Individuals dream about winning the lottery, stock market profits, reducing debt, earning more income, attractive sex partners, and tasty food. But our dreams can turn into nightmares filled with inflation ghosts and monsters.
The derivative monster is a destroyer. Deutsche Bank stock closed at $6.76 on June 7, 2019, down from over $100 in 2007. A repeat of 2007 is possible.
The Ghost of Inflation Past devastated many countries. Heavy debt chains clanked as the ghost walked. He wept knowing the human destruction that inflation and hyperinflation created during the past century, and that more inflation lies ahead.
Monetary inflation appears innocuous at first. Governments and economies need liquidity, print currency units and feed them into the economy. People feel wealthier. Prices rise, usually faster than income. Debt payments become more onerous and the standard of living declines. The central bank prints more currency.
Prices rise further. Currency units buy even less. Prices for gold bullion, stocks, food and housing spike higher as people convert dying currency units into anything that will retain value.
Defining hyperinflation as 50% price increase per month for at least 30 days, there have been (per Professor Steve H. Hanke) 55 hyperinflations in the last century. There will be more.
Believing that a government or central bank can create wealth by printing currency units is a dangerous delusion. Politicians and economists should know better, but they often indulge in excessive currency “printing” that causes higher prices.
The Ghost of Inflation Present stalks the halls of congress and the Eccles Building (Federal Reserve), beguiles everyone, and encourages Quantitative Easing, Modern Monetary Theory (MMT), Magic Money Tree thinking, ZIRP, and other nonsense. Nobel Prize-winning economists proclaim that governments need more debt while over $11 trillion of sovereign debt “pays” negative interest rates. Craziness!
The strident calls for “more spending, increasing debt, larger benefits, modernize the military, expand entitlements, free everything, medical research, shovel-ready projects, build infrastructure, and more graft, corruption and payoffs” echo within the walls of public buildings.
Per Sovereign Man, the Nordea Bank in Denmark offered to lend currency units for ten years to individuals at MINUS 0.12% interest. There are few limits to craziness.
Yes, the Ghost of Inflation Present is tromping our world, fed by the Federal Reserve, congressional appropriations, ever-increasing debt, and governmental nonsense.
Food prices: going up, especially after flooding and planting delays.
Energy prices: Multi-decade trend shows higher prices, even without Mid-East wars. Next week’s prices are guesswork, but next decade’s prices will be higher.
Housing prices: Housing Bubble 2.0 is peaking and may collapse again, but prices inevitably rise over the long-term.
Medical care and college tuition. Out of control and getting worse.
Inflation Statistics: It is rumored that dungeons exist in government capitals where inflation statistics are tortured and crushed. After enough punishment they scream, “We’ll tell whatever story you want.”
Anyone shopping for groceries, cigarettes, beer, housing, or medical care knows that inflation is larger than official numbers. The Chapwood Index shows plausible inflation rates.
The Ghost of Inflation Future will turn dreams into nightmares. This ghost has a smiling face… and predator eyes. He is hundreds of feet tall, stalks the land, laying waste to savings, purchasing power, retirement income and the global middle class.
This ghost drags $250 trillion in global debt behind him. He smiles fiendishly at trusting individuals and proclaims, “Don’t worry, central banks will save us from debt monsters, we owe it to ourselves, inflation and the business cycle are controlled, stocks will rise forever, trust your politicians, central bankers have at heart your best interests, and gold is useless in the modern world.”
The Ghost of Inflation Future will bring tears to those who believe him!
The Ghost of Inflation Past taught us that printed currency units don’t create wealth, we can’t trust governments and central banks to preserve purchasing power of currency units, and… people with something to lose lie to protect their power and wealth.
We didn’t learn the lessons from history. More inflationary pain is assured.
The Ghost of Inflation Present cautions that consumer prices are rapidly rising, despite official denials.
The Ghost of Inflation Future warned us. If global governments and central banks continue traveling down their multi-decade path toward debt, deficits, devaluations, death and destruction, then we will suffer ugly consequences. Devaluation of fiat currencies, consumer price inflation, unpayable debts, and wealth transfers to the upper few percent of the political and financial elite will occur. It will be a dickens of a disaster.
The Ghosts of Inflation have spoken. Central banks and governments want currency units to decline in purchasing power. Those digital currency units are easy to manipulate, simple to counterfeit, and expandable. The game continues until the system resets.
What Happens in a System Reset?
1933: President Roosevelt removed gold from the financial system in the United States. T-bonds became the new standard. He revalued gold from $20.67 to $35 per ounce.
1971: President Nixon “closed the gold window” and refused to exchange for gold those dollars held by foreign governments. The price of gold jumped from $42 to over $800 in a decade.
2001: The “War on Terror” began, debt and deficits increased, politics changed, bubbles grew, political systems reset, and gold jumped from $255 to over $1,900.
2019 – 2025: An international financial system reset seems likely. Possibilities:
- Honest money. Doubtful but desirable.
- IMF Special Drawing Rights. Maybe. Globalists like the IMF.
- Gold backed Russian or Asian currencies. Possible.
- Gold backed crypto currencies. Seems likely only if large banks get a piece of the profits.
- Depression, deflation and then high inflation? Maybe.
- Inflation, deflation and depression? More likely.
- Price of gold rises to $5,000, $10,000, or $25,000 per ounce?
- There will be trauma and tears.
Read: Hubert Moolman: Significant Monetary Event
The Bottom Line:
- Do you own enough gold and silver that you sleep well at night knowing central bankers encourage inflation, decreasing purchasing power, and higher prices?
- Do you own enough gold and silver that you sleep well knowing the U.S. government will increase official national debt by $2 trillion per year during the next recession?
- Do you own enough gold and silver that you are not worried about the future our politicians and central bankers are creating?
- Do you own enough gold and silver? Bullion is insurance against currency devaluations, bad economic policies, inflation, derivative monsters, and unexpected financial events.
Miles Franklin will exchange digital or paper dollars for real silver and gold. Call 1-800-822-8080.
The Deviant Investor