Barry Stuppler's new article on the coming hyperinflation -

Interesting read - http://www.coinmag.com/article.pdf


Thoughts?

 

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It is a nicely done article that is better researched than most. But like the rest, his conclusions are mere guesses. Nobody knows how this will play out.

 

It is a nicely done article - but one cannot escape one glaring error - Barry inadvertently suggests that silver was confiscated along with gold in 1933-4.

Frankly a lot of people like to think that the government couldn't seize older gold coins, ie those issued before 1933. I do not concur with that opinion, because any alleged government can accomplish many things at the point of a gun. Several times in American history the US Constitution has been blatantly forgotten when an alleged need came. This happened early in the United States and unfortunately more recently. The only real given is that eventually right surpasses might, even if it takes many decades.

 

No guns were needed. The government didn't actually "seize" anything in 1933. What they did do was to make it impossible to use gold coinage, bullion and gold certificates for any financial transaction. Most people were forced by this action to turn in their gold for Federal Reserve notes to preserve their savings.

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Anyone buying food on a regular basis already knows that pretty high inflation is here.

 

Quite a lengthy read. I didn't get to all of it, but the "Common Elements" on page 13 alone makes quite a strong case for hyperinflation. It is of course dependent upon the Federal Reserve's (and ECB's, BoE's, BoJ's, etc) willingness to continue expanding the money supply, which they will most likely do or else put the financial system at risk due to all the leverage that would decimate banks' balance sheets in a even a slightly deflationary environment.

I agree with most of what I read, but one thing I disagree with is that the first step toward fiat currency was in 1933. That step was only able to be taken because of the demonetization of silver in 1873 which resulted from issues caused by the fixed gold/silver ratio set in 1792. If silver was still monetized at a floating ratio, as the founding fathers implemented until Alexander Hamilton worked to install the first central bank of the US in 1791, then fiat couldn't have successfully been swapped for gold. They could have done it, but it would fail as silver would have emerged as the better option. Fixing the ratio and thus limiting money to only gold laid the groundwork for fiat currency to be successful, and it all began with a central bank.

 

interesting. so the surviviors (old gold coins and bars) are from the people who could afford to wait it out. It isn't as nefarious as the paranoids make it out

 

A great many were shipped overseas, especially in Switzerland. David Bowers tells some very interesting stories of dealers going to Europe to hunt rare US coins. There are people who still believe there are hoards of US gold coins yet to be discovered in Europe. Makes paying a premium for rarity a bit more risky than just the spot price of gold.

 

Back in 1993 I went scouring through banks in France and you could buy $20s, mostly Saints for a fraction over melt.