Part 1 of this series
presented readers with a simple premise and an equally simple conclusion.
All fiat currencies collapse in value (or are removed from circulation before this can occur). In the 1,000 years since humanity began these experiments in monetary folly, every fiat currency has collapsed or been taken out of circulation
The U.S. dollar is now a pure fiat currency. The U.S. dollar will collapse in value – and this collapse will almost certainly happen sooner rather than later.
For readers who consider this conclusion simplistic rather than simple, let’s add a little more complexity.
U.S dollar has already lost 99% of its value
In little over 100 years in which the Federal Reserve has had statutory responsibility as the steward of the U.S. dollar, the dollar has lost 99% of its purchasing power
The Federal Reserve is already 99% of the way to the finish line (i.e. the dollar going to zero). How controversial is it to predict the Fed will complete the last 1% of its journey to destroy the dollar?
That’s 1,000 years of history. Over 100 years of empirical evidence shows the Federal Reserve destroying the value of the dollar – and through most of those years the dollar was still propped-up by a partial gold standard.
For readers still not convinced, there’s plenty more. Just look at a picture of the Federal Reserve’s recent money-printing madness.
Below are the two recent episodes of hyperinflationary currency destruction by the Federal Reserve.
First, we had the hyperinflationary insanity from former Federal Reserve Chairman B.S. Bernanke from 2009 – 2013. More recently we have witnessed the even crazier-and-extreme currency conjuring from Jerome “The Destroyer” Powell.
Look (below) how crazy/extreme the Bernanke hyperinflation of the U.S. dollar appeared at the time it was occurring.
Look (top chart) at how relatively reasonable Bernanke’s original “helicopter drop” appears to be after the Federal Reserve massaged the chart
by stretching out the timeframe. Now look how much more extreme The Destroyer’s current helicopter drop is versus the Bernanke hyperinflation directly above.
There is only one reason why Bernanke’s original hyperinflation of the supply of dollars has not already completely destroyed the U.S. dollar through a corresponding hyperinflationary rise in consumer prices.
The Big Banks who received the trillions in Bernanke funny-money sequestered all this paper from the real economy.
What did they do with it? Wall Street gambled with it – virtually all of it.
It’s sitting on the books of the Big Banks’ “derivatives” bookmaking scam. Well over $1 quadrillion ($1,000 trillion or $1,000,000 billion) in highly leveraged bets
Today is different from 2009. Today the U.S. economy lays in complete ruin. Phony U.S. government statistics
about a mythical “V-shaped” rebound don’t change this reality.
The bankers at the Fed are conjuring even more trillions into existence this time around. And this time, much of this funny-money must be funneled straight into the shattered U.S. economy
- U.S. commercial real estate markets are facing complete implosion
- U.S. urban residential real estate markets are facing complete implosion
- Hundreds of U.S. “zombie corporations” are facing complete implosion
- The U.S. retail sector (with the exception of a handful of mega-retailers) is facing complete implosion
…and on and on and on.
- 30% of Americans didn’t make their house payment in June
- 47% of American homeowners are considering selling their homes due to the difficulty of making mortgage payments. Who is going to buy these homes???
- Over 40% of Americans who are working fulltime are Working Poor. Those losing their jobs have actually been taking home more money from the paltry support payments from the U.S. government. Those payments are ending in July. Many have no jobs to return to.
This massive economic crisis at the individual level doesn’t even begin to take account of the tens of millions of Americans who were already drowning in:
And speaking of automobiles, the U.S. automobile industry is on track to implode
at almost every level.
The clock is ticking
The only thing that can delay
the complete collapse of the U.S. economy is to hook up the Fed money-pump to the economy directly. Absent that support, U.S. stock market bubbles can’t possibly endure.
Trading multiples are virtually at all-time highs already (while the economy crashes and burns). Corporate profits are evaporating.
Absent trillions of dollars funneled directly into the real economy, multiples will quickly rise so high that everyone
will brand U.S. markets a massive fraud – as opposed to most observers who already see U.S. markets in this light.
What the Federal Reserve has already proven through the panicked injection of trillions of dollars in additional liquidity is that Fed governors will not allow their precious stock market bubbles to implode. Indeed, in recent weeks they haven’t even had the stomach to tolerate any wobbles in these bubbles.
The Bubble to end all bubbles
Most of Wall Street’s $1+ quadrillion derivatives market bubble is tied directly or indirectly to U.S. equities performance
. Even the Fed realizes it can’t get away with conjuring enough funny-money to re-inflate the Derivatives Bubble after an implosion.
This is all it will take for the hyperinflationary increase in the money supply to translate into hyperinflationary increases in consumer prices
. The world’s (supposedly) largest economy: propped up completely and directly by the Federal Reserve’s printing press.
True hyperinflation. The End of Everything.
Still not convinced?
Central bankers confess
If mountains of evidence won’t suffice, how about expert testimony?
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.
- Alan Greenspan, 1966
Central banks live to inflate. Indeed, former Fed Chairman B.S. Bernanke’s principal boast is that he could (and would) always
Alan Greenspan, the premier central banker of the past 100 years, warned us of what this means – before he became the Fed’s Chief Inflator himself.
Central banks like the Federal Reserve will inflate and inflate and inflate until all our “savings” (wealth) is gone. That’s hyperinflation.
Prices go to infinity. Wealth goes to zero.
That’s what happens to every fiat currency unless it is removed from circulation before the inflation death-spiral to zero can occur. This is what is currently happening with the U.S. dollar and most of the world’s other paper currencies.
Fortunately, Greenspan was not completely correct. There is
something we can do to protect our wealth as the world’s central banks methodically inflate our fiat currencies to oblivion.
While we have no gold standard to shield us from psychopathic central bankers, we do still have gold and silver.
By converting our wealth from ever-depreciating paper currencies into eternal gold and silver bullion we are protected from our rapacious central banks and their relentless (and eventually terminal) “inflation”.
Gold and silver are the best inflation-shields. They are hard assets that exist completely outside of and independent from our corrupted financial/monetary system.
Gold and silver mining stocks are a secondary hedge against central bank inflation for investors looking to diversify their assets beyond just bullion.
Mining stocks leverage price gains in the commodities they produce. Even better, gold and silver mining stocks began the current precious metals rally valued at historic lows versus metals prices.
These mining stocks – especially the better junior and mid-tier mining companies – still represent good investor value. While mainstream U.S. equities have never been more over-priced, precious metals mining stocks are still undervalued.
Last chance to prepare
The (monetary) “storm” isn’t coming. It is already here.
The U.S. dollar isn’t dying. It is already dead. Markets (and brain-dead economists) just haven’t realized this yet.
The U.S. dollar is a worthless fiat currency that is currently being hyperinflated at the most extreme rate in its entire existence.
One thousand years of history
tells us that the dollar can’t possibly survive the current monetary depravity from the Federal Reserve.
Fiat currencies go to zero.
That’s not a theory. It is an incontrovertible fact.