Ben Bernanke Beats Deflationists Into Submission With His Money Stick

By: Jeff Berwick | Thu, Dec 1, 2011
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We've got a new slogan for deflationists. Deflationists: Wrong Since the Advent of Fiat Currency.

It's been the never-ending, battle royale of the economic world ever since the looming end to this financial system became starkly clear in 2008. Will the western governments, almost all completely incapable of paying the gargantuan debts enabled by democracy, central banking and fiat currency, allow the system to collapse (deflation) or worm their way out of it via inflation, until we live in a hyperinflationary apocalypse?

We've always stated the same thing and continue to state it. Deflation IS possible but highly unlikely in a system where a man who goes by the moniker, "Helicopter Ben", can print unlimited amounts of currency units to keep the anti-capitalist western monetary system limping along for just a little while longer... just long enough for a bunch of thieves and murderers with names like Obama, Sarkozy, Merkel and others to get out of dodge before the collapse.

The deflationists have now been wrong, at least in the US, since 1938. That was the last time there was actual deflation. Our chart of the US True Money Supply dating back to 1959 show that only for fleeting moments is there any hint of that line going south.

True Money Supply

Inflation is defined as an increase in the money supply. Deflation is a decrease in the money supply. Prices are a SYMPTOM of increases or decreases in the money supply. This is very, very basic stuff. Unfortunately, in world-improving, highly socialist "institutions" such as Harvard, Yale and Princeton the last few sentences may as well have been written in Nepalese. They speak a language called Keynesian and have a religious belief that drawing pictures on pieces of paper can make everyone rich. They probably also stomp up and down on a bag of chips to make more chips, too.

For months the Germans and Europe had everyone on edge. Would a western nation actually default, have its entire banking system collapse, impoverish almost all middle class savers and reduce the size of their monstrous socialist welfare governments by a massive amount, throwing millions into the streets unemployed and penniless? The answer, once again, was no. It was no surprise to us here, as we have always stated that was the much more likely route chosen. Every other time in history when a democratic overindebted government with a fiat currency was faced with collapse or hyperinflation they always fire up the choppers. The reason is simple. It's the easiest way out for the politicians. Obama would much prefer the dollar goes into hyperinflation - something he can blame on greedy corporations, or China, and whip the rich-haters into a frenzy - than to walk up to the Presidential podium and go down in history as the President "in charge" when the US empire collapsed.

Deflation Cartoon

They've been doing this for millennia. They weren't fiddling as Rome burned because the government took responsibility and undertook a self-imposed discipline. Rome was alight because the government overspent massively on military excursions, bread and circuses and used coin-clipping and other means to devalue the currency. That all might sound familiar to Americans today except coin-clipping has been replaced by computerized fiat note creation.

And so, today along with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, the Fed announced it is cutting the penalty that it charges over a basic rate from 100 basis points to 50 basis points.

It sounds innocuous enough. But what that statement really means is that every major western money-printer will do whatever it takes to ensure that capitalism is never allowed to take place. It's no longer "too big to fail", it is "to fail is not allowed". Entire legions of zombie banks and nation states will continue to lurch forward, completely dead on the inside, but animated by endless amounts of fiat money that will only ensure a hyperinflation of all western fiat currencies.

It is possible they could keep this game going for a few more years. Probably not much longer than 3 or 4, however. And it could happen much sooner than that, so to not prepare now is the height of risk-taking. We've been preparing by owning precious metals and the companies that mine or explore for gold and silver. As all the western central banks have shown their outright commitment to printing money we believe that it will ignite a gold & silver stock bubble that will be one for the ages. And, as we've outlined for subscribers over the years, we will then hope to "cash" in our stocks at ludicrous gains and look to get into hard assets once again in preparation for the final hyperinflationary crack-up collapse.

It won't be easy... and that's why we try to provide subscribers with as much information and analysis as possible to survive The End Of The Monetary System As We Know It (TEOTMSAWKI). But, yet again, and for the thousandth time in a row, the deflationists have been proven wrong and the inflationists have been proven right.

 


The December issue of The Dollar Vigilante is coming out on December 1st with a plethora of information, analysis and actionable info on surviving and prospering TEOTMSAWKI. Senior Analyst, Ed Bugos, will also have more analysis of today's central bank announcements coming up in this weekend's Interim Update to subscribers. Subscribe today to become a part of our community of dollar collapse survivors.

 


 

Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/