Many people believe that we are experiencing a contained bout of inflation and that hyperinflation is not possible in America, simply because we are America and we are somehow exempt.We are indeed America and we are indeed a great nation. However you would be mistaken to think that somehow basic economic principles do not apply to us. But these principles do apply, and we are already facing a massive economic crisis with many signs pointing to hyperinflation.
According to the 10 Step Countdown to Hyperinflation Report, a hyperinflationary spiral is already in progress in the United States. This spiral "begins with a sharp increase in essential commodities, as in food and oil." This increase has already begun. Next, smaller banks and asset managers will start to unload Treasury holdings, causing the Fed to buy Treasuries to increase Treasury prices and reduce yields. This, too, is already happening; in March, 2011, PIMCO, the largest asset manager in Treasuries unloaded its entire portfolio of government bonds.
As the Fed hoards Treasuries and other institutions unload their portfolios, even more holders of Treasury bonds will unload their holdings. Alerted to a possible panic, the Fed will increase its purchase of Treasuries to the limit. And, according to the Countdown Report, "At this point the USD has lost 90% of its value."The Fed's attempt to stave off a Treasury panic will in fact cause that panic, with the big banks ridding themselves of Treasury holding, and the United States dollar will become toxic. Other countries will begin shedding their Treasury holdings, and the US dollar will lose its confidence in the US and abroad.
The fall of the USD will lead immediately to investment in commodities, raising commodity prices 200% literally overnight. The oil prices we've seen so far will pale in comparison to $400-$500 a barrel. Americans will begin to hoard commodities, and the Fed will print more money, which will have no effect because the dollar will be essentially worthless. Assets such as stocks and real estate will collapse in value as people flock to commodities, assets that have real value in the world. Oil, gold and other commodities will be priceless; a Mercedes Benz will be worth nothing.
But, because this is America and this kind of thing could not happen here, people will look to the government to fix this unsalvageable situation. And the government will do what it has always done. It will buy more Treasury bonds and print more money. Money which is worth less than the fine paper it's printed on. Money which will buy nothing because the dollar is toxic. Money which simply pushes the hyperinflationary spiral onward.
And then the government will get desperate. First they will initiate price controls and add more law enforcement officers to stop black market trading. The military will be called out "for the good of the country" to control violence in urban areas and to protect the citizenry from marauding gangs. But nothing the government does will reverse the hyperinflationary spiral, and things get worse. Finally the government will have to nationalize all production and distribution. Food and gas will be strictly rationed. But everyone will have food.
To Your Brightest Financial Future,
Sincerely Tamba
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