much higher prices of most goods and services. The prices of luxury goods will likely lag the prices of everything else, because demand for luxuries will be off sharply while people are paying for next week's groceries.

The following YouTube video catches the Fed's inspector general and her cortege in a very embarrassing situation--that of not knowing where nine trillion dollars went. That's about as easy as not being able to see a full-grown elephant in a 10' x 10' room.



When Representative Alan Grayson asked the IG where the money went, her first response was to deny having read the report that indicated that the nine trillion dollars is missing. I'm not sure if the IG intended to look grossly inept with that answer, but that was definitely the effect. When Rep. Grayson asked her the question again, she claimed that they were only doing a high-level audit at this point in time. Don't you think it's conceivable, though, that a high-level audit would notice that nine trillion dollars is unaccounted for?

A good way to understand inflation is to imagine the economic aftermath of a hurricane. What happens? The price of everything goes up. Why?


A good way to understand inflation is to imagine the economic aftermath of a hurricane. What happens? The price of everything goes up. Why? Because suddenly products and services are in much greater demand than they can be produced. Extra money creates extra demand.

Because suddenly products and services are in much greater demand than they can be produced. Extra money creates extra demand. If, suddenly, everyone has a whole bunch more money, the initial effect will be that store shelves will be much more bare than normal. The eventual reaction, though, will be that prices increase in order that the shelves can remain reasonably filled.

The Federal Reserve's brashly irresponsible fiat money creation compounds the already-existing problem of lower productivity brought on largely by the housing crisis.

After a hurricane, the unusually high prices of things gradually return to normal. After hyperinflation, the same thing will eventually occur. To be avoided in the midst of either a hurricane or the storm of hyperinflation, however, is the panic caused by a lack of preparation.

Your government is intentionally ruining your economy. Just as it is not possible that Obama's burgeoning budgets are going to help the United States economy, the latest shenanigans at the Federal Reserve portend monumental global economic failure.

If you haven't started yet, prepare yourself by getting the foodstuffs you need to weather the coming storm of hyperinflation. If you prepare yourself for the spike, it will not be nearly as scary. If you prepare yourself for the spike, you just might come out on the other side unscathed.

Related Articles:

Inflation: Niall Ferguson Hits Back
Paul Krugman Says Not to Worry about Inflation




3 comments:

  1. What are the odds that the inflation will just offset the deflation that comes from extreme low demand?

    ReplyDelete
  2. Cameron, that may be a hopeful sentiment. Maybe that's the same hope under which the Fed and our federal politicians are laboring.

    Frank is merely stating the obvious. It should not be news to anybody. The prepared need not fear.

    ReplyDelete
  3. Cameron,

    There are certain things that, if we don't have them, we'd spend quite a bit to buy. All of the Abercrombie and Fitch stores would likely go out of business due to generally low demand, but not grocery stores. So, if we have out wheat and wheat grinder when the hyperinflationary spike hits, we'll be able to make our own bread rather than pay 99 bucks a loaf for it at the store.

    ReplyDelete

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