muses of the moment

June 5, 2012

Latest Release from Martin Armstrong dated June 1, 2012

Did I miss this one from Mr. Armstrong? Click here for Chaos Around The Corner (7 pages). Seems like familiar material.

groovygirl’s comments: gg would like to comment about Martin’s thoughts on hyperinflation and the fact that he states that hyperinflation can only happen when there is a reserve currency. It never happens in the core currency (which is currently the USDollar). He suggests that this means the USDollar will never go to hyperinflation. (Although his descriptions of stagflation and higher taxes doesn’t sound much better. As I remember, the 70’s weren’t that fun.)

And again: high inflation feels like a hyperinflation to Main Street.

groovygirl has long thought and stated on this blog that hyperinflation could/would occur when USdollars came flooding back to the US. Over 60% of dollars are held and traded outside of the US (could be higher now).

There are a few scenarios in which that could happen. USDollar is supplanted as the oil trading currency by another or basket of other currencies (including gold). Global powers create an alternate global trading currency, and dollars remain as the US national currency. There are created 2-3 international trading currencies, divided along global economic lines by Asia, Europe, and US. The USdollar is hyperinflating in the rest of the world and they don’t want dollars, sending them back to the US.

Any one or a combination of these scenarios could/would cause USdollars to flood back to the US. That could/would be a hyperinflation at the national level.

Groovygirl has a hard time getting around any new global/regional currency that takes the overabundance of dollars out of the world system effectively without causing some sort of hyperinflationary backlash to the US (and any other holder of dollars). I also have a hard time believing that the first new reserve global currency will work. Nations seem to have no problem creating new and more fiat currencies, but have a hard time dealing with the global debt that goes along with it. GG believes that the US dollar will create a hyperinflation in dollars either in the direct blowback from a new reserve currency or indirectly in a drastic increase in all import costs (oil) or a combination of both.

One reason it is so hard to navigate this global debt crisis is because it is a toss up of what will happen first: a breakdown crisis in global economic banking system that requires reworking of all fiat currencies or a reworking of global fiat currencies to “solve” a coming a banking breakdown, that “causes” a flood of USdollars back to the US.

The banking crisis is a debt deflation crisis, and the flooding of USdollars on the national level is a hyperinflation. And then, for those in-between times when the government is printing to try and plug the debt implosion, we might have what Martin says we have now: stagflation. Gold/silver is a good long-term investment for all those scenarios. And that is why I prefer to have it as part of my portfolio. Because, gg really doesn’t know what will happen.

Martin also states that there must be an alternate currency to the one that is hyper-inflating. Although, Martin dismisses alternate e-currencies, gg doesn’t, especially in a crisis. You can hold other fiat currencies in a pay-pal account. Bitcoin and other e-currencies are gaining popularity and use. Yes, the government can shut down e-currencies, but new replacements can pop up in an instant. And during a hyperinflation situation, everyone will risk a shutdown to protect what little money they have. The rich will move their money off-shore and/or buy tangible assets. The poor will barter locally. Business can hold and trade money in other currencies. Local communities can create their own currencies (which they already have.)

Groovygirl agrees that in theory, the e-banking system can be potentially controlled. However, groovygirl also acknowledges that e-banking can disappear and reappear somewhere else faster than the government. With the internet, we have lots of potential options for an alternate currency(s) to compete with a hyperinflating dollar.

Disclaimer: groovygirl is not speaking in any professional way. She doesn’t have an economic model of her own and doesn’t have any affiliation with Martin Armstrong. She agrees with almost all of what Martin’s says, particularly his cycle theory. This is just her completely unprofessional and personal opinion on hyperinflation in the USDollar at the national level.

Update 6-11-12: here is an article about fearful Greeks stashing savings in Bitcoin.

MF Global

Filed under: MF Global bankruptcy — totallygroovygirlfriday @ 11:12 am

For your reading pleasure. Click here for the 275-page report from the MF Global bankruptcy trustee.

KWN

Filed under: European Debt Implosion, Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 1:04 am

A recent interview over at KWN with Don Coxe last Friday has been making the rounds on the gold websites.

Click here.

It is an interesting interview. But beware, Europe is in crisis and they will try rumor first to “fix” the markets. Let’s take everything coming out of Europe with a grain of salt and see how this progresses in the summer months. In a loss-of-confidence situation (which the global economy is in right now), rumors fly, every one in power has a different idea to fix the problem, and what can really pass though the political process is again something completely different.

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