On this week’s episode of ‘What BS is Washington Feeding Us Now,’ we are looking at inflation.
Now before you start dozing off, I’m not talking about prices going up 1 or 2%.
I’m talking about the economical wrecking ball known as hyperinflation.
And how you could lose 90% of your wealth in a few short years.
Hyperinflation is just what the name implies.
It is inflation on a Barry Bonds dose of steroids.
Hyperinflation drives up the price of everyday goods by thousands, even millions of percent.
I’m talking about $400 gallons of milk and $1,000 loafs of bread.
Sounds impossible, right?
Americans have what is known as a normalcy bias around these types of events.
Since we have never experienced such a disaster, our minds refuse to accept or plan for it. But this phenomenon has been occurring across the globe for hundreds of years.
Economies got wrecked.
Regimes were overthrown.
And paper currency became more valuable as firewood than as a means of exchange.
You won’t hear about this on the evening news.
Not because of any great conspiracy or coverup, the media is simply oblivious to what’s going on.
Let’s take a brief walk down memory lane…
The country owed huge war reparations to the victors of World War I.
At the same time, the war-torn nation experienced hits to production capacity, leaving the German little choice but to print more money in an attempt to reboot their economy.
Heavy money printing, high levels of borrowing, and reduced productive output caused the German papiermark to become less valuable than the paper it was printed on.
Half the nation’s factories and businesses were destroyed during World War 2, putting its economy on the brink of collapse.
The government was forced to print more money to lend out and build new businesses.
The formula was the same…
Reckless money printing, heavy borrowing, and diminished production capacity.
The national currency tanked so fast that prices of goods were doubling EVERY 15 HOURS.
Crippling international sanctions forced the government to print money in order to maintain generous living standards under its socialist state.
One again, the pattern held true.
Massive money printing + lower output = hyperinflation.
The same thing happened in North Korea in 2009 after farming output was hit by heavy sanctions and a poor year for weather.
Inflation reached 98% a day in Zimbabwe in 2007.
Today, a loaf of bread costs 1,428,570,000,000 dollars.
That’s not a typo – 1.4 TRILLION Zimbabwe dollars… for bread.
The same series of events was responsible for every collapse in currency:
- De-stabilizing event like war, natural disaster, or bad policy
- A sharp decline in productive capacity
- Corrective stimulus measures funded with heavy money printing
It is a recipe for disaster.
And the United States is dangerously close to repeating this process.
Now, before I go any further, I want to make one thing very clear – I am NOT a doom and gloom fear monger.
I don’t think the world is about to end.
I don’t have a cabin in the woods with a two-year supply of food rations and a 1500-watt ham radio.
What I do have is a respect for history and enough common sense to see a disastrous pattern beginning to repeat itself.
Let’s walk through the checklist:
1. A de-stabilizing event like war or natural disaster.
I’m pretty sure a once-in-a-century pandemic that shuts down the entire economy for the better part of a year qualifies.
2. A sharp decline in productive output.
The decline in American productivity is nowhere near the 50%+ drops they saw in post-war Europe. And we don’t have a fully socialist welfare state to prop up (at least not yet) like the one that crippled Venezuela.
But it definitely took a hit.
U.S. productivity fell at an annual rate of 4.2% in the fourth quarter – the largest quarterly decline in almost 40 years.
So this is sort of a half-checked box in my opinion.
3. Corrective stimulus measures funded with heavy money printing.
Check. Check. And double check.
Roughly 1/3 of the money supply in circulation today was created in the last 12 months.
That statistic alone is enough to spawn a new wave of gold hoarders.
And if you don’t believe me, try buying gold coins today. If you can even find them, they are selling for 10% over spot.
Ask me how I know…
According to the cronies at the Bureau of Labor Statistics, inflation is up just 1.6% for the year.
Give me a break.
Have you tried to buy a car lately?
Used vehicle prices are up 26.2% from a year prior.
Material costs have gone through the roof, causing house prices to skyrocket.
Lumber is up 346% since last March.
Copper prices have nearly doubled.
Steel prices have tripled and gasoline costs 187% more than a year prior.
So forgive me for calling BS on the 1.6% inflation lie being fed to us by government bureaucrats.
I don’t care how much a box of cereal or a carton of eggs cost.
You can’t build a skyscraper out of Lucky Charms.
America runs on steel and lumber and iron.
And whether you call it inflation, a commodity cycle, or a shift in supply and demand, the fact remains…
Your dollars went a lot further 12 months ago.
This is not a time to be hoarding cash.
Buy real estate. Buy gold. Buy bitcoin if you’re brave enough.
Just don’t hold greenbacks.
They are a losing bet in this environment.
But, most of all look at my surging stocks right now. I’ve found countless stocks that are not just outpacing inflation at any measurement – but trouncing them by multiples. With gains underway in these surging stocks – inflation is not remotely an issue for those buying into my stocks that are tops in my stock surge indicator.