muses of the moment

October 7, 2009

Hyperinflation….stage 2

Voltaire said, “Paper money eventually returns to its intrinsic value – ZERO”. No paper money has ever survived in its original form and the dollar as well as most other currencies will not survive this time either.

I highly recommend this article. It explains the 3 stages of hyperinflation. It is coming to the US and UK. There is no stopping it now. I suspect we are really in stage 2 and the Government is buying its own paper through central banks (and loaning them the cash) and through off-shore banks.

Very important article, if you read nothing else during this economic crisis, read this and take action. Click here.

By the time stage 3 rolls through, it will be too late to move your money out of dollars. Do that now. When the dollar index is at .52, it’s too late.

Hyperinflation and the US currency collapse has less to do with the state of the economy in the traditional sense, it is a loss of confidence in the currency and the government backing it.

A quote from the above linked article (I have said this same thing many times before):

Gold will not fail to go up from here. If there has ever been a clear investment situation, this is it. A financial system built on quicksand will see to that. Also, hyperinflation and money printing will see to that. Some people ask, what about if we get a deflationary collapse instead, won’t gold go down then?

I see the probability of a deflationary collapse as very low. Governments will not stop the printing presses. But even if I were wrong and we get a deflationary collapse, gold is still the best protection.

Because in a deflationary collapse there is absolutely no chance whatsoever that the banking system will survive. No loans or derivatives could ever be repaid in a deflationary asset implosion. This is why gold is a win-win situation whether we get inflation or deflation.

Side musing: Jim Sinclair’s countdown for the beginning of the end of the dollar is 34 days….that is when China will do what they have been threatening to do.

Although gold jumped yesterday at the news that other countries want to trade oil in non-dollars, this is old news. It will happen, but the dollar has many other pressures on it besides the oil issue. The USdollar is dead…get out now.

Be very careful about trading dollars on the currency exchanges. Yesterday’s news (and its impact) just goes to show you how volatile this global currency situation is.

The US Mint has curbed production on several coins for 2009, because they can’t get the physical metal to make coins to keep with demand. If you have money, buy gold. No money, buy silver.

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