12 Warning Signs of Hyperinflation

yep, I mentioned that in my earlier post. OTOH, I believe he made some good points in his long winded presentation.

What's confusing to me is his association with Agora publishing. As far as I know Agora has a solid reputation.
I've been in Agora's beautiful building on Saint Paul St.


Agora 1217 St Paul St:
http://www.agora-inc.com/1217-saint-paul-street-ross-r-winans-mansion

 

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I listened to the WHOLE THING and I can say, WHEW, this man likes to hear himself speak!!!?

Ok, so overall he hadn't really mentioned anything I haven't heard before in other venues, not to say his message was questionable.

What I didn't like was that, well, it didn't need to be so damn long? There were some things I didn't like....

1) The video player did not provide how long the video was, most video players will show you the length. This was curious from the start, kind of like walking into a restaurant
with no clock...

2) At first I read along as he spoke....then I realized, I really didn't need to read so I could just listen.....then, honestly, I almost fell asleep, I had to get up, walk around and
continue listening....that helped....I also ate twice during his video.

3) Many times he was going to tell you about gold/silver PM's in general, but would say, "But before I tell you...." Basically dragging it out even further....

4) He spoke about gold/silver, what was "the worlds biggest secret?" It ended up being #5 on his list of things to do....

5) $99 USD, then $49 half off...really? Shocked he wanted our USD's after all that US dollar bashing.....kinda ironic....

6) It just doesn't seem right to make someone listen to your speech and then at the final ending, you have to purchase his subcription to actually get the info....


Again, sounds like I was displeased with the video.....his message is the same I've seen here and elsewhere. For new comers, it could be a fresh of breath air
who have not heard the inflation speak....

I'm just basically saying he could have gotten to the point WAY earlier.....

As Cloud just listed, there were some issues with him....won't comment on them since I don't know anything about the guy or this specific case that got him in trouble.....

 

Good analysis. I to got a snack while he was rambling. The hook for me was gold/silver and the parallel he was making with Britain in the sixties & seventies. I'm hope we're not heading the same way as Britain during the sixties and seventies. I was tempted to buy a subscription to get the free books then cancel the subscription.

Also, the Motely Fool is hawking cut rate subscriptions. I would like to read some of their books.

 

I liked the story about the Brits, and he was right, I had no idea they went through anything like that......It's always Germany, Zimbabwe or Argentina that were the extreme cases of inflation.

So the saying goes, if the entire nation pays 100% of their wages towards the debt, we still won't pay it off...is this actually really true?

And if the answer is yes, then what is the eventual outcome for America? I don't want to compare America to a disease, but my saying in life is, "It is what it is"...

So if America has a disease in which it only has so many years left, then all the media and financial analysts in the world that are saying everything is fine, is all hot air....

Are people like Chopper Ben and Tiny Tim really bad for America, or are they practicing clever wisdom to protect America and its people, and "we" just don't get it?

I'm just throwing my thoughts out there... I can say, it's honestly hard for me to believe these guys are "evil".....but can they really be?

 

My vote is they're whistling in the dark while walking past the graveyard. And their policies are increasing the rate of inflation and hastening the dollars decline.

 

You won't hear anything in the main stream media about the dollars' total collapse. The media will act like they didn't see it coming. If the media really did "tell it like it was", they would be viewed as "too extreme". Extreme has turned into a bad word, whether your talking about right wing or left wing....... So, the dollars' demise is too extreme for most of the media......

 

The thing that the dollar collapse crowd seem to miss is that institutional investors are not stupid, and if this was more than a remote possibility, interest rates would not be this low in the corporate bond and mortgage markets. The Fed can play with short term rates and treasuries, but other markets are really not sending signals for a potential dollar collapse. Instead, the expectation seems to be a moderate increase in the inflation rate at most.

 

Here is a 2002-2011 U.S. Dollar value chart compared to a basket of World paper currencies.
The Dollar has lost almost 40% it's value (compared to other World paper currencies) in the past 9 years.



What this chart doesnt show is the devaluation of the entire system of paper currencies (the Dollar and the other fiat (unbacked, print as much as you want) World currencies) against a physical store of weath like gold and/or silver. In that case, the dollar has lost 80% of it's value in the past decade.

For Gold:
In 2001, it took 240 U.S. Dollars to buy 1 oz of Gold.
In 2011, it takes 1,475 Dollars.
In other words, it takes six times (6x) more dollars to buy 1 oz of gold using 2011 dollars vs 2001 dollars.

For Silver:
In 2001, it took 4 U.S. Dollars to buy 1 oz of silver.
In 2011, it takes 40 Dollars.
In other words, it takes ten times (10x) more dollars to buy 1 oz of Silver using 2011 Dollars vs 2001 Dollars.

So if you had kept the price of silver fixed at $4 an ounce for the past 10 years, your dollar would only be worth 10 cents
(10%) of it's value from 10 years ago.

 

Of course, if you go back to the 1980s, the dollar index was in the 80s back then. So over the very long term the dollar rises and falls. It's relatively low now, but this is not new. Of course there is a constant underlying inflation rate in the type of system we have, but this in no way marks the end of the dollar.

 

Nice explanation and chart. It's freaky to think about how your $1 bill is really worth 10 cents!!?? But when one holds a $1 dollar bill, it doesn't feel like 10 cents....I guess
that is what is misleading and that's the trick that we play on ourselves....

Listen, we are all affected by this, I don't care how much PM's you own. Those PM's are only protecting what your worth was at the time of the USD's value when you bought them.

Every paycheck you get is already devalued by some amount. When you go grocery shopping, you are already affected....so really, the best you can do is spend that USD, either to
feed yourself, shop, or put those USD's in some form other than USD's.....

So when the velocity starts to kick in where no one wants to be holding USD's (the hot potato) that's when things can get scary....

 

I agree with Cloud. You are coming off a historic high with your chart Winged. Take your chart over 40 years and you will not be seeing that pattern. The late 90's had very high historical US dollar values versus the rest of the world. They also had very low historical values of PM, so the same period will show huge PM profits as well. With charts, the date range selected is how people manipulate the data to get you to believe whatever THEY want you to believe.

I can pick date ranges as well and show you whatever I want to show you. This is the danger with these things, and why I always insist on taking the entire data set to look at. Put your chart up from 1920 to date and see how much cumulatively the US dollar has lost. Yes, its lower now, but that chart would not lead a person to believe the dollar is in its last throws before collapse like your chart is trying to say. We have been lower before, and higher as well. Even your chart really shows no change in the last 4 years. If the dollar was collapsing then we should be showing sustained decreases.

To me, bottom line, the dollar was overvalued in the 90's, and adjusted in the early 2000's. Personally I think we are a little low right now, and the Euro is overvalued.

 

I didn't read into his data as if the dollar was collapsing. Just that the value has been declining. I don't really beleive that the dollar will collapse. But just as I would have rather own a 1 oz gold coin in the 1920's for $20 than a $20 USD, today that $20 USD is really worthless compared to the 1oz gold coin.

 

Except if you compounded the $20 at 5% for 85 years it would be worth $1,265 now. Nobody really just holds paper dollars for multiple decades. They usually invest it in some manner.

 

Wow that's not too shabby....I suppose the keyword is if you "invested" that $20 at 5% for 85 years right? If it sat underneath your mattress, then that's where you would lose out correct?

 

Correct. But in reality, it is far more likely that both the gold coin and money would have been spent along the way. The point is that the case for and against holding dollars vs. gold isn't as clear cut as it seems at first. And I've used the same logic in reverse on those who claim that the gold owner would be far behind the typical investor. Over the very long run, most asset classes seem to move roughly together. For shorter time periods, timing becomes more critical. And since gold has more than quintupled over the past decade, a case could even be made that the dollar will outperform gold over the next decade. I happen to believe that there will be a huge price spike in gold and silver before the end of the bull market in metals, but the end is out there, and getting closer.

 

It's true that the dollar had reached recent historic highs at about 120 in July 2001 (my dollar chart info only goes back to 1985) and this was at a time where the DOW had made it's incredible surge from about $5,500 in 1996 to about $10,500 in July 2001. If you throw out the lows and highs over the past 26 years the dollar has been hanging out in the high 80's or low 90's give or take. If we were to just use 90 as a rough average over the past 25 years and the 74 range that was breached in '08 (this is also the present value) the dollar has lost 17% of it's value since July 2001.

If we use 17% as the "adjusted" decline of the dollar, that means that the present DOW level of roughly 12,200 is really worth about 10,614 (remember it was $10,500 in July 2001). Of course if you were buying in to the stock market in 2001 and you have been holding since that time, you're not dealing with adjusted numbers and would have experienced the full 37.5% loss; so the $12,200 DOW is really worth $7,625 in nominal terms.

One other point, whether you use 17% or 37.5% loss in value of the dollar over the past decade (take your pick), these are BIG numbers. The Fed could shore up the dollar tomorrow by sharply increasing rates but of course that would inhibit growth, stymie exports, increase unemployment and damage prospects for a recovery. The other alternative is to continued accommodation. Given the Fed’s mandate to "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates" I expect them to choose the latter. Not sure what constitutes a collapse of the dollar but I do expect it to move lower.

Bluesboy65

 

Exactly, this is the trap people get into, (or lay if you are the one arguing it). "Cash" is really not a $20 bill at all, but an investment that will compound. Yes, of course, someone holding onto a $5 bill will lose big time. Kind of puts into perspective all of the "profit" people made over the years from notes, huh? I mean, someone in 1935 buying a $10,000 at face value and selling it today for $100,000 didn't really make much of a return.

Anyway, its a fool's argument to say I would rather have a $20 gold piece than a $20 note and hold for 70 years. Of course they would. I would rather have $20 of any commodity today rather than a $20 bill to hold onto for the next 70 years. However, to say $20 in gold, (or any commodity), will outperform $20 invested intelligently is a guess. History will say a bad guess, since it has not worked out that way historically. The same goes for graphs showing this relationship. If you just show the price of almost ANY commodity versus a dollar, you will show declining dollar value. This is a fallacy, since dollars in the 1930's would have GROWN in the meantime. Its common trap, misunderstood by the general public and used to prey on the financially misinformed unfortunately.

Chris

 

But you are assuming the price of the dollar versus other currencies was correct at the beginning of this pattern. I would say the dollar was overvalued then. We were so overvalued that US bidders would literally walk away with entire auction sin Europe at the time. I know I bought a lot of material then. Try going back to the 70's and see what the relative strength of the dollar was. Also remember people, the US was the only industrial power intact after WWII, we almost had to become more prosperous after that, and us keep looking back to our WWII prosperity is not really helping us find our future.

Also, you are ignoring the dividends the markets would have paid out, and we switched to a more incentiveized dividend tax policy, so they went up overall. Without taking dividends into account, your market valuation estimate is skewed.

 

I would agree the dollar was overvalued, that's why I adjusted it downward by 25% (from 120 to 90) to begin my analysis. Your dividend point is also a good one, perhaps my relating it to the DOW confused the point but I simply wanted to compare the dollar to a well understood benchmark. Albeit in exaggerated fashion, I think Wing’s chart shows that the dollar has moved lower and is currently at or near historic lows. You’ve mentioned that you think the dollar is a little low right now but do not seem overly concerned. Are you OK further declines in the dollar index is as long as increasing rates can reign it in?

 

The madness of crowds. If markets were perfectly efficient, then the 2008 crash couldn't have happened. You can be a follower and follow the lemmings off the cliff, or you can be a contrarian and opt out of their insanity.