Investor Sounds Alarm on Hyperinflation
June 15, 2009 by Bob Livingston
The headline from the Bloomberg News internet site Bloomberg.com said it all, “U.S. Inflation to Approach Zimbabwe Level, Faber Says.” But although Bloomberg was running the story, the main stream media (MSM) didn’t touch it.
Faber is Marc Faber, who publishes the Gloom, Boom & Doom Report. He said in an interview with Bloomberg Television in Hong Kong, “I am 100 percent sure that the U.S. will go into hyperinflation. The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
Zimbabwe’s inflation rate reached 231 million percent in July, 2008, the last annual rate published by the statistics office.
To put that into perspective, inflation in the U.S. in 1979 reached a high of 13.5 percent. That was a 500 percent increase above the 70-year average 2.5 percent, and those who lived during that time remember it as an uncomfortable economic period.
We’ve been warning for a long time here and in The Bob Livingston Letter that Fed policies were sending us on a path toward inflationary destruction. And we’re not alone in this thinking. But the MSM and the boys and girls in government don’t want you to know about it.
Why? Because they don’t want you to know that for almost 100 years now they’ve been silently, stealthily stealing your wealth.
It started in 1910 when a group of powerful bankers met in secret at Jekyll Island, Ga., and created a monster, then pushed Congress to grow that monster—the Federal Reserve. Founded in 1913, the Fed is a non-Constitutional cartel of private bankers that has control over the U.S. monetary system.
Since then the Fed’s policies have caused a devaluation of the dollar that has stolen your money. Ever wonder why things cost so much more today than they did 40 or 50 years ago? It’s because your dollar is worth so much less.
For example, in 1933 the Consumer Price Index (CPI) (the price of a basket of common goods purchased by the average consumer) was 12.8. In 2008 the CPI was 225. In other words, that same basket of goods has increased from just under $13 to $225. That’s the result of your devalued dollar.
Here’s what noted economist Peter Schiff wrote in his book, Crash Proof, which predicted the financial meltdown, when he detailed why the government likes inflation:
- Inflation makes the national debt more manageable because it can be repaid with cheaper dollars.
- In a democracy full of personally indebted voters, the government will pursue monetary policies hospitable to debtors even as it accommodates the special interests that lend to them.
- Inflation finances social programs that voters demand while allowing politicians to avoid the politically unpopular alternative of higher taxes, enabling Uncle Sam to play Santa Claus.
- Inflationary spending is confused with economic growth, which is confused with economic health. (Of course, gross domestic product (GDP) numbers are theoretically adjusted for inflation but that doesn’t mean much if the inflation figures are misrepresented.)
- Inflation causes nominal asset prices to rise, such as those of stocks and real estate, instilling in the minds of voters the illusion of wealth creation even as the real purchasing power of their assets falls.
Back to the Bloomberg story: Federal Reserve Bank of Philadelphia President Charles Plosser said that inflation may rise to 2.5 percent in 2011.
But the head of Asian economic forecasting at Action Economics in Singapore said he was confident that the Fed would be able to contain inflation at 2 percent or less.
Meanwhile, the Fed, Keynesian economists and MSM ignore history. They ignore Zimbabwe, which got into its mess by printing money to pay down its debt. They ignore 1970s America. And they ignore Weimar Germany in 1918-1923, where hyperinflation caused 30,000 percent inflation and led to the collapse of their civilization and the rise of Adolf Hitler.
The government boys and girls don’t want you to understand inflation, and the MSM is not going to report it until it can’t be ignored. Meantime, you ignore it at your own peril.
What can you do? First, call your Congressman and Senators and urge them to get behind H.R.1207, which calls for an audit of the Federal Reserve.
Second, buy and hold gold and silver. Because when hyperinflation comes, precious metal is the only thing that will stand between you and financial hardship.