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.
Andy: Appreciate your enthusiasm. Have you ever heard of Martin Armstrong? He will save you and your subscribers a lot of money and energy.
Yes, I’ve more than heard of him, I’ve written of him as well. Let’s just put it this way; he’s an intelligent guy, but I’m NOT a fan, and have essentially zero interest in anything he says about financial markets.
To understand how hyperinflation works, read this:
I’m amazed that we have lasted this long without an outright collapse of the dollar. Earlier this year, I started to convince myself that maybe everything I believed was wrong and that it wasn’t coming after all. You just knocked me back into reality, as depressing as that is. Facts and physics cannot be ignored forever.