In Jim Cook's Archive


Back in the early 1970’s a business associate of mine suggested that someday bread would be a dollar a loaf.  We ridiculed him for this outlandish prediction.  At the time it seemed absurd.  Unfortunately, nowadays we are inflating much worse than at any time in the past.  Consequently, I am comfortable in telling you that bread is going to be a $100 a loaf.

You have to look backwards to appreciate the true extent of price inflation.   If you listen to the government, you get the idea that inflation has been low for decades.  However, the paperback book I used to buy for $.35 tells the real story.  I recently paid $11.40 for one at the airport.  That’s 32 times higher.  When you look at what prices used to be and what they are now you see the truth.

It’s no secret the Federal Reserve is creating hundreds of billions of new money to finance the government’s deficit spending.  That money eventually impacts prices.  It used to be generally acknowledged that inflation was a bad thing.  Now it has become a desirable government policy. This despite the fact that unsound money and currency debasement are ruinous to a nation.  Inflation destabilizes society.  It’s the reason that Wall Street bankers line their pockets to excess.  It’s why 43 million people are on food stamps.  Wages don’t keep up with the true inflation rate.  And that’s why young people are finding it harder and harder to afford marriage and a family.

Furthermore, inflation is a sneaky tax.  When the dollar goes down and prices rise, it robs people of purchasing power.   Coupled with low interest rates, rising prices decimate the income of retirees.  An inflation driven boom, followed by a bust in the stock market finishes them off.

Silver analyst Ted Butler doesn’t share my inflation worries.  I believe inflation is the main reason to own silver.  Ted thinks you own silver because it is undervalued and it offers significant profit potential.  He claims a combination of factors (shortage, investment demand, short covering and industrial demand) will drive up the price of silver.  I would add that a glut of dollars will impact silver and that inflation causes both gold and silver to rise and offset a dollar decline.   It’s what gold does best and silver invariably follows.

Inflating the currency will surely continue.  One certain outcome will be asset inflation.  Tangible assets will explode. Inevitably, prices for all things will rise.  People who wish to prosper and maintain a handsome lifestyle must be nimble.  By owning silver they put themselves in a position to continue the good life.  Those who hold a large enough quantity of silver can gradually sell it off, little by little, for income.  It should be much better than dividends, interest and annuity payments that are ravaged by steep inflation.

Remember this: inflation is a policy that cannot last.  Great quantities of new money and credit are required to sustain an inflation addicted economy.  The possibility exists for runaway inflation or even a hyperinflationary depression.  Be prepared for government mismanagement based on political objectives rather than sound monetary policy.  At the very least, get ready to add a zero to everything.

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