debtwb2The first signs of hyperinflation have arrived. 
There was one hugely notable development in the gold and silver markets last week. Normally anytime, Ben Bernanke whispered even a hint or suggestion of QE tapering, the gold and silver markets would crash on such an announcement. However, this time, gold price behavior reacted intelligently to the insanity of Central Banking monetary policy and it ignored the propaganda of Central Bankers and continued to riseWhy is this development so significant? It is massively significant because it signals a further breakdown of confidence in the monetary system.  Every other instance that Chairman Bernanke even hinted about tapering QE, it gave the Federal Reserve and their puppet bullion banks an opportunity to suppress the price of gold that they successfully relished. This time around, I don’t believe that their propaganda was any less effective than all the prior times Bernanke falsely warned about QE tapering. So what has changed? People no longer care what Bernanke and other bankers say about QE because their confidence in fiat currencies, as illustrated by the largest single day drop of the Indian rupee last week, is starting to finally, and justifiably crack. And the first sign of a loss of confidence in fiat currencies and a vote for the solid valuation of gold (and silver) money is the first sign of potential hyperinflation ahead.

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From JS Kim, Smart Knowledge U:

debtwb2
original artwork above courtesy of @williambanzai7

 

The first signs of hyperinflation have arrived. As I will explain later in this article, it began last week with the meeting of POTUS Obama and his most supportive lobby, the banking industry. Just a few months into Obama’s first term as US President in early 2009, I penned an article, “8 Reasons Why the Obama Administration Will Not Solve this Crisis by the End of 2009.” Although the title of that article title sounds absurd today, idol worship was so high of Obama immediately following his election not only in the US but all across Europe, that media commentators across the world were implying, and sometimes matter-of-factly stating, that Obama would be well on his way to solving the global monetary crisis by the end of his first year as POTUS. In direct opposition to the media love affair with Obama, shortly after his election in 2008, I objectively studied Obama’s support of a massive bailout plan for banks in his first months of service and his freshly minted appointments of Timothy Geithner, William Daley, William Donaldson, Robert Rubin, Roger Ferguson and Paul Volcker to his economic advisory board and key cabinet positions. Based upon my findings, I concluded that beyond a shadow of a doubt, banking cronyism would expand, multiply, and go unprosecuted under Obama’s watch.

 

The Obama administration has given a lot of lip service with zero follow-through to prosecution of criminal banking behavior, the most recent being AG Eric Holder’s following very empty promise: “Let me be very, very, very clear…if we find a bank or a financial institution that has done something wrong…those cases will be brought” (emphasis not only mine but Holder’s as well!) Unfortunately since that time, though numerous indisputable cases of banking criminal behavior have been uncovered and presented to Holder, Holder has shown no spine or willingness to enforce his prior promise. As a consequence of the refusal of the top attorney in the United States to enforce the rule of law and to prosecute industry-wide criminal banking activity, the first signs of hyperinflation have arrived.

 

The real national debt, despite having been falsely frozen at the falsely advertised figure of $16.699 trillion for more than 90 consecutive days for no other reason than it has reached the designated limit, clocks in at a whopping $220 trillion if you include all unfunded, off-balance liabilities such as Medicare and Social Security (Source: Economist Laurence Kotlikoff).

 

debtwb1 original artwork above courtesy of @williambanzai7

 

Furthermore, this figure of true national debt does not even feel obscene in relative terms once you consider that the Alan Greenspan/Robert Rubin/Bill Clinton administration let the global derivative market run unregulated in the name of multi-billion dollar short-term profits to bankers and irresponsibly explode into the unresolvable $1,200,000,000,000,000 to $1,500,000,000,000,000 market that exists today. Let it be known for the record that CFTC Chairman Brooksley Born urgently lobbied for strict regulations of the global banking derivatives markets and warned Summers and Greenspan that letting bankers exploit derivatives for profit at the expense of sound banking principles would create the very crisis we are suffering today. What was Born’s reward for such a prescient and wise prediction? A vile cussing out by Larry Summers and forced resignation by Summers and Greenspan.  Yes, this is the same Larry Summers that President Obama has adamantly defended and is Obama’s first choice to supplant Ben Bernanke as the next chairman of the Rothschilds Private Bank.

 

Neither the government lies about the the unchanging nature of the “official” national debt for over 90 consecutive days now nor the government lies about the true scope of the national debt is stunning. What is stunning, however, is just how gigantic is the US National Debt when you start putting the figure in relatable terms. No one really understands how incredibly large is a sum of $1 billion, let alone a trillion or a couple hundred trillion, so it helps to illustrate the absurdity of this unresolvable debt by painting this debt in a different light.  Let’s assume for argument’s sake that the estimate of $220 trillion of real US national debt is too aggressive (although Kotlikoff insists this figure is accurate) and counter estimates of $100 trillion are too conservative. Let’s split the difference and say the true US national debt is $160 trillion dollars. If one were to lay $1 bills side by side, a current US National Debt of $160 trillion would reach from the earth to the moon 239,000 miles away not 100 times, not 500 times, not 1000 times, not even 10,000 times, but 32,358 TIMES AND BACK. Our national debt would travel to the sun 93 million miles away AND BACK, not just once, not just twice, not 10 times, not even an unfathomable 50 times, but EIGHTY-THREE complete round trips! Explained a third way, if you were driving the fastest commercial car in the world (as concluded by Top Gear test drives), the Pagani Huayra, continuously at its top speed of 372 kms/hour and never, for not even one-second, let up on this top speed and never stopped to change the tires, it would take you until the year 9643 (or more than 7,629 YEARS) before you would pass the last dollar bill of US national debt laid out side by side in 1$ bills.  Finally, if you were an alien capable of flying your UFO at the speed of light (670.6 MILLION miles per hour), you would not pass the last dollar of US debt until 23 hours, 1 minute, and 14 seconds later (if the entire debt were laid out side by side in $1 bills)! These FACTS should alert any reasonable logical man, woman and child that massive inflation is the fate of the USD in future years.

 

This simple fact should also alert you to why so many Asians have been buying gold like it is going out of style ever since the April 12, 2013 banker raid on the paper gold derivatives markets, and why I find it so amusing that some Western financial journalists still question whether or not the latest surge in gold and silver prices is just a “dead-cat” bounce. It is quite obvious that journalists that write about gold and silver tanking again have never spent one minute inside any Asian country, especially during the last five months, where I have personally witnessed manic physical (NOT paper) gold buying in Singapore, Hong Kong, China and Thailand. While true, that the global fiat currency breakdown and real gold and silver money takeoff will be disorderly and very volatile, there is no question that we are still in the midst of a massive gold and silver bull run. And what happened on April 12? US President Barack Obama held a closed-door, off-limits meeting in the White House with the following 15 globalist bankers:

 

Lloyd Blankfein, Chairman and CEO Goldman Sachs
Jacques Brand, CEO Deutsche Bank
Michael Corbat, Chief Executive Officer Citigroup
Jamie Dimon, Chairman, CEO and President J.P. Morgan Chase
Sergio Ermotti, CEO UBS
James Gorman, Chairman and CEO Morgan Stanley
Gerald Hassell, Chairman and CEO Bank of New York Mellon Corporation
Jay Hooley, Chairman, President and CEO State Street Corporation
Abby Johnson, President, Fidelity Financial Services, Fidelity Investments
Steve Kandarian, Chairman of the Board, President and CEO Metlife
Brian Moynihan, President and CEO Bank of America/Merrill Lynch
John Strangfeld, CEO, Prudential
John Stumpf, Chairman, President and CEO Wells Fargo
Jim Weddle, Managing Partner, Edward Jones
Bob Benmosche, President and CEO American International Group

 

Just hours after this meeting, the bankers flooded the gold derivative markets with 400 tonnes of paper (non-existent physical) gold, and the infamous banker gold price raid of 2013 was on its way. Last week, on August 19, 2013, Obama met with the following banking industry regulators:

 

Securities and Exchange Commission’s Jo White
Commodity Futures Trading Commission’s Gary Gensler
Consumer Financial Protection Bureau’s Richard Cordray
Rothschilds Private Bank’s (U.S. Federal Reserve) Ben Bernanke
Office of the Comptroller of the Currency’s Thomas J. Curry
Federal Deposit Insurance Corporation’s Martin J. Gruenberg
Federal Housing Finance Agency’s Edward DeMarco
The National Credit Union Administration’s Debbie Matz
US Treasury Secretary Jack Lew

 

Immediately after this meeting was announced, fierce speculation that gold was about to get slammed yet again predominated internet gold forums.  We immediately countered that speculation on our twitter feed by suggesting that this meeting was NOT about slamming gold prices but about finalizing plans to seize assets from within the US global banking system, “Cyprus” style.

 

goldtwitterfeed

 

Sure enough, not only did gold and silver fail to get heavily slammed after this meeting as many people were worried about, but both have since risen considerably higher in the interim. Finally, a few days later, the Rothschilds Private Bank (known in some circles as the US Federal Reserve) announced that they were going to begin cutting back on QE measures by $15 billion next month, eventually ending QE measures all together by June 2014.  Besides my intense skepticism of this claim, and I would need proof that the Rothschilds Private Bank is actually cutting back QE without any concealed backdoor mechanisms to continue QE, there was one hugely notable development in the gold and silver markets. Normally anytime, Ben Bernanke whispered even a hint or suggestion of QE tapering, the gold and silver markets would crash on such an announcement. However, this time, the mass media reported not a peep about the massively significant decoupling of gold price behavior from QE tapering announcements, and the subsequent continued rise in gold price. For once, gold price behavior reacted intelligently to the insanity of Central Banking monetary policy and it ignored the propaganda of Central Bankers and continued to rise.  Why is this development so significant in my opinion? It is massively significant because it signals a further breakdown of confidence in the monetary system.  Every other instance that Chairman Bernanke even hinted about tapering QE, it gave the Federal Reserve and their puppet bullion banks an opportunity to suppress the price of gold that they successfully relished. This time around, I don’t believe that their propaganda was any less effective than all the prior times Bernanke falsely warned about QE tapering. So what has changed? People no longer care what Bernanke and other bankers say about QE because their confidence in fiat currencies, as illustrated by the largest single day drop of the Indian rupee last week, is starting to finally, and justifiably crack. And the first sign of a loss of confidence in fiat currencies and a vote for the solid valuation of gold (and silver) money is the first sign of potential hyperinflation ahead.


Watch the above video for illustrations of the US national debt round trip abilities to the sun and moon!

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About the author: JS Kim is the founder and Managing Director of SmartKnowledgeU, a fiercely independent research & consulting firm with a focus on intelligent, dynamic investment strategies to avoid the wealth destruction of quantitative easing and Central Banks’ currency wars. Sign up for our free newsletter on our homepage to learn the best ways to buy gold and buy silver. Follow us on twitter @smartknowledgeu

  1. I don’t think there is any hope for the vast majority of westerners. Looking at the price action today, it seems anything but intelligent, and to think the average joe would have the chops to stomach this illegal manipulation by their lawless government is not logical.
    Everyone in the Precious Metals community has bee bragging about the metals being ready to leave the station for 2 years. Bring on the collapse already so it can finally happen.

  2. “Hyperinflation”?  I don’t think so, what are the signs?   A 15-20% rally in gold/silver off a huge 2 year decline?  Big deal.
    The velocity of money is still very slow, what is going to make that change?  Nothing in my mind. Wages remain weak, credit remains tight, inflation for corporations remains non-existent.  
    Silver is just above $20 oz, that is not even a sign of mild inflation, more like deflation.

  3.  “People no longer care what Bernanke and other bankers say about QE because their confidence in fiat currencies…”
    What is meant by people? Those very very few that invest large quantities of money in the stocks and bonds?
    By people they surely don’t mean average joe who DGARA (dosen’t give a rats ass) about what Bernanke has to say. Bernanke who? I’m taking some University courses right now to upgrade my career and none of the young students have any sense of monetary policy whatsoever and really don’t give two shits about anything outside the world of pop culture, shopping and what to wear.
    To me an eventual collapse makes sense and maybe 1 person in 1000 agree with me or even want to discuss the issue. It makes me feel alone and a little crazy at times and I presently think of the song Enima by Tool.
    “Some say the end is near
    Some say we will se amagedon soon
    I certainly hope we will
    I sure could use a vacation from this
    bullshit free reign circus sideshow”
     

  4. Zman    food and fuel, two key elements of Average Joe’s consumption, are up on average 10% year over year for the last 4 years.  that’s inflation on the ground level  Or maybe that 29% increase in my health insurance perium was not inflationary?
    It comes as no small irony that the Rothchild’s Private Bank (I’ll call it RPB from now on) has a negative net worth of the order of $250 billion since the demon spawn of Greenspan and Masters called the financial wepaons of mass destruction (Buffet’s term) has consumed every market in the world by a factor of 10 to 1 over the entire worldwide net worth. This is the Law of Unintended Consequences come home to bite them in the ass.
      The IR swaps have killed the RPB portfolio with a loss of $300,000,000,000.  That is real 10% loss on their $3 trillion balance sheet of junk bond treasuries and sub prime mortgages bought with QE to infinity. The RPB is highly leveraged at something on the order of 50 to 1 butt those losses will never be disclosed until the RPB implodes.
    I imagine that the head sheds at RPR are seriously pissed that Bernanke got off the plantation by buying all this junk and ruining their plans, whatever those plans might be. But rates are rates and even the BIS won’t be able to stall this reckoning for long.
    The genie is out of the bottle, rates rise, as they most certainly will, and the Fed will be gutted. The UST 10 year is breaking higher today.
     This gutting does not include the hundreds of billions of UST notes and bonds being offloaded by the Chinese and others as they dump their holdings or trade them like a hot potato to others through indirect exchanges of  UST bonds for hard assets.
     

    • AGXIIK, I think we all need to make the distinction between individual and business/corporate inflation.  Yes, myself and Joe-Six Pack experience real inflation, there is no debate about that subject in my opinion, but “big money” doesn’t care about us.
      “Big money” is only concerned about inflation at the corporate level, is inflation hurting the bottom line?  So far the answer is NO.  With flat wages, and strong productivity gains, “big money” has no fear of inflation at this point.   They will only care if the bottom line goes down.
      “Big money” is what moves the markets at the end of the day, they will pour money into inflation hedges (PM’s) when they see the inflation hurting their other investments (stocks and bonds).   They could care less about our higher food, gasoline, education, insurance, and housing costs, that’s our problem, they just don’t want to see multi-national corporations getting hurt, and so far these companies don’t see rising costs or inflation.
      Could higher borrowing costs/higher interest rates hurt these corporations down the road?    Yes, but so far it hasn’t really happened.

    • “The genie is out of the bottle, rates rise, as they most certainly will, and the Fed will be gutted. The UST 10 year is breaking higher today.”
       
      Not to worry, AG.  This could be all part of The Plan.  First move all manner of debt and financial glop onto the Fed’s balance sheet.  Then, end the Fed.  POP! Hey, what happened to all that debt?  It disappeared!
       

  5. zman  I think we are reading off different playbooks.  Yes, big business can ram their increased costs of raw materials, health care, taxes and wages either into their cost structures by forcing their workers to take less, their suppliers to take less or the consumer to pay more.
    I’ve been i nthe business world for nearly 40 years and its the small and medium sized businesses that are hurt the worst by inflation.  They are unable to pass on costs to the end user and yet they can’t exact cost savings up the line to their suppliers.  Thus they are in a cost profit crunch that can easily destroy them  Small business is responsible for 70% of the economic growth (now less than 0 in this country)  They create at least 60% of the job growth and 90% of the innovations in the US.  They are being squeezed to death by cost hikes and profit constrictions. They do not have the luxury of the big businesses flexibilities of internal and external financing to sustain operations until prices are managed more effectively. Yet large businesses are laying off people by the hndreds of thousands and potentially into the millions due to the cost increases being forced on them by those producers higher in the food chain.
    I talk to business people every day and they are scared of Obamacare because it is the biggest uncontrollable cost factors in their income statements today. This effect, along with petro, power, water, taxes and regulations, is trapping all businesses in this inflationary problem that cannot be resolved except through curtailment of services, layoffs, cutbacks in purchase managers buying and a much reduced profitability.
    Those reductions in profits are being seen in earnings and that will affect the stock market as well. The S&P return is down signficantly in the last 2 quarters. Dividend yield outside of the big banks is now about 1.95%, well under UST 10 yr yields.
    Lending costs will also impact all businesses as this cost is relentless and can both hit the bottom line plus put a leveraged business is ral risk of a unprofitable financial results along with banker required calling or repayment of loans, something that kill a business overnight.
    Big business is not immune to inflationary pressures and while they can move the cost increases to the comsumers, the end buyers can just say no and stop buying, as they have been doing at giants like Walmart and JC Penny.
    Time will tell who’s accurate but as far as Average Joe goes, we votes with his wallet and his packetbook says there is inflation now and more coming.
    Gold and silver will become our personal hedges against rapid inflation and that is the good news.

  6. Thanks for the response,
    “Big business is not immune to inflationary pressures.”     “Those reductions in profits are being seen in earnings and that will affect the stock market as well.”
    If that statement ends up being true, all bets are off.   Thus far, the corporations have managed quite well, but if we really do see profits falling and costs rising, the stock market will let us know.  Maybe this recent sell off is the start, hard to say.
    A rising PPI producer price index will give us some insight as well.
     

  7. Copy that Zman  We are tied down, strapped down, watching this TV show from Hades.  Time will tell and once they’ve squeezed all the blood from the poor turnip, there will ge hell to pay. Or something to that effect.  
    One thing that does allow us to reduce prices is paying cash for goods and services. Or silver and gold if that’s your gig. It is mine and it has worked quite nicely
    I just suggest that my service provider if he or she wants to have a buying conversation that does not include the gummint, Uncle Sam, the IRS, Brady Gun checks, the governor and allow this person to get something of real value, like silver coins, and engage in REAL COMMERCE and not this government regulated, tax mandated bullshirt that we deal with whenever we go to the store or service business
    We are now using a doctor that understands this system.  Our medical plan has a very high deductible, so for anything other than catastrophic issues, we offer the doctor cash/FIAT, gold or silver.  When we went ‘all in’ into precious metals we set aside some for this specific purpose.  We are basically Obamacare proof and since we are both early 60′s this is critical since the doctor we just fired was screwing us as wall as  misdiagnozing minor medical malfunctions.  All in all we will beat the doctors at their own game.  And within a yeaer, when doctors find themselves being killed by taxes, regulations and KLUMMACcare, we will have the high road in negotiations
    BTW, we have found as much as a 400% difference between cash payments and those run through insurance. I am on a mission and completely committed to getting as many doctors and other product and service providers on to the Real Money payment Paradigm as I can, if for no other reason that their protection and well being as well as our.  Over and out.  Cheers

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