Friday, July 22, 2016


Our thoughts about hyper-inflation tend to conjure up images from the past depicting wheelbarrows of paper money being used to buy loaves of bread. The Wiemar and Zimbabwe FIAT hyper-inflations involve the collapse of national currencies in a world where the dollar (and other stable currencies) presented an exit route to escape to.

Super price hyper-inflation for goods and services of the sort prior to "globalization" are a psychological phenomena that entail massive (early stage) currency exchange demand from a collapsing to a stable FIAT currency that can still buy essentials in a relatively stable way. If 10 dollars buys a loaf of bread on Monday, and it takes 30 dollars on Tuesday, ALL dollar holders will urgently trade dollars for any currency that offers stable purchasing power.

We are not there yet, obviously.

We do still see, to some extent, mild to acute inflation as a byproduct of geo-financial economic attacks (systemic sanctions, FX derivative leveraging, etc..). But for the most part, central banks are coordinating a global FIAT devaluation that leaves us with a relatively strong dollar to flee to (for reasons that have little to due with exchange rate considerations of the past) as all currencies decline together through various forms of (public and private) QE.

Because ALL FIAT currencies have embarked on a mission to devalue against other financial assets, and because most widely held FIATs still purchase the basic necessities of our synthetically derived physical world, currency account holders are only gradually considering their options to exit cash deposits, but considering they are.

What they are not considering (yet) is the value of financial "assets" denominated in a collapsing currency. Another did explain the potential "rush to Euro denominated contracts" but whether or not any currency can survive a first ever global FX regime collapse begs the question. This is why a new FX regime is in the making, with a new currency bloc and infrastructure, equivalent to the old.

There must be something to "rush into" as the floodgates of hyper-inflationary fear manifest. It was always known that GOLD was that something, but there must be functioning currencies in our modern world to prevent the dark age Apocalypse that many predict (it won't happen).

Currencies that derive their value through their strength in gold will be the currencies to flee to. Currencies weak in gold will be the escape valve for defaulting debt.

Get out your aspirin, as there are only so many ways to explain an unprecedented and epic change of "value perception". The world waits for what has already happened. Can the CBs coordinate a soft landing? The meeting of minds lies ahead.

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