Hyper-inflationary U.S. dollar – Chasing a contraction of the gold
August 19th, 2010For this concept disturbing in your brain, think of a shark frenzy. First, there was this shark chewing on a tuna just killed. Smelling blood, a number of other sharks immediately join the celebration. In no time, fifty, maybe a hundred sharks seem crazy, each increasingly difficult to get their noses in it enough to take a bite of this meal contraction.
Okay may be a bit 'dramatic. Then again, as regards the gold goes, maybe not. You see, whileWashington is busy 24 / 7 cooking enough political dollar rescue once the eyeball-popping is writing checks, less gold is always pulled from the ground.
You get the picture here? Much of dollars … less gold?
Spreading Monopoly money
It 's sad, of course, to see this.
It's our glorious dollars once a part of the founding of our great nation, powerful in the world monetary standard, now raised printedlike so many colorful Monopoly money.
How much money we are talking about monopoly? According to analyst Barry Ritholtz, who was meticulous in building saves Excel spreadsheet from the government that we are on the hook for 8.5 trillion U.S. dollars. This does not include "$ 5200000000000 in Fannie / Freddie portfolios that American taxpayers now explicitly.
And his estimate is by default. Ritholtz coupled economic package President Obama168 billion dollars, while the height is driven now more than 850 billion dollars.
Now we're throwing around billions we throw away billions, almost as if the word trillion, does not mean what it actually used. To give you an idea of what the word is mind blowing scale, Olivier Garret of Casey-report creates a list of the costs of all American wars, and government initiatives, including Iraq, the Gulf War, Vietnam , World Wars I and II, the Marshall Plan and anything that NASAever done, including a tour of the moon.
He came to $ 8100000000000.
relatively small number Ritholtz bailout 'is almost half a trillion more. The crucial question here is how the world can possibly digest 8500000000000 brand new dollar?
The obvious answer is, he can not.
DOLLARS flood will not happen PERK
Have you heard the term before? A perk test is the amount of time required for the plan on a building lot to absorb waterstand on it. Rapid absorption means that the game will perk.
This year the global economy faces its own version of a nightmare Perk Test: A flood of dollars will be spread over all nations of the world, and there are few possibilities to follow all this already devastating and lasting consequences will be absorbed.
This trillion dollars will mean more lost than ever on the hunt for the world's goods. And this is a formula for hyperinflation, the classic example is during theGerman hyperinflation of 1923, a wheelbarrow of money received after the thief takes the money increasingly worthless stolen thrown to the ground.
Here's another (from marketskeptics.com): "My father was a lawyer," says Walter Levy, an internationally renowned oil consultant born in Germany in New York, and had taken the insurance in 1903, and he every month the payments faithfully. There was a policy of 20 years, and when it came due, earned and bought oneLoaf of bread. "
Wikipedia definition of hyperinflation is inflation that "out of control", a condition in which prices are rising rapidly as a currency loses value. "Thus, a step forward, what happens if the production of those goods increasingly unnecessary hunting dollars begins to dry?
Less gold since the beginning of the CENTURY
That's why gold is so valuable: it is simply not a lot, or on earth.
Still less isFirst produced in those days. While the gold mining companies all the time, world production has ten years in retreat in much of the past.
After London research group GFMS consultancy, the rate of gold mining output peaked in 2000 to 2,573 tonnes in 2469 tonnes in 2006 and 2444 tonnes in 2007.
And 2008? The best estimates show year-end gold production falls by 2,400 tons. This would mean, since 2000, a decrease in gold production6.72 percent. Part of the problem is the decline in mine production of gold in the former Saudi Arabia, South Africa. While China is expected to replace South Africa as a leading gold again, there is little anticipation for the supply of gold will grow to new heights.
So there you have it. More than the dollars we've ever seen before … less gold after the end of last century.
"If the Fed creates inflation enough, gold is likely to hit $ 5,000," said analyst Peter firmly ship on Fox NewsInterview, hunting with a wonderful summary of the results of this hyperinflationary dollar / gold scarce.