Thursday, June 30, 2011

Hyperinflation, Economic Nonsense, and the Perspective of History

What does Lindsay Lohan have in common with economic historian Adam Fergusson?  The answer is that they both understand the cause of hyperinflation.  Yesterday Lindsay Lohan tweeted, "Have you guys seen food and gas prices lately?  U.S. $ will soon be worthless if the Fed keeps printing money!"  

One could hope that the perspective of history, specifically as demonstrated by Adam Fergusson's classic When Money Dies, would grant a measure of common sense to later generations concerning something so insidious as hyperinflation.  Yet Daniel Indiviglio of The Atlantic is brazen enough to act the part of Walther Rathenau, who oversaw the beginning of the Weimar hyperinflation.  Indiviglio writes, “The Fed's intervention is not driving food and energy prices. Moreover, the current levels of inflation are not nearly approaching levels where U.S. dollars will soon be worthless. To be sure, prices had been rising, but Americans aren't going to be pushing around wheelbarrows of dollars anytime soon to purchase a quart of milk.

Now, compare that to what Fergusson writes of Rathenau, that he, "expressly and publicly denied that the printing press had any role to play in that permanently spiraling sequence of events, and by ascribing the country’s ills primarily to the unfavourable trade balance caused by reparation payments he totally failed to understand the reality that the country was living far beyond its means, printing money to pay for excesses which included over-employment, the inordinate subsidy of industry, the import and manufacture of luxuries for domestic consumption, and a grossly inefficient tax-collection system.”

I know I frequently sound like I have nothing new to say regarding inflation, and our current state of economic affairs.  Yet I cannot remain silent on this.  Indiviglio is enabling the inflationary policies by parroting the Fed’s lies.  Inflation is never understood when it is happening—it happens slowly at first, that hardly anyone notices, and then it accelerates so suddenly that everyone is so consumed with spending their money to survive, that they have no time to reflect upon what got them into the situation they’re in.  This is one of the lesson’s Fergusson gives in his book.  Not only is he enabling the inflators, but he is actively denying their involvement and redirecting those harboring suspicion of the Fed to bogus claims of increased demand.

There are essentially two options in how to understand economics.  You can either listen to the King’s wise men, sorcerers, and magicians, like Indiviglio, or you can listen to those outside the establishment, with nothing to gain by the inflationary policies of our Gangster Government.  But remember, it is the court magicians and their wannabes, that never know what is happening until it is past, and then never recognize that things are as bad as they are, and then when it is too late, you’ve lost everything.

The reality of the situation, just like Weimar Germany, is that the Central Bank is creating money at a pace unparalleled in American history.  This is causing inflation, if not hyperinflation.  If you want to protect your wealth through the destruction of the dollar, you must put your money in things of real value, assets that will see you through the inflationary crisis we’re experiencing.  Get some gold and/or silver.  Do it now.  Ignore the fallacious economics of men like Indiviglio, and do what you know you must.

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