Posted on 07/24/2009 10:30:29 AM PDT by iThinkBig
While I do not agree with 100% of what von Greyerz is claiming, the article is a very important wakeup call. It's obvious we have studied the same economics and are looking at the same numbers. These events do not have to be so pessimistic for ourselves personally if we wise up and take actions to prepare. I am a very strong optimist for our country in the long run - in fact, the actions of the US government is the only reason why I am short-term pessimistic - Jake
by Egon von Greyerz – Matterhorn Asset Management
In this newsletter we will outline what is likely to be the devastating effect of the credit bubbles, government money printing and of the disastrous actions that governments are taking. Starting in the next 6 months and culminating in 2011-12 the world will experience a series of tumultuous events which will be life changing for most people in the world. But 2011-12 will not be the beginning of an upturn in the world economy but instead the start of a long period of economic, political and social upheaval that could last for a couple of decades.
"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises
(Excerpt) Read more at towneforcongress.com ...
Seems to me they will print their way out of it. No other option. Expect 15% intrest rates and 20% inflation. Just like Carter. They will have to jigger the cola for social security and other intrest sensative payouts. But that will be easy for them.
My forecast is similar but also depressing, 20% interest rates, 30% inflation in energy & food, deflation in everything else.
Sounds right. Inflation in the needed supplies. That will lead to Chavez style price controls and shortages.
No doubt about that. Doing what I can to educate the masses...
Jason
That is a very conservative estimate for the inflation side of the picture. I'd add at least another zero, two if you change the 2 to a one.
What you are seeing is the longer-term endgame for the dollar. Mises predicted it, Geithner confirmed it a few months ago at the CFR.
Like the old cliche, “it’s not if, but when.”
Gold
Sorry, the thread has gone for 7 posts and nobody has said it.
THo I wouldn't be sorry to have some of the metal right now.
There will be no deflation. As our GNP drops, and our huge and growing larger deficit becomes a larger and larger portion of our GNP, they will print more and more money to pay or attempt to pay the interest on that rizing GND debt.
Meanwhile as the world economy contracts, there won’t be a country in the world foolish enough to buy U.S. treasury notes, rather they will be- as they already have- trying to spend the ones they already hold. China has been buying up gold mines and oil fields for instance.
The more money the government has to print to pay the bills, such as the rapidly growing welfare rolls, unemployment insurance, all those government salaries, school teachers, etc. Plus trying pay the interest on our growing national debt, the faster the value of our dollar will drop, which causes inflation. Hyper inflation considering the massive debt we are accumulating and spiraling downward GNP we are producing.
It happened in Mexico, Zimbabwe, and Germany after ww1. Don’t think it can’t happen here. It’s allmost certain and Obama is greasing the wheels on that freight train even more.
Gold"
So Obama can confiscate it like the government did in the 30's? No thanks. Gold would become just as useless to you as a wheelbarrow full of American dollars, because you won't be able to spend it, and go to jail if you do.
I worry about taxes...property taxes....
“There will be no deflation. As our GNP drops, and our huge and growing larger deficit becomes a larger and larger portion of our GNP, they will print more and more money to pay or attempt to pay the interest on that rizing GND debt.
Meanwhile as the world economy contracts, there won’t be a country in the world foolish enough to buy U.S. treasury notes, rather they will be- as they already have- trying to spend the ones they already hold. China has been buying up gold mines and oil fields for instance.
The more money the government has to print to pay the bills, such as the rapidly growing welfare rolls, unemployment insurance, all those government salaries, school teachers, etc. Plus trying pay the interest on our growing national debt, the faster the value of our dollar will drop, which causes inflation. Hyper inflation considering the massive debt we are accumulating and spiraling downward GNP we are producing.
It happened in Mexico, Zimbabwe, and Germany after ww1. Don’t think it can’t happen here. It’s allmost certain and Obama is greasing the wheels on that freight train even more.”
Deflation will continue for non-essentials. For energy, food and healthcare, costs will increase. Trickle down on energy may slow deflation a bit. On the deflation side, we are 75% of the way through it, I expect by mid 2010 to see a strong steady march of energy inflation. 2011 Bush tax cuts will expire, inflation and other local & federal tax increases, this will create the double dip or W effect and 2nd major leg down. As for hyperinflation, not set in stone but probably and that would occur as the US loses the world’s reserve currency status. The battle of the titans, East and West are in a Clash of the Titans phase right now, this plays out over several years and is not so instantaneous. Your points are also good.
I’m so sorry and hope your husband finds another job. Sounds like you have little debt, which is good. Property taxes - yup, we never really ‘own’ our homes when the government can tax them away from us.
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