Dear Jim,

Regarding part of this post on hyperinflation it seems quite familiar:

Was Weimar’s Hyperinflation Triggered By An Increased Velocity Of Money Or A General Loss Of Confidence?
Posted: Nov 18 2008 By: Jim Sinclair

***snip***
2 “Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:

- Outright lying in official statistics such as money supply, inflation or reserves.
- Suppression of publication of money supply statistics, or inflation indices.
- Price and wage controls.
- Forced savings schemes, designed to suck up excess liquidity. These savings schemes may be described as pensions schemes, emergency funds, war funds, or something similar. 
- Adjusting the components of the Consumer price index, to remove those items whose prices are rising the fastest.

None of these actions address the root causes of inflation, and in fact, if discovered, tend to further undermine trust in the currency”
***end snip***

My Observations:

Bullet point one - Over the past years it is a given that the government massages the inflation numbers to suit their interests and pay less than they should on COLAS, etc. This fact is laughed about openly on CNBC. I have also seen numerous changes in how money supply is counted, calculated and presented on the Fed’s books, possibly Monty Guild or some other Fed watcher could document these changes and how they affect the market’s perception of the US dollar. There has been no audit of US gold as has been discussed by many gold people over the years and there have been distinctions made on the Fed’s books about "deep storage gold" and other strange classifications of the "reserve." Ben Bernanke also opined once that the Fed could buy gold mines if they so desired. So in my mind, bullet point one has been going on for some time now – massaging and fibbing over time, and hiding info.

Bullet point two – Well Dr. Greenspan took away the widely followed Money Supply report a few years ago, citing them as not needed anymore and to save the Fed money and time by not calculating the report. Well thanks to the private groups who continue to create these reports (as best as they can as mirrors to the originals) it seems like the money supply numbers are accelerating rapidly higher. Soon Inflation will be a dinner table topic again as it was in the late 70’s, so hiding it by eliminating reports or doctoring the reports will not make much of a difference in the near future.

Bullet point three - Price and Wage controls were tried by Carter and they failed. In an Obama administration I would tend to believe that they may be tried again. We can only wait and see if the same mistakes are made. We know that price controls lead to shortages on the goods that are capped, and artificial wage controls – usually making the employer pay more to his workers than what the market indicates, leading to less profits and in some cases business closures.

Bullet point four - Forced savings schemes–The trial balloon for that has already been released into the internet ether! Taking over 401k plans and IRA’s by the government, a Democrat sponsored idea, where you would receive a rate of return of 3% over the inflation rate (we know this number will be quite modest already) with other stipulations, restrictions, tax gimmicks and the like. Most average people, after they wake up from the market beatings they are now taking will probably go for it! Why not let the government manage the retirement money there is not much left anyway? And now we see that there is a cry for Obama Bonds!

We are well on our way towards dollar collapse and full blown runaway inflation. Looking at Trader Dan’s charts today regarding the fed balance sheet practically blows my mind – an ocean of dollars swamping the ship of State.

I noticed today that the 3 month bill is paying 0% interest! I also remember watching an exchange of viewpoints a long time back on a financial program about gold. One man said that gold is not a good investment since it pays no interest. The other man quickly replied that gold didn’t have to because it’s real money. Well paper money isn’t paying much these days and is going down in value since its supply is growing, the last thing you want is a drink of water when you are drowning. The lifeboats left are few, as some have already been lowered away.

CIGA Ken

Hello Jim,

Very good analysis in your article"30 Reasons For The 2nd Great Depression."

I might add this is the fourth long-term down cycle since 1860, and it’s not over yet.

CIGA Eric

Click chart to enlarge in PDF format