Friday, May 01, 2009

Hyperinflation Continued

I've written before about concerns over hyperinflation. I encountered an interesting interview of John Williams of the Shadow Government Statistics website.

Williams, an economist, says of the "stimulus plan:"

It will not stimulate the economy. The cost of all this is inflation. We will see inflation levels not seen in our lifetime by as early as the end of this year. Eventually we will see liabilities of $65 trillion – more than four times U.S. GDP, more than global GDP. There will be a hyper inflation where the dollar becomes worthless, where the paper is worth more as wall paper than as currency.

He continues and says:

"We are headed into a hyper-inflationary depression that will become a Great Depression. When hyper inflation hits, it will disrupt the normal flow of commerce and turn it into a Great Depression.

What about paper assets based on the dollar? You want to get into something like gold or silver –physical gold or silver, not paper. Perhaps get some assets outside the dollar. It’s a time to preserve your wealth and assets, not to start speculating on the stock market. There is a lot of volatility ahead. Over the long term, gold and silver are your best hedges."

Basically, there are four things the government can do to eliminate the massive debt we're accumulating: tax the country into the stone age, inflate the currency so that it becomes worthless, repudiate the debt, or cut spending significantly. The government has already set the course of taxation and inflation. This combination will be devastating and you absolutely do not want to have your financial portfolio to have any significant exposure to the U.S. dollar. Get out while the gettin's good!

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