Dr. Doom’s prediction U.S. will suffer Zimbabwe-like hyperinflation fuel for gold bulls?
I think what is going on in the former Soviet Bloc might have more leverage on this, especially if it goes systemic.
and while depegging might be what they have to do, the result will be a dagger struck at the heart of already-deeply-wounded european banking.
Faber and Peter Schiff were on Glenn Beck’s show today. I wanted to watch, but just after Faber started to speak a thunderstorm went over and I lost satellite for 20 minutes or so. That might have been interesting if Beck was able to pull his head out of his a__ long enough to conduct a rationale interview. It’s a shame how far the msm has degenerated.
So if we end up with hyperinflation, any thoughts on how long it lasts? And how do we finally get out of it? I”ve heard it said that it finally "burns itself out". What does that mean?
How does one best prepare for the possibility, besides purchasing things you will need in advance, and owning gold? Also, is the idea then to sell some gold at the super inflated price, or hang onto it for whenever a new currency, or newly valued currency is issued?
Thanks for any input.
[quote]Also, is the idea then to sell some gold at the super inflated price, or hang onto it for whenever a new currency, or newly valued currency is issued?[/quote]
That’s a very good question I often asked myself. Chris said in a podcast a while back that when land gets to the point that an acre is in the handful-of-ounces of gold per acre price, that that would be a good indicator that we’ve dropped back to historical norms. As an aside, he also said gold might/could go down if bonds went up significantly. Bonds are going up right now, but gold hasn’t dropped – in fact it’s risen. I’d watch carefully for a further rise in bonds and the potential that gold could take a temporary beating as people leave gold and head into return-paying bonds.That would be a good buying opportunity for more gold.
[quote]And how do we finally get out of it?[/quote]
The example of Zimbabwe may be instructive. I saw a piece on the country last night suggesting that it has started on its way to recovery at least partially because it has abandoned its currency. Only USD’s and S. African Rands are accepted in trade now. IOW, they accept more stable currencies.
It’s odd, given our concerns about the USD, to see that it is still accepted as the reserve currency is some corners of the world. It may take more than our current economic problems to dislodge it from that status. I think the possibility of hyperinflation may be a bit overblown.
[quote]It’s odd, given our concerns about the USD, to see that it is still accepted as the reserve currency is some corners of the world. It may take more than our current economic problems to dislodge it from that status. I think the possibility of hyperinflation may be a bit overblown.[/quote]
I wish you were right, but all evidence points to the contrary. The $ is still the reserve currency because we have not entered the final throws of the currency meltdown that is on its way. Do not underestimate the amount of dollars that are out there, in central banks throughout the world, and the habits and beliefs that have been formed after 70 years of reserve currency status. Remember, that only the US’s ability to pay back it’s debt is what stands in the way of continued currency health and a complete meltdown. Our debt to GDP is already well above WWII levels, most of our production has been exported for debt, leaving meaningless service jobs that don’t produce anything, our personal savings are non-existent, as opposed to WWII we now have unfundable entitlement programs that consume 2/3 of our budget, and opposed to WWII-1970’s we are the world’s largest debtor instead of the world’s largest creditor.
If we had a credit score as a country, it would be well below the dead-beat level. It only takes one generation of bad habits to bankrupt a nation. The same thing happened in England from 1920 to 1940. It’s about to happen to us. Be prepared.
I don’t disagree that we will have high inflation, we just don’t know enough to assume we’ll have hyperinflation. Schiff opined that we still have time to stop quantitative easing before hyperinflation becomes inevitable. Faber disagreed, saying that we have already gone too far.
But, no matter which comes to pass, our options are the same. Buy PM’s or other currencies while the USD still has value.
I follow Schiff and am currently reading his Crashproof. Howevver, short of Andrew Jackson and Warren Harding rising from the dead, putting Obama in a straight-jacket and dunce cap and sitting him in the corner, dissolving the Fed, and ending our welfare state, I do not see how it is possible for the gov to stop quantitative easing. Until we are willing to accept the pain that will come without government programs and services, the printing will go on.
No need to worry.
In his column today, superstar economist Paul Krugman says that the current fears of inflation are politically motivated nonsense. He states that the real danger is deflation. http://www.nytimes.com/2009/05/29/opinion/29krugman.html?_r=3