Serious price inflation will come this summer.
Although I have warned readers for some time that hyperinflation is coming, this is not me saying it, but Walmart CEO Bill Simon. Last week he told USA Today that inflation is “going to be serious” in the coming months.
“We’re seeing cost increases starting to come through at a pretty rapid rate,” he said.
Of course, back in October 2010, Federal Reserve Chairman Ben Bernanke promised that inflation was his goal. “For the first time in many decades, [the Fed] had to take seriously the possibility that inflation can be too low as well as too high,” he said.
“Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along,” John Long, retail strategist at Kurt Salmon told USA Today. Along with steep increases in raw material costs, labor costs in China and fuel costs for transportation are weighing heavily on retailers, he said.
The National Inflation Association reported in February that commodity prices have risen significantly since the fall. Wheat is up 52 percent, cotton is up 177 percent, corn is up 72 percent, soybeans are up 49 percent, coffee is up 86 percent, orange juice is up 37 percent and sugar is up 86 percent—all since Oct. 30, 2010. The price of oil is at a 30-month high—the highest price ever in the month of March. Gas prices have doubled since President Barack Obama took office.
Higher fuel prices only compound the inflation problem. Factor in the result of the earthquake and tsunami in Japan and the subsequent radiological contamination of food around the globe and you can see we are in Red Alert territory as far as inflation is concerned.
The elites and Keynesians love inflation because it allows the government to steal the wealth of its subjects without the subjects realizing it. As Alan Greenspan said a 1966 essay, inflation is a “scheme for the hidden confiscation of wealth.”
As Peter Schiff wrote in his book, Crash Proof, inflation makes the national debt more manageable because it can be repaid in cheaper dollars, it allows for easier financing of social programs without raising taxes, can be confused with economic growth and causes nominal asset prices to rise (like stocks and real estate) which creates the illusion of wealth creation.
But rising prices makes it more difficult for people to buy the products they need and want.
Conversely, the elites and Keynesians don’t like lower prices, which they mistakenly—or nefariously—term deflation. But falling prices is not deflation. Just as inflation is an increase in the money supply, deflation is a decrease in the money supply. A decrease in the money supply makes the green slips of paper the public holds more valuable. Deflation benefits the saver and hurts the borrower.
Keynesians make the fallacious argument that when prices are falling, consumers will not buy because they will instead wait for the prices to fall further. Of course, that has not happened in the case of personal computers, flat screen televisions and other electronics that have seen prices fall as more competitors enter the market with comparable—or superior—products.
As I wrote in U.S. Exporting Runaway Inflation Across The Entire World With Its Reckless Money Printing, the unrest in the Middle East began as riots over the high cost and shortage of food.
The United States has thus far avoided such riots by paying off the masses. How so, you ask? More than 44 million Americans are now on food stamps. That’s 14 percent of the U.S. population. Unemployment benefits last for 99 weeks. These factors have prevented American streets from looking like the streets in Algeria, Tunisia, Egypt, Saudi Arabia, Bahrain, Iran, Syria and Libya.
In Wisconsin, the government cut back on its gifts to the public employee unions and riots ensued. In Ohio, the same thing happened.
People don’t like to have things taken away, though they have allowed the government to steal their wealth for 100 years. It seems they’re becoming tired of it. Many of them just aren’t yet sure where to vent their anger.
Those protesting in Wisconsin and Ohio are venting at their governors and legislators, claiming they just want to break the unions. But States, unlike the Federal government, must balance their budgets. So cuts have to be made somewhere. States can’t unleash another round of quantitative easing (money printing) as the Fed can.
Unfortunately, the people who shop at Walmart are too busy watching “American Idol” and gossiping about Charlie Sheen through their Twitter accounts to understand what’s happening. They will see higher prices and they’ll blame the nameless and faceless “they,” sure that the store manager or his boss or his boss is responsible. But most, if not all, will not know what’s happening until it is too late for them. They are headed for rough times.
If the Federal government had to live within its means, many so-called entitlements would have to go away. But the government is a Ponzi scheme. Bernie Madoff was sent to jail forever for his Ponzi scheme, which pales in comparison to the Feds’.
But it doesn’t. When it needs money, the Fed prints more and distributes it to Wall Street and the banksters who get to use it first, before it’s diluted. The rest of us get it later, when it’s worth less—or worthless.
To understand, imagine a glass of milk. The Fed, Wall Street and the banksters get to drink the fresh milk. Then imagine pouring water into the milk. We get to drink after more and more water is poured into the milk, after it is more water than milk.
For those millions on Social Security and other entitlement programs, the money won’t go away. But the dollars you get from them will not buy a loaf of bread. Your checks will remain the same while it takes wheelbarrow loads of cash just to buy bread, as it did in Weimar Germany in the early 1920s.
That’s why we have encouraged you to buy silver and gold. If you have silver and gold in your possession you will still be able to buy food and necessities while others paper their walls with their worthless dollar bills.
And it is time, and almost past time, to store food and water. They will only get more expensive from here.
There is still time buy gold and silver. As the Fed destroys the dollar, you will look back at how cheap gold and silver are now.
How long do we have? It appears to me that we are very close to economic and social collapse. But times can yet wobble along for months or even a few years. It is a certainty that it will get visibly worse in many ways, especially now that the endgame is here.