osoab
19th April 2011, 10:18 AM
Hyperinflation Special Report (2011) (http://www.shadowstats.com/article/hyperinflation-special-report-2011) from John Williams @ Shadowstats. It's long and it is free.
http://www.shadowstats.com/imgs/2011/652/image012.jpg
Section 8—Hyperinflationary Great Depression
Even with the government’s spending, debt and obligations running far beyond the ability of the government to cover with taxes or the political willingness of the government to cut entitlement spending, the inevitable inflationary collapse, based solely on these funding needs, possibly could have been pushed well towards the end of the current decade. Yet, the effects of extraordinary economic downturn and the government’s response to same, have advanced the turning of Social Security funding from being in net surplus, to net deficit, by several years, to the present day.
The printing presses already are running, and the Fed is working actively to debase the U.S. dollar, effectively funding fully net U.S. Treasury debt issuance to the public. Global rejection of the U.S. dollar and criticism of U.S. government fiscal actions and Federal Reserve monetary policy are accelerating, along with calls for a new world reserve currency.
Actions already taken to contain the systemic solvency crisis and to stimulate the economy (which have not worked), plus what should be renewed devastating impact of unexpected ongoing economic contraction on tax revenues, have set the stage for a much earlier crisis. Risks are high for the hyperinflation beginning to break in the months ahead; it likely cannot be avoided beyond 2014; it already may be beginning to unfold.
It is in this environment of rapid fiscal deterioration and related massive funding needs that the U.S. dollar remains open to a rapid and massive decline, along with a dumping of domestic- and foreign-held U.S. Treasuries. The Federal Reserve would be forced to monetize further significant sums of Treasury debt, triggering the early phases of a monetary inflation. Under such circumstances, current multi-trillion dollar deficits would feed rapidly into a vicious, self-feeding cycle of currency debasement and hyperinflation.
With the economy already in depression, hyperinflation kicking in quickly would push the economy into a great depression, since disruptions from uncontained inflation are likely to bring normal commercial activity to a halt.
What happens next is anyone’s speculation. How long would a hyperinflation last before the government brought its fiscal house into order and established a sound currency? I would be surprised if the hyperinflation crisis lasted beyond a year or two, since the system is not positioned to handle the crisis well and pressures for rapid resolution would be extremely strong. All that depends, however, on what evolves out of what otherwise would be highly unstable political, economic, financial and social environments. Accordingly, the best individuals can do is to take actions to protect themselves and their families, through the worst of foreseeable circumstances, both in terms of personal safety and in terms of the purchasing power of pre-crisis assets.
Section 9—Closing Comments
Other Issues
A U.S. hyperinflationary great depression would be extremely disruptive to the lives, businesses and economic welfare of most individuals. Such severe economic pain could lead to extreme political change and/or civil unrest; the timing would be right for the emergence of a successful third party for the 2012 election.
What has been discussed here remains well shy of a comprehensive overview of all possible issues, but rather at least has raised some questions and touched upon some likely consequences. No one can figure out better than you the peculiarities of this circumstance and how you, your family and/or your business might be affected. Using common sense remains the best advice I can give.
These matters will continue to be expanded upon in the regular SGS Commentaries, as circumstances and subscriber reactions dictate.
I extend by deep thanks to the various readers who have raised questions and provided ideas, comments and material. As always, please feel free to offer your thoughts or raise your questions by e-mail to johnwilliams@shadowstats.com.
http://www.shadowstats.com/imgs/2011/652/image012.jpg
Section 8—Hyperinflationary Great Depression
Even with the government’s spending, debt and obligations running far beyond the ability of the government to cover with taxes or the political willingness of the government to cut entitlement spending, the inevitable inflationary collapse, based solely on these funding needs, possibly could have been pushed well towards the end of the current decade. Yet, the effects of extraordinary economic downturn and the government’s response to same, have advanced the turning of Social Security funding from being in net surplus, to net deficit, by several years, to the present day.
The printing presses already are running, and the Fed is working actively to debase the U.S. dollar, effectively funding fully net U.S. Treasury debt issuance to the public. Global rejection of the U.S. dollar and criticism of U.S. government fiscal actions and Federal Reserve monetary policy are accelerating, along with calls for a new world reserve currency.
Actions already taken to contain the systemic solvency crisis and to stimulate the economy (which have not worked), plus what should be renewed devastating impact of unexpected ongoing economic contraction on tax revenues, have set the stage for a much earlier crisis. Risks are high for the hyperinflation beginning to break in the months ahead; it likely cannot be avoided beyond 2014; it already may be beginning to unfold.
It is in this environment of rapid fiscal deterioration and related massive funding needs that the U.S. dollar remains open to a rapid and massive decline, along with a dumping of domestic- and foreign-held U.S. Treasuries. The Federal Reserve would be forced to monetize further significant sums of Treasury debt, triggering the early phases of a monetary inflation. Under such circumstances, current multi-trillion dollar deficits would feed rapidly into a vicious, self-feeding cycle of currency debasement and hyperinflation.
With the economy already in depression, hyperinflation kicking in quickly would push the economy into a great depression, since disruptions from uncontained inflation are likely to bring normal commercial activity to a halt.
What happens next is anyone’s speculation. How long would a hyperinflation last before the government brought its fiscal house into order and established a sound currency? I would be surprised if the hyperinflation crisis lasted beyond a year or two, since the system is not positioned to handle the crisis well and pressures for rapid resolution would be extremely strong. All that depends, however, on what evolves out of what otherwise would be highly unstable political, economic, financial and social environments. Accordingly, the best individuals can do is to take actions to protect themselves and their families, through the worst of foreseeable circumstances, both in terms of personal safety and in terms of the purchasing power of pre-crisis assets.
Section 9—Closing Comments
Other Issues
A U.S. hyperinflationary great depression would be extremely disruptive to the lives, businesses and economic welfare of most individuals. Such severe economic pain could lead to extreme political change and/or civil unrest; the timing would be right for the emergence of a successful third party for the 2012 election.
What has been discussed here remains well shy of a comprehensive overview of all possible issues, but rather at least has raised some questions and touched upon some likely consequences. No one can figure out better than you the peculiarities of this circumstance and how you, your family and/or your business might be affected. Using common sense remains the best advice I can give.
These matters will continue to be expanded upon in the regular SGS Commentaries, as circumstances and subscriber reactions dictate.
I extend by deep thanks to the various readers who have raised questions and provided ideas, comments and material. As always, please feel free to offer your thoughts or raise your questions by e-mail to johnwilliams@shadowstats.com.