It’s a Hyperinflation, Jim, but not as we know it

A quick review of history reveals a catalogue of hyperinflationary events and subsequent disasters.  Although there are many similarities between the accounts, like all natural cycles there is often a twist to the fabric of time and therefore the behaviour of the participants in the afflicted economy.

Hyperinflation has been given a wide array of definitions, but the events always comprise of two primary factors: monetary debasement and velocity.

Monetary debasement is essentially increasing the quantity of units of currency in circulation, and velocity is the speed in which the currency circulates amongst the population.  The latter is completely psychological and occurs when confidence in the currency is lost by a critical number of people.  Monetary debasement has historically been the act of governments and bankers.

Two historical accounts of monetary debasement

1.        Athens

Many researchers believe the ancient Athenian government were the first to monopolise the currency supply of their people through minting electrum coins of exact weighting.  Electrum is an alloy comprising primarily of gold and silver but also contains other metals such as copper.

The economy flourished as trade became more fluid through the medium-of-exchange being numbered in units.  Sure, people were using gold, silver etc prior to these acts by the Athenian government, but this is the first known act of the government monopolising the currency/money supply.

As time passed, the metal of the coins became debased mainly through adding copper to gold and silver coins, but also through the re-minting of coins with a higher unit of currency stamped onto the same-weighted metal.  Towards the end of the debasement the citizens were carrying around base-metal coins, and then ‘something twigged’ in the mind of the population resulting in high velocity and a subsequent hyper-inflation.

There were, as always, many other factors such as an unsustainable cost of running the military and centrally-controlled price-fixing, but I merely wish to exemplify one pertinent feature of the Athenian currency debasement – it was done with coins, not paper.

2.       German Weimer Republic

Like most hyperinflations, the Weimer Republic scenario had a wide variety of factors involved.  The essential factor I wish to illustrate is the use of paper.  Unlike the Athenians – that had their precious gold, silver, and electrum debased with many other metals – the Germans were forced to carry vast quantities of paper fiat to their local store.

Germans sweeping

  Today’s Currency Supply

The vast majority of our currency is digital, not coins and not even paper.  A hyperinflationary event consisting of coins and paper is unlikely at this juncture.  The potential for debasement through digital currency is already evident, and the limitations are almost non-existent.  The Athenians needed to at least acquire metal and then physically mint the coins, whilst the Germans needed paper and printing presses.  All today’s governments require is the cyber-world of digital currency to remain intact to effectively inflate the currency to unprecedented levels.

Over the past few months the Swiss Government has pegged their franc to the euro, the RMB is already pegged to the $US, and numerous countries follow whatever moves are made by Ben Bernanke and the Federal Reserve.  After effectively announcing QE3 for the Fed, the Bank of England announced their QE2 and the ECB their QE1.  The latter, incidentally, is completely unlawful under various EU treaties; but as we clearly know now, the governments work for the elite bankers and therefore make, and break, their own laws as they please.

Make no mistake, as the personal credit-based fiat is paid-down, written-off, or otherwise simply disappears from the currency supply, the governments of the world will attempt to replace that currency with government-issued base money.

The vast majority of people do not realise that when they take out a loan, use their credit card, take out a mortgage etc that they are actually increasing the currency supply, nor do they recognise that when loans are paid off that currency simply disappears from circulation.

As stated, hyperinflation has a significant psychological component to its nature, and as people don’t readily understand how debt-based fiat works they fail to connect the nature of this insidious debt-trap with inflations and deflations.

However, as the people recognise all these quantitative easing programs for what they are – monetary debasement – the likelihood of a hyperinflationary event increases exponentially.

“There’s enough fuel [currency] already in the system for a hyperinflation” ~ Chris Duane

Is a hyperinflation inevitable?

This is a question that many people ponder upon, and prepare accordingly.  The simple answer is “no, but it’s clear that the currency we use is about to become a footnote of history”.

Today’s debt-based fiats will either hyper inflate or rapidly deflate through defaults that governments cannot control.    In the eventuality that governments retain control – by no means a certainty – then hyperinflation is almost inevitable, but anarchy could indeed occur resulting in massive deflation and economic stagnation.

Europe in the 1300’s

The era from 1250-1345 was similar to the past few centuries in many ways.  An elite group of bankers had been practising usury to dominate and manipulate people to effectively parasite and stifle every other aspect of the economy.  Similar to the Rothschild’s of the modern era, these bankers had also manipulated trade through bogus ‘free trade’ agreements that served the interests of their bloodline and their minions in government positions.

The Bardi and Peruzzi Bankers of Florence, Italy, suffered a massive collapse in 1345 creating economic Armageddon and mass depopulation, black-death, and a myriad of other chaotic scenarios including war over resources.  It’s believed the population of Europe decreased by at least a third, but maybe even halved, and globally there was a twenty five percent population decrease.

 Population decrease

The collapse is often blamed on King Edward III of England, who in 1342, recognising these ‘loans’ were nothing more than theft of his nations resources and decided to default on the loans issued by the Florence-based banks. England was effectively a third world country at this time, with the wealthier nations concentrated around the Mediterranean then out towards the Far East.  A 2011/2012 Greek default could ‘trigger’ a collapse of the banks, as could Portugal, Spain etc.

It is, however, important to realise that the bankers of Florence were over-leveraged and had been loaning out currency they didn’t have thus creating the inevitable web-of-debt that results from usury.  Edwin Hunt, in his 1994 book The Medieval Supercompanies suggests the bankers were basically insolvent in the 1330s through their various credit bubbles and were therefore trading under an illusion of wealth long before the default by King Edward III in 1342.

“Indeed, the great banking companies were able to survive past 1340 only because news of their deteriorated position had not yet circulated….” ~ Edwin Hunt

I doubt I’m going out-on-a-limb when suggesting there are countless banks that are over-leveraged and are currently trading whilst insolvent.  This illusory wealth can only last so long.  The interesting game Rothschild et al are playing with gold could ultimately expose them as being short on gold.  As they use their puppet central banks and central governments to pump gold bullion onto the market, there are many small investors buying fractional ounce coins adding to the usual gold-bugs and ‘paper millionaires’ looking to cash-out of the illusion that is the world economy.

As they throw more gold bullion into the system they’re ultimately reducing their ability to do it in the future.  The ETF scams will be more and more exposed over the coming months which will further reduce their ability to manipulate the market as people ‘wake up’ to the illusion of Wall Street shenanigans .  They no longer can suppress the price of silver using bullion in the vaults of central governments as they’ve already used it all up.  The US government held the largest stockpile of silver, peaking in the billions of ounces, only to have none today after decades of pumping silver onto the market to suppress the price.  Their game’s probably ‘up’ on gold, but when?  Who knows, but what cannot be sustained shall not be sustained.

Conclusion/Summary

Hyperinflationary events have occurred before and are usually the direct result of banker greed and/or a megalomaniac government.  I seriously doubt the governments will start printing-off lots of paper currency, but they may.  In both Germany and Zimbabwe the governments not only increased the quantity of paper in circulation, they also increased the unit size printed on the paper resulting in notes such as the Zimbabwean one-hundred-billion dollar note.

zimbabwe dollar

Instead, the governments of today will simply ‘print’ digital currency that will basically go towards shoring up their over-leveraged bankster cohorts.  The currency will not flow-down to the people on the street which will result in a greater and greater disparity between earnings and inflation.  This will increase the likelihood of a hyperinflation as the people wish to spend the currency quickly on tangible assets such as food etc.

However, the illusion of the banksters themselves is becoming more and more apparent and the number of people opposed to usury and debt-based currency is growing globally and exponentially.  How many of the banksters are already bankrupt?  I suspect many.  How many banks will soon collapse?  I suspect many.  Will the governments collapse?  Probably not totally, but their illusory power is backed by the illusory economy and the illusory currency.  They will be limited when responding to either a hyperinflation or a rapid deflation.

Stay safe, and prepare for the opposite of bankster-backed global ‘free trade’ – Localism.

3 comments to It’s a Hyperinflation, Jim, but not as we know it

  • Silver Shield

    This hyperinflation will not benefit the average Joe because they do not any real assets. We will not see a rise in wages or hiring you will simply see the real assets of the world become so expensive that it will become inconceivable for anyone to afford it. Yet when one realizes the trillions held by the super wealthy and how small the market is for real assets and the change in mentality over real wealth, it does not take long to see how this can happen.

    The Fed is the lender of last resort.
    The Gov is the spender of last resort.
    That is all that is needed for a currency devaluation.

    This will ultimately lead to a loss in confidence in the currency and this will lead to the increase of velocity of money as people flee paper assets into a smaller and smaller pool of real assets.

    Got silver?

  • Carlos

    I can’t believe how much I love this site’s articles.

  • […] A quick review of history reveals a catalogue of hyperinflationary events and subsequent disasters. Although there are many similarities between the accounts, like all natural cycles there is often a twist to the fabric of time and therefore the behaviour of the participants in the afflicted economy. Hyperinflation has been given a wide array of definitions, but the events always comprise of two primary factors: monetary debasement and velocity. Monetary debasement is essentially increasing the quantity of units of currency in circulation, and velocity is the speed in which the currency circulates amongst the population. The latter is completely psychological and occurs when confidence in the currency is lost by a critical number of people. Monetary debasement has historically been the act of governments and bankers. Two historical accounts of monetary debasement 1. Athens Many researchers believe the ancient Athenian government were the first to monopolise the currency supply of their people through minting electrum coins of exact weighting. Electrum is an alloy comprising primarily of gold and silver but also contains other metals such as copper. READ MORE […]

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