muses of the moment

April 13, 2012

Latest from John Williams from

Filed under: Inflation, John Williams shadowstats — Tags: — totallygroovygirlfriday @ 5:04 pm

Here is the summary, you pay for the detail:

– CPI Headline Inflation of 0.3% Was 0.8% Not Seasonally Adjusted
– March Year-to-Year Inflation: 2.7% (CPI-U), 2.9% (CPI-W), 10.3% (SGS)
– Broad-Based Inflation Reflected in Stronger “Core” Inflation
– February Trade Improvement Should Boost GDP Expectations

Real inflation rate is 10.3%. So no, it’s not your imagination, prices are rising.

Hyperinflation in debt part two

Groovygirl is looking at all financial news with this new information. For detail click here for part one.

New perspective: the securities and derivatives that banks are creating are a new currency to purchase more securities or as collateral to buy real things (like stocks and gold) or to leverage positions in real things (like silver). The hyperinflation we are looking for is taking place right now in this “currency” in the shadow banking system. And the Fed’s actions like bailouts and QE are to keep that shadow hyperinflation collapse from contaminating the real economic system.

You all may have got this a long time ago, gg is just catching up 🙂

Let’s look at this Bloomberg story. Click here.

“What Bernanke is to the Treasury market, Iksil is to the derivatives market,” Bonnie Baha, head of the global developed credit group at DoubleLine Capital LP in Los Angeles, where she helps oversee $32 billion, said in a telephone interview.

Macris’s team amassed a portfolio of as much as $200 billion, booking a profit of $5 billion in 2010 alone — equal to more than a quarter of JPMorgan’s net income that year, one former senior executive said.

In reading the quote above, the shadow banking system (derivatives in this case), which is hundreds of times larger than what Big Ben has control of, is in a state of hyperinflation outside of the real economy. That $200 billion is the currency creation and the $5 billion is the profit from that creation. Ben is not printing money for the hyperinflation, the investment banks are printing “money”. (Having said that, Ben’s reaction to contain the damage, is causing a debasement of the dollar and might indeed cause a hyperinflation in the dollar. But the damaging hyperinflation, the one that will take the global economy with it, is the bank’s printing and it will happen before a hyperinflation in the dollar.)

Since 2007, the value of securities held in JPMorgan’s chief investment office and treasury has more than tripled to surpass $350 billion from $76.5 billion, according to company filings. The biggest jump was in 2009, when the company disclosed that the CIO made “significant purchases” of government-backed mortgage securities, asset-backed securities, corporate securities, as well as U.S. Treasury and government agency securities, according to the filings.

That’s the hyperinflation. And that’s just the reported holdings of one bank, who knows what is held off-balance sheets, hidden in foot notes, and held in off-shore investment companies.

Remember what happens in a hyperinflation. More “currency” must be created to purchase the same items. That creates more currency chasing fewer real assets and profits. It also causes the velocity of that currency to increase; it changes hands faster and faster. And once the market grows concerned with the value of underlying currency, they stop accepting it, and the currency collapses. We saw this in the liquidity freeze after the mortgage credit derivative crisis. When we read about a liquidity freeze or credit freeze in the markets, we are really reading about this shadow banking currency collapsing. That is the currency crisis.

Groovygirl is seriously simplifying the security and derivatives industry, but it is necessary to get her arms around what is really going on. And since this is not about investing, but a shadow currency that is in hyperinflation mode, the normal regulators and government policies will just have no effect or worse unseen consequences.

Click here for groovygirl’s hyperinflationary depression page. GG still thinks all these things will happen, but it possible that the “hyperinflationary event” she refers to, will be the total collapse of the shadow currency (and its complete contagion of the real economy), not necessarily the actual fiat currency. She still needs to study this more. Regardless, as the shadow currency falls, real things become more valuable. That part stays the same.

Update: $17 trillion was created by Big Ben and QE, but that was the reaction to the hyperinflation and then collapse of the global over-the-counter derivatives, the shadow banking currency, going from one quadrillion to $700 trillion and its direct effect on the real economy and real assets. Jim is right, as long as the shadow currency is in reoccurring crisis, QE and various buy-outs and bailouts can not be terminated for any length of time.

Part three, click here.

Mr. Butler from issued a post reflecting on Ms. Masters’ recent sighting on CNBC. Click here.

groovygirl agrees with Mr. Butler that something is going on behind the scenes or is about to break. The mere fact that Blythe was on TV at all (regardless of the context) is very significant.

Really wish this book was published in English. Do you think that will ever happen?

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