Hyperinflation Coming? Very Very Concerning...

[kurtyordy]

even obama sees what is coming-

Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2) - Bloomberg.com

 

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[andviv]

I was about to reply with a long post and then remembered we don't discuss politics here.

I don't think he said anything we all didn't know before.

 

[MJ DeMarco]

Dollar hits 7-month low

 

[Rawr]

(linked)

Today:

Finally a major event has taken place that is a US dollar milestone.

The financing and extremely important event is the arrangement between China and Brazil displaces the dollar as China becomes the major trading partner with Brazil. Since then the Rial has been celebrating and the dollar has been depressed.

This is a once in approximately a century replacement of a trading currency that has always meant a dethronement of the deposed and coronation of a new currency king.

The last time this happened was when the US dollar supplanted the British Pound as the major trading currency and entity with Brazil 79 years ago.

It took the Brits 300 years to supplant the Portuguese Escudo with the British Pound.

Only twice has this occurred in 379 years. This is obscure to most but not to Mr. Paulson the hedge wizard. Obscure to most, but not to our gang at JSMineset.

The dollar died in Rio and that means everywhere.\

The dollar is in for a very cold winter.

There is one thing that is absolutely certain and that is Gold is now headed to at least $1650 and in all probability much higher. This is happening NOW!

What more do you need to know?

 

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[MJ DeMarco]

Oh, did the water get a few degrees hotter?

 

[Rawr]

Oh, did the water get a few degrees hotter?

Soon it won't matter how much money we are making in the market, unless we can buy heaps on gold before hand.

 

[Russ H]

Umm . . . haven't we been over this before?

China cooks their own goose if they switch currencies-- they have BILLIONS in US debt. Seeing the dollar go down is not something they want right now.

In the future, when they're better positioned? Maybe-- they could cause a major collapse in US currency.

But now?

We'll see . . .

-Russ H.

 

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[Edge]

We may be able to ruin the dollar without China. This is 5 minutes of must see TV.

[ame="http://www.youtube.com/watch?v=cJqM2tFOxLQ"]YouTube - High Quality Version: Is Anyone Minding the Store at the Federal Reserve?[/ame]

 

[kidgas]

Edge,
I would love to comment on your video but I am afraid I would end up in trouble. Suffice it to say...WOW. Thanks.

 

[Russ H]

Edge-

I know from B&P that you're past the age of 20-- so I'm sure you recognize Congressional grandstanding when you see it, right? This is one of the oldest, most lauded forms of capital hill goings on.

Everyone else: Please watch a few dozen congressional hearings, if you haven't already. They are full of stuff like this-- Congressmen posturing themselves to look good on video/TV, for great soundbites (helps them get re-elected).

I'm not saying it's good, or it's bad. It's just part of our system.

BTW, in the interest of balance, here's an atty's analysis of the session:

TUESDAY, MAY 12, 2009

Grandstanding

The video of Rep. Alan Grayson grilling the Inspector General of the Fed Board of Governors, Elizabeth Coleman, has been making the rounds. Grayson says that there's a Bloomberg article which says that the Fed has entered into $9 trillion of off-balance sheet transactions, and asks Coleman if she has investigated those transactions at all. After Coleman fumbles around for a while, she essentially says no. Grayson makes himself look good in this video, especially because Coleman's performance is so bad, but this is grandstanding of the highest order.

First of all, the Bloomberg article never said that the Fed has entered into $9 trillion of off-balance sheet transactions. This is the article he was talking about, and the phrase "off-balance sheet" doesn't appear once.

And the $9.7 trillion number refers to all money spent, lent, or guaranteed during the financial crisis by the Fed, Treasury, and FDIC. It's also very misleading, because lending $1 billion isn't the same as guaranteeing $1 billion in assets, and $5.7 trillion of that $9.7 trillion is in the form of guarantees.

Second, Coleman is the IG of the Board of Governors of the Federal Reserve, not the Reserve Banks. The Fed's various lending facilities are handled by the New York Fed, and Coleman has no authority to audit the New York Fed or any of the other regional Reserve Banks. All the regional Reserve Banks have auditors, and they're all subject to regular external audits as well. Until a few years ago, the Board of Governors conducted examinations of the Reserve Banks in lieu of external audits. But some people thought that was too insular, so the Board of Governors' examinations were replaced by external audits. Ironically, if there hadn't been concerns about the independence of the Board of Governors' examinations of the Reserve Banks, Coleman might have been able to answer Grayson's questions.

********

-Russ H.

 

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[MJ DeMarco]

China cooks their own goose if they switch currencies-- they have BILLIONS in US debt. Seeing the dollar go down is not something they want right now.

Are you sure??? China has slowed the buying of Treasuries and has started piling money into commodities like COPPER.

 

[AroundTheWorld]

could be they recognize the bad situation and figure their choice is between bad or worse. Better to cut anchor now, before it sinks the entire boat.

 

[kidgas]

I certainly think owning hard assets (or at least having exposure) is a wise idea whether you are China or an individual.

 

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[Russ H]

Actually, MJ, word amongst contractors is that China has been buying copper for a while now-- it's an essential element for building their infrastructure.

We saw prices on electrical copper (and plumbing copper) go up by 10-15% EVERY 2 WEEKS last year, before the financial fubar.

It was insane-- we bought all of our plumbing pipe, fire sprinkler stuff, and electrical ahead of time-- it was literally almost DOUBLE what we paid for it, by the time the markets went kerplunk.

China is doing an enormous amount of electrical wiring and plumbing-- copper is by far the most valuable commodity to their entire build-up.

So it totally makes sense for them to buy copper-- they plan to actually USE it, not TRADE it!

(least that's what I've heard on the street)

Marketplace: Copper rising on Chinese infrastructure

-Russ H.

 

[MJ DeMarco]

Another bad day for the dollar, higher commodities, and a new high on Treasury yields.

 

[Russ H]

Weird. T-Bill yields went down yesterday.

-Russ H.

 

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[Rawr]

Hello!

China warns Federal Reserve over 'printing money' - Telegraph



has anyone ever seen this - what do ya think?

[ame]http://www.youtube.com/watch?v=7QCyhi-6EFc&feature=related[/ame]

 

[Russ H]

Looks like the typical propaganda from Fox News (or any other news outlet).

It's becoming harder and harder to get any accurate news these days without a "spin" one way or the other.

The age of objective reporting is apparently over.

Sad, really.

But from a fastlane perspective, if you can keep on top of what is actually happening (vs what the news says), you can profit from the misinformation.

That's the whole reason folks like Wm Randolph Hearsst, Rupert Murdoch, and Ted Turner own news outlets: So they can spin the news to manipulate the people.

-Russ H.

 

[hatterasguy]

Like I said before invest in real estate and guns, that way your covered no matter what. Both are sound investments.

Just look at what gun manufacture stocks have been doing, look at Colt. They are back ordered years out, I have never seen gun prices rise like this. They have to be up 100% since last year. Last year I could get a nice M1 Garand for $400, this year its $1k.

I found a nice Dragunov I'm going to be buying in a few weeks. Now I need to stockpile 3k rounds of 7.62x54.

 

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[MJ DeMarco]

Treasuries had another big sell off today. Interest rates are rising as foretold ...

Treasurys were hard hit first, with the 10-year note's yield rocketing to a fresh high of 3.732%, amid selling by mortgage servicers hedging against a rise in interest rates. Stocks' decline came after the yield on 10-year Treasurys broke above 3.55%, which had recently proven a tough level to break. Traders sold Treasurys and stock-index futures as the yield pierced that level, which in turn pushed cash prices for stocks lower.

For those who want to profit, short the treasury ETF.

ProShares UltraShort Lehman 20+ Year Treasury ETF (TBT)
The ProShares UltraShort Lehman 7-10 Year Treasury (Ticker: PST)

I tried to find a chart of the PST, and from a techincal standpoint, it doesn't look good for those who think Treasures are safe.

 

[randallg99]

Treasuries had another big sell off today. Interest rates are rising as foretold ...

For those who want to profit, short the treasury ETF.

ProShares UltraShort Lehman 20+ Year Treasury ETF (TBT)
The ProShares UltraShort Lehman 7-10 Year Treasury (Ticker: PST)

how much more upside is there to TBT now that it's almost 60? It was mentioned a few months back when it was mid 30s
http://www.thefastlanetomillions.co...ubble-post74928.html?highlight=bond#post74713

but what all of us have to remember about the US bond market imploding is that the rest of the world will have their respective economies follow....(not to mention the USA mortgage rates will all but sky rocket)

Ben and Tim are undoubtedly calling every sovereignty simply saying in so many words: "if you let these treasuries go, your economy will go down with them" ...

another thread on arbitraging canada's loonie had me thinking that the easy money was already made after we've already seen the usd plummet to decade low levels....

so, if we're going to profit, it's gonna be buying B+ rated corp bonds paying 15% and higher. a lot of downgrades have forced corporate america to ante up for debt.

 

[MJ DeMarco]

Another dismal day for the dollar reaching new short-term lows, plus, commodities spike AGAIN. Both hands of inflation (Dollar Devaluation + Higher Prices) are slapping hard at the US Dollar and its Economy and guess what? The media has no clue how serious this is.

Silver posts biggest monthly gain in 22 years

Oil posts biggest monthly gains in 10 years

Looks like hyperinflation to me.

Higher oil, gold, silver and guess what, your dollar can't buy as much.

In layman's terms...

Before ...

$1 buys 1 gal of milk.

Now

$1.20 buys 3/4 a gallon of milk.

A nice double-bitch-slap.

 

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[randallg99]

something has got to crack... Laws of physics says that everything cannot go up simultaneously, but WTFDIK.

 

[max momo]

DOLLAR WEAKNESS

Someone somewhere else posted that an acquaintance had information that an increase in mail volume was a bullish sign for increased economic activity and upturn in the business cycle.

Here was my contrarian position:

The Thesis: Uptick in Mail Volume or Parcels Posted Equals Uptick in Economic Production.

Let’s examine with a slight bit of light.

On the surface this indicator seems hopeful. Alas, it represents the same detailed critique as the pizza hut delivery indicator in D.C. That is, the more pizzas delivered late at night equals the more hours folks are working on our recovery. Too bad the fallacy smells better than it looks/tastes upon a closer view.

Most regrettably, a massive influx of mail between government agencies DOES NOT constitute an economic recovery. Furthermore, increased numbers of registered deliveries between lawyer offices charged with dismantling Chrysler and General Motor bondholders DOES NOT equal new green business shoots. Tax refund checks do NOT constitute economic activity.

‘Jingle Mail’ simply precedes the Vulture Envelope.

Rather, how about we examine the baseline for economic recovery in our global world: EXPORTS. Some will look at the GDP and become simply mesmerized by how good the numbers have looked (especially in relation to how Main Street/suburban strip mall appears today). hAR! Alas the number of times Merrill and Bear swapped the same derivative, each taking a cut off the top, composes part of the GDP. Now the new reality crowds out the happy fluffy clouds.

Even the government number manufactures can’t hide the depths of the decline. GDP Data released last week showed the number DOWN %6.1. Incredible, really. Imagine the true number when lawyer mail and bogus bank profits are stripped out of fanciful-land economic reporting!

BEA: News Release: Gross Domestic Product and Corporate Profits

Now - here is my basic premise: Only what you produce, sell and then mail = economic activity.

THIS MEANS EXPORTS!

Looking at the mail alone, without factoring in SALES (nothing happens until you sell) and PRODUCTION keeps our analysis in kidding-garten.
One of the best indicators of export production is: Change in Export Intensity.

Unfortunately most of the 2008 is still on a pay-per-view so I’ll post the 2007 data as the baseline.

For a review, Export Intensity reflects the amount of production designed for international export.

In 2007 16 states remained net exporters.

Here they are:
Export Intensity Data

So, the Change in Export Intensity reflects positive international exports = Economic Growth

As a point in fact, last weekend I reviewed 1st Quarter 2009 Department of Commerce charts for Gross Economic Exports and Export Intensity.
Regrettably I do not have those printouts currently available.

Nevertheless I can state that there were just FOUR states with positive growth. I can remember three of them: Mississippi, Nevada, and Oklahoma. The other 46 saw net declines! Many of them, especially the big boys and Midwestern manufacturing hub saw double digit declines, up to 25 and 32%. This is a NIGHTMARE. You cannot compete given that type of export contraction. THIS is a BIG reason why they are taking down the dollar right now!

Of the four positive states, one was less than one percent and only Mississippi and Nevada were in double digits.

OK. You may believe NV production was precious metal increase. Wrong. That cake has baked since 2003 and mostly everybody had had their slice by now. The remaining slice is simply divided up into diminishing (disappearing) returns.

The fact is that Commerce Dept. does not provide the underlying sector growth. So, my source contacted both the States of Ms. and Nv. Mississippi showed the strongest and sustained growth, primarily due to the next generation Humvee and other military product hardware.

Nevada data provides more confusion. The state could only report that the data uptick was due to airplane part manufacturing, with no further explanation. A further source (private airlplane broker) using proprietary software was able to determine the uptick was almost entirely due to export of one or two likely renovated airplanes to an asian government (non-military exports of aircraft are not officially tracked as individual sales).

Bottom line, only Ms. Increased export production, in preparation of increased war.

This does not a recovery make.

In order to increase exports your product needs to have greater pricing power than your competitors. That is, cheaper.

That requires a weaker dollar.

You saw that action this week galore.

Some further examination:
Have increased exports caused the Sterling Pound to rebound of late?

Well, as a point in fact UK exports also declined in the 1st quarter 2009.
This source reports that UK service AND manufacturing decreased Q1-2009 by 6.1% q/q. (However I haven’t yet found the decrease in manufacturing alone, less service).

IHS Global Insight // Same-Day Analysis

However, that 6.1% figures VERY closely to the overall 5.9% decrease in imports, suggesting the numbers are quite correlated – domestic demand – and not Export Intensity.

This source provides even a better picture of UK manufacturing:

Export orders drive improvement in UK manufacturing sector - Telegraph

A better ratio to examine might be the decrease in UK exports relative to US exports. Namely, US exports dropped by over400% compared to the UK.
Unfortunately and Typically the US press is not printing articles which even contain correct facts or math. Here is but one example:

http://www.nytimes.com/2009/05/30/business/economy/30econ.html?ref=global

One might be better served to rely on the foreign press.
This source quotes previously reported numbers, backed by the tables I reviewed this weekend, that shows first quarter US exports dropped by 30%.
US economy contracts 6.1% in first quarter of 2009; exports plunge — MercoPress

The WSJ at least still gets the facts straight and also prints decline in US exports at 30% in the first quarter 09.

Don't Go Wobbly on Trade - WSJ.com

None of these sites apparently employ writers sophisticated enough to separate out goods and services exported. When you look up the data here:

http://www.bea.gov/newsreleases/national/gdp/2009/pdf/gdp109a.pdf

You see that US GOODS exported fell over 38% q/q. (Not sure if the relatively rosy – by comparison -services exports includes kidnapped journalists or troop movements between occupied countries)

A manufactured goods export decline of over 38% decline, on top of a poor previous quarter is simply ghastly. *A true crash. And who – exactly – is printing this reality?

As you see, this ratio of UK/US manufacturing is yet another indicator supporting the stronger Sterling in relation to the Dollar.

Nothing yet to reverse the thesis.

You think the Dollar is off today? Look how bad granny had it:

 

[BryanC]

Great clip from Celente. I have been watching a lot of his stuff for the past few years. His prediction accuracy is pretty phenomenal. I remember the first time I heard him on Coast To Coast AM and The Alex Jones Show. Everything he was talking about was mind boggling.

 

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[imirza]

The charts below don't look like hyperinflation to me. The Dollar is still 12% above its lows from last year. Oil is 55% below its highs. The commodity index is 38% below its highs. Gold is near its highs. Silver is well below its highs. Gold and Silver have strong fundamentals in my estimation and their rise should not be seen as evidence of hyperinflation. The last chart is the Baltic Dry Index which tracks worldwide international shipping prices of various dry bulk cargoes. Its a full 70% below its highs. In other words, cost of shipping goods is 70% cheaper today than it was a year back. These are not ingredients for hyperinflation.

Now one may argue looking at these charts that the price of everything in recent weeks is increasing while the dollar is falling. Well, if one looks closely, you see that prices of everything fell of a cliff starting last summer. We are simply regressing back to the mean before prices continue to head downwards. Oil lost 80% of its value in a few months. The Baltic Dry Index lost 94% of its value ! These drops were simply too much in too short a period of time.

On a personal level a gallon of milk costs me $1.79 these days versus around $3.29 a year back. I fill up gas for $2.35 a gallon vs $4.29 a year back. I go shopping and clothes are about 30-90% off. I was looking to buy a suit at Nordstrom and saw Hugo Boss suits that normally run $699 on sale for $250. Where is the hyperinflation ? The only thing I see is Deflation.

The problem we have is still too much inventory. Builders built too many homes, auto makers built too many cars, electronic manufacturers manufactured too much electronics. All this because world consumption was increasing and easy credit allowed people to consume beyond their means. The days of easy credit are over, people are consuming less and the result is too much inventory which caused prices to collapse. Most of this inventory has already been sold as of now and I see price stabilization ahead. Prices dropped too far and now we are heading back to a level of equilibrium. This cannot however be mistaken for hyperinflation. There is no easy credit and consumers continue to tighten their belts. The dollar will likely stabilize in the days ahead too.

Ahead on this horizon is Pay option ARMs blowing up which could cause another leg down in housing thus bringing on more deflation. Eastern European countries continue to struggle economically which could weigh down the whole of Europe. This will weaken the Euro and strengthen the Dollar in return. China is building up inventory due to government stimulus program. This inventory will likely be dumped on the world market dropping prices even further. Downward pressure on prices and deflation continue to be the major threat.

 

[randallg99]

looks like those phone calls that Ben and Tim are working.... there is no possible way USA treasury markets crash without virtually wiping out worlds' net worth

Treasuries, Dollar ‘Only Game in Town’ as China Buys (Update1) - Bloomberg.com


one of these drove down my street last night:

File:Enzo side.JPG - Wikipedia, the free encyclopedia

 

[hatterasguy]

Things are starting to return to normal thats my take. Stuff was getting to cheap to fast, we were experiancing deflation which is IMHO more scary than inflation.

The numbers maybe off but I'm recalling them from the top of my head. I think we have something like $42T worth of US currancy in circulation world wide. Obama and his crew have added a couple trillion to that to try and keep the economy going. That is going to cause a bit of inflation, but not hyperinflation.

 

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[MJ DeMarco]

I think deflation is over. A return to "mean" prices in this economy is markedly different than mean prices in a 4% unemployment economy and a lose credit market. All that is gone.


Australian Dollar gets lift from sunny GDP data


Woohoo! I'm in and the dollar continues to fall.

 

[hakrjak]

People on this forum have been predicting massive inflation now for over a year. If you keep predicting something indefinitely, you will be sure to be right sooner or later I guess haha...

I agree with the poster above who said that the only thing he sees is deflation right now. Take Gas out of the equation, and the price of everything else is going down. Labor has never been so cheap, speaking as someone who hires construction guys every week. Skilled rehabbers used to cost me $30+ an hour, and now they are $10... When 1/3rd of the world's wealth has evaporated, and there is no sign of it coming back any time soon -- Inflation is a lot less likely I'm thinking.

In the 1970's when inflation ran wild into the 80's -- workers were asking for raises at work and getting them. That is not happening right now, as people are just glad to have a job -- of they even have one.

Cheers,

- Hakrjak