dollar collapse panicEconomist John Williams thinks 2014 will mark the beginning of hyperinflation. Williams contends, “You are going to see, early on, a crisis in the dollar that will start to trigger the inflation . . . as the inflation picks up, that’s going to savage the economy, which is already in a depression.  It never recovered.” Forget what you have heard about the so-called recovery. Williams says, “The consumer is in trouble. There is nothing happening to turn the economy around.” The weak economy is bad news for the dollar. According to Williams, “Anything that would suggest deficit deterioration here, and a weak economy would do that, will have a devastating impact on the dollar.” And if foreigners start selling some of the 12 trillion U.S. dollar based assets, such as bonds and currency, things will turn ugly fast. Williams says, “We’re dependent on the rest of the world continuing to go along with us and continue to support the dollar. That’s not going to happen.” So, the big question everyone is asking is when will the buck take a hit in value? Williams says the dollar will likely begin selling off before the middle of this year, and he adds, “It’s really going to be a currency panic . . . when the fundamental selling pressure really starts to pick up, when the selling gets heavy . . . in turn, the weakness will be seen in a spike in oil prices and a spike in gasoline prices.” Williams says there will be a panic out of the dollar and he predicts, “Once you see a massive sell-off here, I see the game as being over.”

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  1. I’m sorry John Williams fans, but he’s going to lose a lot of credibility with this “90% chance of hyperinflation in 2014″.
    This guy never mentions the Euro, Pound, or Yen, what is going to happen to the Euro?   Trade at 2?    Not gonna happen, the Euro and Yen are in worse shape, in fact, I wouldn’t be surprised to see a strong dollar RALLY of 10%-15% this year.
    What are holders of dollars going to buy?    There are limited choices, that’s why after 5 years of QE, they still hold US dollar/bonds, they never sold.  The US dollar is still the best of the worst, a fact Williams never mentions.

    • I AGREE WITH YOU. THE DOLLAR WILL MOST LIKELY GET STRONGER IN 2014 AS THE EURO BEGINS TO CRACK AND INVESTORS START MOVING INTO THE DOLLAR. INFLATION IS COMING SOMETIME DOWN THE ROAD BUT I THERE WILL BE NO HYPERINFLATION. EVERYONE KEEPS REFERENCING WEIMER. WEIMER DID NOT HAVE THE WORLDS RESERVE CURRENCY OR TH EWORLDS LARGEST ECONOMY. MOST PEOPLE THINK THE STOCK MARKET IS GOING TO CRASH WHEN IN FACT WHAT WILL MOST LIKELY HAPPEN IS A SHARP CORRECTION THEN A BIG LEG UP THAT WILL SEE THE DOW AT 30,000 WITHIN THREE TO FOUR YEARS. ANYONE CAN HOLD ME TO MY WORD AND SHOW THIS BLOG IN FOUR YEARS AND SEE WHERE WE ARE.

    • I agree there will be no hyperinflation but be careful what you wish for..  It will most likely be a revaluation and it just happens over a weekend as the banks close.  There will be no reaction time available to anyone.  Hyperinflation you can usually see coming from a mile away and prepare as it builds up steam!
      At some point the Kraken will be released!  And when that happens, the SHTF big time.
       

    • John Williams reminds me of Joe Friday of Dragnet fame.  “Just the facts, Ma’am.”  Every commentator references William’s work and ALL agree his numbers are spot on.  So, when John William’s says, “Hyperinflation arrives in 2014,” meaning we are going to see the early stages of hyperinflation in 2014.  I think we can assume it’s going to happen.  By Williams definition ‘hyperinflation’ is north of 10%.

    • True inflation has been running right around 9% so hyperinflation by the 10% definition is right on the doorstep beating down the door.

    • I actually think John is onto something here…I’m loading a lot of data plus my thoughts based on it…read (or not) at your peril.
      I’ve previously posted this first portion…so skip if you’ve already seen but the data sets the stage for assertions below.

      PART 1

      Take a gander at who’s bought all that new Treasury supply…not just the Fed, it’s foreigners who love our liberty and low yielding bonds…(based on TIC reports) and are supporting the DOLLAR.

      Global “foreign” holdings of US Treasury….Fed holdings……total outstanding public debt
      Dec ’00 – ………….$1 T ……………….$200B*…………………………..$3.3 T
      Dec ’07 – …………$2.35 T ……………..$400B*…………………………$5.1 T
      Oct ’13 – …………$5.65 T ……………..$2.3 T**…………………………$12 T
      * mostly short end bills
      ** almost entirely long end bonds

      Now look @ individual country increases, Jan ’07 to ’13???:
      China $400 B —> $1.3 T (15% of GDP)
      Japan $600 B —> $1.2 T (18% of GDP)
      UK $100 B —> $158 B (5% of GDP)
      Brazil $54 B —> $246 B (10% of GDP)
      Taiwan $38 B —> $185 B (40% of GDP)
      Russia $9 B —> $150 B (5% of GDP)
      Ireland $19 B —> $111 B (55% of GDP)
      Belgium $13 B —> $180 B (40% of GDP)
      “carribean banking centers” $68 B —> $291 B
      “oil exporters” $112 B —> $237 B
      Luxembourg $60 B —> $133 B (220% of GDP)
      Norway $20 B —> $78 B (15% of GDP)
      France $10 B —> $60 B
      Singapore $30 B —> $86 B (35% of GDP)
      Switzerland $34 B —> $174 B (35% of GDP)
      India $15 B —> $60 B (3% of GDP)
      Thailand $16 B —> $45 B
      Canada $28 B —> $58 B
      Minor movers…???
      Germany $50 B —> $60 B (2% of GDP)
      Italy $14 B —> $29 B (1% of GDP)
      Netherlands $15 B —> $30 B
      Turkey $25 B —> $50 B

      None appear to be leaving the treasury table…not sure if they are given money via swaps or promised “something” (gold???) to keep buying or if they are simply so weak they’ll do anything to prop up the system. But nothing data wise sez this is bout to come unhinged.
      Point is all these nations and many more are actively supporting the dollar system (regardless their yapping) and seems in all their interest to maintain dollar and help keep a lid on rates, lid on PM’s, lid on commodities, and print ad nauseum. Not surprising gold is going nowhere when every country has it in their best interest to smack it down.
      Probably also notable that the PIIGS have been so busy running their own LTRO that they are full to the gills of their own nations debt and do not appear on the list (except the curious exception of Ireland??? wonder where they got all those $’s while also going through their own bailouts???)…

      BTW – trend of Foreigner ownership of Treasury debt since ’08…
      Jan ’08 $2.4 T
      ’09 $3 T
      ’10 $3.7 T
      ’11 $4.4 T
      ’12 $5.1 T
      ’13 $5.6 T
      Oct ’13 $5.65 T
      seems main reason for slowdown in ’13 was debt ceiling freeze (only issued $650 B in ’13) while QE was buying up $540 B…but since debt ceiling raised, Treasury has issued over $600 B since Oct 17 to catch up. Don’t really see any trend changes or anybody selling off.

      here’s the source data…
      http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
      http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt

      Then again, I freely admit the Treasury TIC data could be completely fraudulent as all the Treasury’s are held in US financial institutions and “assigned” to the foreign entities – could be they are bought via the Fed or ESF or straight up digital counterfeiting / accounting fraud. I have heard of one or two other .gov reports not exactly adding up…would make as much sense as “foreigners” buying all this ridiculous paper.

      PART 2 -

      this data is freely available and very much contradicts many peoples paradigms that the Fed is buying everything….or that China is dumping everything paradigm. Now, what to make of the data is very interesting debate but I just wanted folks to at least start w/ the same data and focus the discussion on what is vs. what isn’t happening.

      The Fed’s balance sheet is definitely going straight up (particularly when considering of the Fed’s $400 B in holdings in ’08 were primarily short duration Bills vs. now holding almost entirely long duration Bonds; ie, Fed could have wound down the majority of it’s positions in ’08 w/in 6 months or a year by simply not rolling them…now, the Fed likely has an average maturity of 7 to 10 years and in such quantity that they will never be able to roll-off Fed’s books…will be forced to roll these $2+ T and still growing in treasuries forever).

      Now, I’m not sure I’d agree the data shows confidence in the dollar…I might suggest the opposite. The Fed and Foreigners buying massive quantities of Treasuries while domestically there has been no relative increase in Treasury holdings since ’00 (total held notes/bonds domestically has been $2.5 T +/- 250 B since ’00)…this is a flashing red light on the dashboard for me. Particularly as the Fed now states it will taper it’s purchases which would effectively leave the $5.65 T in foreign holdings subject to rising yields and falling prices…or otherwise a scenario where they would take significant losses (likewise the Fed on it’s MBS portion). Most folks would begin liquidating positions when clear losses are inevitable but through Oct ’13, Foreigners have done no such thing!?! 

      So, either the Fed is going to allow and enable rates to break the 34 yr trend of decreasing rates (the same 34 yr period in which the greatest debt load in history was built…under the guise that ever greater debt will always be serviced by ever lower interest rates upon ever higher debt) and simultaneously chase out foreigners from the bond market…and leave the only source of Treasury buyers from domestic sources who will be forced to sell the majority of their risk assets (Dow 1,000?) to buy up all the rapidly rising yields on Treasury debt…or Fed is running a very large head fake before a much larger QE…and “foreign” holders somehow know this!?! 

      Only two options I see to attract domestic sources of cash to buy the $2 T necessary in ’14 if Fed doesn’t would be…($1 T in new issuance…Treasury has already issued over $600 B since Oct 15 budget yr start paying back all the internally “borrowed” cash from last years debt ceiling freeze + sequester rollbacks) + at least $1 T in foreigner sell / roll off assuming falling bond prices…)
      1- rates rise significantly to make Treasury’s more attractive than high performing risk assets…and in so doing crash the interest rate sensitive economy…
      or
      2- stock market and economy crash 1st making very low yields relatively far more attractive than everything else.
      Somehow I don’t see either of those scenarios in the Fed’s planning? 
      orrrrr…
      3- “foreigners” are being promised “something” for buying these…promised now or in future to ride through big losses???

      Seems given these above seemingly silly scenarios, given record fractionalization of PM’s, given metals driven to selling at a discount to their cost of production…that this 2014 timeframe is the turning point, the pendulum swing point and the pendulum may swing quite unevenly the opposite direction shortly w/ an even larger QE or some game changing event in the currency market?!? Hard to see a scenario where currency’s aren’t reset against PM’s to re-plumb a system backed up on far too much toxic shit…

       

  2. @zman: Personally, I will take the credibility of John Williams! His track record is indeed impressive.  That said, we will just have to see.
    @SLG:   Do you have any LARGER print you can use.  I can hardly read your comments the type is sooooo small….

    • “Sometimes, the Caps Lock key seems to get stuck.”
       
      I see that as a mental issue… over-compensation of some sort.  If one suspects that their position is invalid, then a stronger case can be made for it by SCREAMING!  lol
       

    • @Mammoth – SLG AND I BOTH PURCHASED OUR COMPUTERS AT THE 30TH ANNUAL SWAP MEET. TANDY TRS-80′S FOR ONLY 1.35! I LIKE TO PRESS PLAY ON MY TAPE DRIVE AND PLAY “TAIPAN” OR “STRIP POKER” AND SOMETIMES I LOAD UP THE SILVERDOCTORS WEBPAGE THROUGH MY COMPATIBLE 2400 BAUD MODEM. IT TAKES 45 MINS, BUT HERE I AM IN ALL MY GLORY JUST LIKE SLG. :)  UNLIKE HIM HOWEVER, I OWN A COMPUTER THAT USES LOWER CASE FONTS… THEY SELL THEM ANYWHERE OUTSIDE OF MADAGASCAR OR UGANDA.  I’D SHIP HIM ONE, BUT THE LOCAL USURPERS WOULD CERTAINLY CONFISCATE IT.  SO I BID FAREWELL TO SLG ON THIS CLASSIC TIP:
      :10  PRINT “BUY A NEW COMPUTER”
      :20  GOTO 10
      RUN

  3. No interviewer is doing his/her job unless they ask “You’ve predicted this before, why are you right this time?”  Don’t get me wrong – I like Shadowstats.  But people conveniently forget that Williams has predicted hyperinflation before.  On one occasion some 4 years ago or so he had predicted hyperinflation within 6 months, or ‘by next summer’, I don’t recall his exact wording.  It didn’t happen.  But if he keeps doing it, sooner or later he will be right. Just like all of the rest of them.

  4. John Williams is one heck of an economist.  Unlike the usual members of that profession, he is not owned by the Gov, the big NY banks, or Wall Street.  He sells his expertise to willing buyers because his assessments of the state of the economy are sufficiently accurate that good business decisions can be made based on them.  Not so those who work for the groups mentioned above or the stock cheer-leaders on financial TV programs.  Their only interest is not the true state of the economy but following the official party line, regardless of the facts.  His numbers are impeccably accurate, so while the Gov and the Fed are spinning their BS about 1.4% inflation and low-7% unemployment, John tells it like it is with 9% inflation and 14% unemployment.  Unlike the Fed and the Gov, John does not simply stop counting when the numbers become unfavorable and not what he wants to hear.  So, given the people we all know and the cost of living we all pay, what do these tell us about whether the official line on our current economic situation or John Williams is correct?   My experience is that he is correct and that the Fed and Gov are managing the party line.
     
    As to hyper-inflation, well, that is something that no one ever recognizes as happening UNTIL it happens.  John is no exception to this rule.  If anything, his failing has been that he has underestimated the ability of those in power to manipulate the system and avoid an absolute crash.  This they have done but much of the damage done to the US economy over the past 5-10 years is structural and has not been repaired.  It has been papered over so that it looks OK when it is not.  
     
    John is correct that we are in a depression.  The near-collapse of the US financial system in 2008 revealed many structural flaws… cracks in the walls and foundation, if you will… that were never repaired.  They still exist and at some point will become obvious even to the doubting Thomas types among us.  The definition I use for a depression is:  a prolonged period of time in which national productivity and production fall, coupled with persistently high unemployment.  A recession is similar but of much shorter duration and severity.  A recession is the financial equivalent of a bad cold, while a depression is the financial equivalent of pneumonia.  Recessions do not damage economies, depressions do.  Recessions are over and done in about 13 months on average, while depressions last not for several months but several years.  We are told that we are now in a “jobless recovery”.  What they do not tell us is that this is an oxymoron. There is no such thing as a jobless recovery because ALL recoveries produce jobs and lots of them.  This one has not, therefore it is not a recovery.
     
     

  5. It wont happen unless the government wants it too. Most other big governments are all linked together. They been buying each other debt with made up money called QE I believe its been around for many years. The stock markets not going down unless the government dumps there controlling shares. Inflations not going to happen unless the big mega banks actually starts to loan some of the QE injection money out. Through QE injections of 850 billion then times 10 through fractional reserve banking an the have $15 to $20 trillion in loan money they can lend out, but there not only the government gets it. When it comes down to shits an giggles here it is the real deal. Lets look at the war arsenal on each side. The people money wise to invest in pms maybe close to a $trillion the usa Government $20trillion. Which equal we lose gov wins

    • I am constantly bewildered by the cowardice that swamps the forums in relation to a government and its people.  “Dang” you clearly and hopelessly accept tyranny and welcome it into your home through a cowardly viewpoint. 
      Does ANY government hold the military, whereas its people are not in “hand” of it? Of course!  Yet who is driving all of those death machines???  the people!  What number of armed soldiers out number the “people”?  Are the people sheep or learned people?  30 million vets are alive today. Each one taught to destroy their enemy, their enemies armor, and their enemies strongholds.  1 million troops? maybe at best? 30 million vets, and volunteers whom may be trained by vets to overthrow tyranny? Did you not consider a mans fervor to protect his home, family and freedom?  How are governments to pay those “traitor” troops to slaughter their brethren when the people refuse to pay taxes?  Then there is the factor of the “usurping governments” political enemies: Well connected, well trained, well equipped to arm the people to overthrow the tyrannical government… not lastly, there’s the governments enemies. (Russia, China etc) who supply rebels with weapons and supplies to win such a rebellion. (not unlike what we have done all over Asia)
      …And while said country is in utter turmoil, producing nothing, trying to overthrow its freedom loving people, the enemies of that country are strengthening.  It’s a lose/lose scenario.  This is why it is in a governments favor to mind-screw its population to WILLINGLY accept it’s chains. (it IS after all for their best interest)

      Perhaps I misunderstood your view. I do not hold monetary strength any differently, because without a financially strong people, a government is likewise WEAK. U.S.A. is ONLY powerful because it’s people are wealthy, and thus generate a size able tax base. Without it, any strong position is doomed to eventually fail, as did Rome.

  6. The way I see it, most of the world is absorbing the huge output of fresh USD volume now. USA houses 4-5% of the world citizen. And the US economy is obviously taking an ever smaller share in the global economy. In terms of consumption they’re putting on a brave face, but otherwise, they’re dying or dead. Hardly 1st world anymore IMO.

    With this trend of moving out of the USD, and this is obviously for 95-96% of global inhabitance, it will be harder for the US to export their hyperinflation. They won’t be able to spread the gunk as thinly as today. Imagine Asia including the Middle East give up on the dollar, with South America and Africa staying on loyally, and Europe kind of following global trend half-assed as is to be expected, trying to be “neutral”. The demand for freshly printed dollars will diminish FAST. Every printed dollar with have double or triple the effect, perhaps not only in size but also in response time.
    I’ve been saying for years. When the FED create a new dollar unit, they effectively steal ~95% of it out of the pockets of the rest of the world. That’s what happens when you are a tiny country, allowed to print the world reserve currency at will. It’s like paying 5 cents to pull a paper dollar out of the wall, and buying a Chinese egg roll for it. When this dollar is spent on a US product in limited supply, say a stock, you see what happens. The printing process actually reduces purchase power quite quickly. High stock prices, which the main stream media calls a recovery. If only hospitals could print the patient’s recovery like this…

  7. I’m sad to see many familiar user names (definitely not speaking to everyone) here who still cannot connect the dots.

    Let me make something several points absolutely clear: 1.) Governments do not have absolute control (although they’d love for your to believe this). Yes, the larger the economy the more power/influence they can exert, but they are by NO means omnipotent. Why is history replete with different reserve currencies, even in modern history?

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/01/20120103_JPM_reserve.png

    Humans cannot control the weather; they cannot control the global economy. 2.) The west has joined hands. The Fed, EU and JCB are working in concert. This is acting to give them more influence, yes, and it is prolonging the inevitable. 3.)None of the problems are being fixed. It is beyond obvious that systemically the problems continue to get worse, in Japan, U.S. and Europe. Look at the data; look at the stories, and for godsakes do yourself a favor and get the information from non-mainstream sources. 4.) The U.S., Japan, and Europe will together continue to see their currencies devalue with respect to precious metals, commodities and eastern currencies — these are long term trends. Wealth is moving from west to east. As the east gets wealthier, with respect to the west, there will continue to be a rebalancing of the standard of living globally. Think about what happens to prices in general when 1.4 billion Chinese are able to afford much of the goods we buy, and begin consuming like the contemporary west. The Chinese Yuan has been the best performing currency vs. the dollar for some time now, and has rallied substantially over the past several years…China will have the LARGEST economy by 2020.

    Here I leave you with just one story I recently came across, exemplifying the wonderful progress of the EU economy:

    https://www.youtube.com/watch?v=wtt-6usRuW8&feature=youtube_gdata_player

  8. “I’m sad to see many familiar user names (definitely not speaking to everyone) here who still cannot connect the dots.”
     
    Can’t say we haven’t tried. Sadly, I’ve given up on some of the posters here. They will not, or can not be reached, for whatever reason.
     
    Here’s another wonderful and accurate chart on gold vs currencies for those who think gold is in a “bear market”. Gold has outperformed every currency on the planet from 2000-2014.
     

    http://goldsilver.com/article/race-to-debase-fiat-currency-vs-gold-fiat-currency-vs-silver-2000-2014/

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