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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Commentary Of The Month
September 2, 2016
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THE GOLD PRICE TIDE HAS TURNED!

By Gijsbert Groenewegen

This coming autumn we are likely to see the beginning of the hyperinflationary phase of the sovereign debt crisis. Hyperinflation normally hits an economy very quickly and unexpectedly, and is the result of the currency collapsing. Hyperinflation does not arise as a result of increasing demand for goods and services. The course of events in a hyperinflationary scenario can be summarized as follows:

  • Chronic government deficits
  • Debt issuance and money printing escalating rapidly
  • Bonds falling – interest rates rising fast
  • Currency collapsing

 

The above process turns into a vicious circle that accelerates quickly. The more money the government prints, the faster the currency will fall – and the faster the currency falls, the more money the government must print. Once the hyperinflationary spiral has started, it will feed itself like we have seen in the Weimar Republic, Zimbabwe, Argentina and many other places.

What will exacerbate this process is a financial system which is totally bankrupt in all but name. If banks valued their toxic assets at market instead of at maturity, no bank would be standing today. As longer-term government bonds start falling, this will also put upward pressure on short term rates with central banks losing control of their manipulation of rates. This will lead to rates going into the teens in the next 2-3 years like in the late 1970s. Virtually no borrower, whether public or private can afford rates just two or three percent higher and definitely not rates of 15% or 20% which we are likely to see – at a minimum. Also, with higher rates, the whole derivatives market of $1.5 quadrillion will blow up since these instruments are all interest rate sensitive. In a world of exponentially growing sovereign deficits and debts, the outcome of the biggest credit bubble in history has always been guaranteed.