Countesy of FOFOA-All fiat currency is a short position on gold.
Notice the bottleneck at the bottom of the pyramid? That is because there are not enough U.S. dollars or gold to supply everyone who will want them. This sounds wrong doesn’t it? Well you should know that the U.S. holds 90% of the money supply in reserve. Only about ten percent of the U.S. dollars are actually in circulation. Most of the money supply actually only exists in the form of zeros and decimals in bank computers. When people rush to banks to get their fiat, there will have to be a bank holiday to get fiat to the banks. And after that rush to fiat, when fear chases people out of the dollar there is not enough gold in the world to convert the trillions in fiat which will seek conversion from zero value paper. All of the gold in the world has a value of about 9 trillion dollars. The debt of the U.S. alone is almost twice the value of all gold in the world.
Don’t ask me to lock down an exact time that this will occur. In every country which experienced hyperinflation it was like lightning had struck. What I have done is researched what actually occurs directly before a period of hyperinflation.Here is the progression which confirms the hyperinflationary direction.
1. Monetization of bad debts is the beginning-bailouts, car and home buying subsidies-buying all bad debts and FDIC insurance-nobody loses
2. Deflation of assets is the second stage-as people become fearful of investing; also fearful banks invest in safe assets-like cash and treasuries
3. A rise in the value U.S. dollar will follow-(happening now) up 13% since flirting with 71.
4. Next is the collapse of the dollar when fear takes over and the dollars will immediately seek conversion to valueIt is only after #4 in the progression that the Federal Reserve will resort to printing money in greater quantity to meet their obligations. The fear is what causes the hyperinflation: the fear of holding dollars which are supposed to be a store of value. Businesses will demand cash and reject checks and credit cards before the hyperinflation takes hold. Fiat currency is king since you can theoretically redeem fiat for living expenses. Fiat is all people know-they have been taught to trust it from all of the talking heads on CNBC; and from the promises of their government.
You see most of this has started already. It has begun and yet the fear has not gripped the public yet. They have not recognized the deflationary head fake. When people do suddenly realize what is happening it will be too late to preserve your wealth or gather what you need to sustain you through the hyperinflationary time.
Zimbabwe didn’t have billion dollar notes when hyperinflation started. They only had Z$100 notes just like the US. The million and billion dollar notes followed the onset of confidence collapse as the government printed to survive.
The next chart is the “deflationary head-fake” (Argentina) right before the onset of hyperinflation as the private bank credit money disappears…
So first comes hyperinflation, then, and only then, comes the massive printing as the central bank tries desperately to keep the government functioning. So don’t look for massive printing to see hyperinflation coming. Look for the monetization of bad debt (already happened) and the first signs of real price inflation (we are seeing it now in food and health care 10%), even in the face of apparently deflationary forces.