So, the old man in Venezuela says that hyperinflation is the answer to our prayers. Has he finally gone off the deep end? Has he joined the ranks of the most insane in this asylum, in which we are all compelled to live? If I have, I take comfort that I am in good company.
This past Friday my good friend Brian of the Frankenstein Government blog introduced his readers to the FOFOA blog, which Brian called pure genius. Knowing that Brian is not prone to hyperbola, I clicked on the link he provided and read for about 15 minutes without finishing the article. I was excited by what I was reading and learning, but I didn’t have time to read any longer. This weekend, however, I spent hours at the FOFOA blog. Brian was right. The author is a genius! He is also a mystery. FOFOA has no about page. We don’t know who the author is or what his credentials are. He is currently writing a series of ten posts (one per day) that will coincide with the tenth anniversary of his blog. If you are a blogger, what I am about to tell you will humble you. Get a load of his stats:
Five years later and my blog has more than 400 posts, 52,000 comments (2,600 of which are mine), and more than 5 ½ million views. I guess that means a few people found the discussion worthwhile! ;D
Impressed? I am. By comparison. this humble blog will see its third anniversary next month. I will have written just over 1000 post by that time. And, I do not have enough years left in me to ever expect to see my view total reach 1 million, let alone 5.5 million.
FOFOA stands for Friend Of a Friend Of Another. The author was apparent a big fan of a blog called FOA (Friend Of Another) and that is he came up with the name for his blog. FOFOA ia a blog for gold bugs. Gold and why people should own physical gold is the only subject discussed at FOFOA. The thing to understand about gold bugs is they believe people should own physical gold because they believe that this inflationary fiat money system that depends on ever-expanding debt (debt and money are equivalent) will come to its inevitable end by way of hyperinflation. Although you can’t eat gold, the gold bugs will tell that during hyperinflation, if you have a little gold, you will be able to sell small amounts for a lot of the new dollars with the added zeros (a la Zimbabwe) which you will need in the race with your neighbors to find and buy the scarace necessities of life. It is the inevitable coming of hyperinflation that I want to talk about today.
You may or may not know that there has been a long running debate between those who believe the fiat monetary system will end in hyperinflation and those who believe it will end in a deflationary crash. Although I spent several hours reading FOFOA this weekend, I only got through the first three of his ten part series called My Candid View because I was distracted several times by links to earlier articles that sounded interesting. One of those links was to a post in 2011 titled Deflation or Hyperinflationn. I found it fascinating. By the way, FOFOA has successfully converted a few long-time pundits from the deflation camp. Here are a couple of quotes from that article:
There is a quote I like that comes from Le Metropole Cafe. It goes, “we will have deflation in everything we own, and inflation in everything we use”. This is partly true. It is true during the run up to the rubber band snapping. It is true until we hit the waterfall. At that point I have my own version of the quote. “We will have hyperDEflation in everything measured against real money, GOLD, and we will have hyperINflation in everything measured against paper dollars.”
This is very important: Once hyperinflation commences it is characterized by a running shortage of cash, even though it appears like the opposite to the outside observer. The currency collapses in value against economic goods because the debt and the credit collapsed. There is no credit, only cash, and there is a shortage of cash for everyone, including the Elite and the government. So they, the Elite/government, print and print for their own survival while saying it is for yours.
And, from Part 2 in his series, this is one deflation pundit throwing in the towel:
Sheesh! Where to begin? It’s difficult to give up a belief system that took root 30 years ago, but I find your arguments irresistible. I took notes as I read the essay, thinking to rebut you point-by-point; instead, halfway through it, I found myself overwhelmed by the clarity of your thoughts. The real power of this essay is that each step of the hyperinflationary endgame it foresees is entirely consistent with human nature, particularly where self-interest and self-preservation are fated to play out.
I will have to find a way to break this gently to my readers, perhaps starting with the joke about not having to outrun the bear. It goes a long way toward explaining how the Masters of the Universe will actually benefit from hyperinflation…..
Hyperinflation _ The Bad News
Well, what could hyperinflation be but bad news? I will get to the other side of the coin in a moment.
One thing many pundits believe is that, be it hyperinflation or be it deflation that finally takes down this worthless fiat monetary system perpetrated on the world by biggest of the world’s banker with a little help from President Richard Nixon, those bastards will finally get what they deserve. In other words, the bankers will see their great wealth destroyed. Wrong, says FOFOA. And, in the interest of full disclosure, maybe this is why I se the author as a genius. He confirms something this humble observer wrote over two years ago. That is that when the US Treasury has no choice but to put the printing presses into hyper-drive (printing new bills with more zeros on them), it will be the bankers and connected elites who will be first in line. That is how the newly printed fiat money begins to be circulated into the everyday economy which ignites the Hyper as opposed to High inflation. Because they are first in line, they will spend all liquid money buying hard assets __ gold, yes, but also assets that are or produce the things that all people will need to survive. This is how they will protect and even increase their wealth.
Hyperinflation will result in scarcities of basic necessities and civil order will break down. Our government will crack down hard on the disorderly. Wages will not keep up with the hyperinflation. The unprepared, the poor and the elderly dependent on government programs will suffer the most.
Hyperinflation __ The Good News
Believe it or not, according to FOFOA, there is some very good news that will come with the hyperinflation. First, let me report that FOFOA believes the period of chaos, the period before the transition to real money backed by gold, will be short lived…as short as six months, in his opinion. But, the really good news is that the author of FOFOA believes there is nothing wrong with our Leviathan government that won’t be fixed by hyperinflation. My interpretation of what he believes is as follows:
Once the Banksters have converted all their mountains of inflated cash into hard assets and once the US government paid of all of its sovereign debts with worthless fiat dollars, they will have no choice but to produce a new currency back by gold or, at least, at basket of gold and other commodities, They will no longer be able to deficit spend. They will no longer be able to tax and borrow sufficiently to maintain the Leviathan and, therefore, the size of our federal government will be reduced to a small fraction of what it is today. Entitlement programs will have to go and the social safety net will be will barely be enough to keep people alive. The federal government will no longer be able to micro-manage our lives or the economy. Free markets will finally have a chance to work their magic. Both people and governments will have to live within their means.
It is probably obvious to you that this old man has a new favorite pundit. If you decide to checkout FOFOA, make sure you set aside some good quiet time to read at length. This is a long post, by my standards, His are four or five times this long. FOFOA is not easy reading because he gets into some heavy subjects that require that you have your thinking-cap screwed on good and tight; and because he has developed a system of acronyms you won’t be familiar with, as his long-time followers are. (He could help new readers if he had a glossary of his acronyms.) In my opinion, it will be worth your effort. He has good advice on how to survive the coming collapse of the dollar and the hyperinflation that will result from the collapse. I will definitely be reading every last word of his current ten part series: My Candid View.
For the first time in a long time, I have hope that my grandchildren and their children have a good chance of living to enjoy an American Renaissance.
Well, that’s what I’m thinking. What are your thoughts?