U.S. Hyperinflation And Cultural Insanity

October 24, 2013

Hyperinflation is an insidious, economic killer. It inevitably (but insanely) creeps up on its Victims in plain sight, before decimating them with an always unexpected ambush. How can one of the most-obvious of all economic phenomena always end up as a “surprise”?

Because none of the Victims ever believe that hyperinflation is possible. Point out that the U.S. dollar has lost 98% of its value in the 100 years that the Federal Reserve has been responsible for preserving its value, and people will yawn – it’s old news. But then assert that it is about to lose the last 2% of that value, and (amazingly) the response will be laughter and/or derision.

Look at a chart showing a 98% decline in anything, and the expectation will be that the last 2% is also about to be lost. Or, in market vernacular; “the Trend is your friend.” It is irrational, bordering on insane to expect such a chart to reverse itself, or even stabilize. Indeed, it is charts of this nature which spawned the expression “past the point of no return.”

Yet when people look at charts of currencies, in this case worthless paper currencies; the mere suggestion that a currency could go to zero is a concept literally beyond the comprehension of nearly all of our populations. If a person finds it impossible to conceptually conceive of lions, then a lion could simply walk up and eat that person.

We will not/cannot protect ourselves from a “risk” which we do not believe to be within the realm of possibility. One does not take precautions to protect themselves from the “risk” of man-eating butterflies, or killer-bunnies. Thus is hyperinflation perceived by the masses: the Threat of the Killer-Bunnie.

In less-extreme forms; the inability to acknowledge/accept (obvious) reality could be described as “normalcy bias”. Because almost all Change (even large changes) is impossible to perceive in real-time; it is a common human intellectual flaw to expect tomorrow to be like today (or yesterday). A tomorrow which is not like either today or yesterday is not perceived to be within the realm of possibility.

However, with respect to hyperinflation we are not dealing with mere Normalcy Bias, but rather its substantially more-extreme cousin: Cultural Insanity. There are several empirical reasons for reaching this more dramatic diagnosis.

Obviously hyperinflation is not a Killer-Bunnie. There are numerous, documented historical examples of this economic killer. There is a very recent historical example (the Zimbabwe dollar), and there are several extremely obvious examples of hyperinflation currently in progress (Western, paper currencies).

It is normal/sane not to believe in the existence of Killer-Bunnies, unless one has read about people being devoured by Killer-Bunnies, has watched Killer-Bunnies devouring people, and is watching Killer-Bunnies devouring people. In such a reality; it would be insane not to believe in something which can (easily) be empirically perceived.

Regular readers have seen the chart below on the U.S. dollar on numerous occasions. It clearly and unequivocally depicts a hyperinflation-in-progress: a vertical line as supply (of U.S. dollars) goes to infinity. It is a fact of mathematics/economics that as the supply of anything goes to infinity its price must go to zero.

But readers will no longer see this chart in the future (unless one chooses to use an older version), because it no longer exists. Meet the new-and-improved version of this chart of the U.S. monetary base from the Federal Reserve.

A chart which previously measured decades now measures years. Apologists will argue that it was necessary to “stretch out the scale”, in order to clearly delineate the micro-changes in the exponential growth of the U.S. monetary base.

Realists, however, will argue (with success) that the Federal Reserve (and U.S. government) is simply trying to hide this hyperinflation-in-progress. As has been previously explained; all exponential functions end in implosion/explosion, without exception. The Federal Reserve would not have found it necessary to move from a scale of decades to a scale of years unless it was certain that its money-printing was never going to revert to anything remotely resembling “normalcy”.

Clearly the intent here was to try to make the growth in U.S. money-printing no longer appear to be “exponential”. It is an impossible task. Even in its current form, it is obvious we are still looking at an exponential function, but (in this scale) simply not so extreme – or scary.

Yet stretching out the scale even further to totally camouflage the exponential explosion in U.S. money-printing is self-defeating. If one goes from measuring an economic phenomenon in decades to measuring it in months, you don’t hide the fact that “something big” has happened/is happening – you advertise it. It’s impossible to conceal this Killer-Bunnie.

Sadly, however, for the vast majority of the Culturally Insane inside (and outside) the U.S. population there is no need to hide the Killer-Bunnie. Show the chart above to any one of these Victims (in either form) – and even explain its significance – and you might as well be showing them a painting of a polar bear in a blizzard. They will see nothing.

Total Cultural Insanity.

There is only one obvious parallel of Cultural Insanity in the animal kingdom: the lemming. The only “reality” which the Culturally Insane lemming is capable of comprehending is to follow the Herd.

It is here we see unequivocal evidence of the endemic brainwashing of the Corporate Media. Human beings are not lemmings. We are not born Culturally Insane. We have (supposedly) active, cognitive brains.

When it is explained to us (theoretically) that all exponential functions must end in (near-term) implosion/explosion, and then we are presented with a chart showing a particularly extreme exponential function (the monetary base of the U.S. dollar); we understand that the U.S. dollar must explode to worthlessness – soon.

When a sentient adult is not able to comprehend a simple concept, glaringly illustrated with an unequivocal picture; this defies rational explanation – other than brainwashing. Indeed, the essence of brainwashing is to “turn off” the brains of its Victims.

After more than six months of (phony) huffing-and-puffing about “tapering” U.S. money-printing (ever, so slightly); a new Dove is perched to replace the thoroughly discredited B.S. Bernanke at the Federal Reserve. And the same Corporate Media is now confessing that more money-printing is far more likely than less money-printing.

Such is the inherent nature of all exponential functions: they must accelerate – or suffer near-immediate implosion. Indeed, virtually all Ponzi-schemes can be represented by an exponential chart of one facet or another of the scam. Thus it was no surprise to see “Helicopter Ben” implicitly confess that the U.S. economy is now a Ponzi-scheme, when he “explained” why he had (once again) failed to pull the trigger on an Exit Strategy.

Just as all exponential functions are terminal mathematical phenomena; Cultural Insanity is also a terminal affliction. Sooner or later (generally sooner), the Herd runs off a cliff.

In the (non-insane) populations outside of the Culturally Insane West; we witness a near-exponential function which has mirrored,  and is mirroring the exponential explosion of U.S. (and Western) money-printing: demand for gold and silver.

For literally thousands of years; precious metals have proven to be the Ultimate Hedge against inflation: a safe-haven which fully preserves the purchasing-power of all wealth stored within these metal vessels – irrespective of any inflation maelstroms which may be ravaging wealth in most other forms.

Choices in life are rarely so distinct, especially in the realm of economic/financial decisions. One can choose to “run with the herd” of Western Lemmings (charging straight toward the Killer-Bunnie which none of them can see). Or, one can opt for the ultimate financial security of precious metals – and convert their paper currencies to gold and/or silver (at fire-sale prices), before all that paper is devoured by the Killer-Bunnie.

Jeff Nielson


Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.

Gold weakens on global cues and lackustre demand