Won't be Long Wulf ... Jest wait 'til that Trillion $$$ Stimulus Package comes along ...

U.S. Hyperinflation Right Around the Corner?

"Hell, everybody with any brains knows that if the government keeps creating more and more money and credit, then consumer prices will rise exponentially and the economy will be ruined, just like Zimbabwe today�?

Ed Steer of CaseyResearch.com writes, "I see in a Reuters story that home prices plummeted a record 17.4% in September from a year earlier…and the US government was providing more free money to more banks. So, what else is new? More money out of thin air. Late in 2007 it was tens of billions per week. By the end of the first quarter of 2008, it was hundreds of billions per week…and starting about a month ago, it's been a trillion dollars or more per week."

Naturally, I am thinking to myself that not only have I heard all of this stuff before, but I have spent a lot of time talking about it myself, mostly mumbling under my breath to my imaginary friends and people who dare to sit next to me.

So I am not prepared when Mr. Steer asks, "Is hyperinflation heading our way?"

Naturally, I am flattered that he should ask my opinion! I say, "Hell, yes, we are going to have hyperinflation if the damned government keeps creating more money and credit to feed the bubbles", first citing the example of Zimbabwe, and which I was going to use as a conversational springboard to seamlessly segue into how the whole last 4,000 years of human history has proven that gold is the only asset to own when a government is creating so much money and credit that everything else will turn to, in a word, crap.

Then I find, to my chagrin, that he is not asking my opinion at all, and was merely being rhetorical as a way of introducing the fact that "John Williams over at shadowstats.com sure thinks so", which made me realize that I could recover from my embarrassment and again seize control of the conversation by saying, "Me, too! I expect hyperinflation, too! Hell, everybody with any brains knows that if the government keeps creating more and more money and credit, then consumer prices will rise exponentially and the economy will be ruined, just like Zimbabwe today, and just like every other example in all of history where a stupid bunch of governmental dirtbags created too much money!"

But I never got a chance to say anything, which is probably good because I was stunned to speechlessness when he went on that Mr. Williams expects hyperinflation "within the next 18 months." Yikes!

I look at this "18 months" thing, and I look at all the unbelievable trillions of dollars being created per month, and then I remember that there is always a lag between the time when a huge supply of money enters the economy and when it affects prices, which is somewhere between 9 months and a year and a half or so, and I shudder.

Even more than that, if we do get hyperinflation in 18 months, then at 17 months, inflation will have been extremely, extremely high, but not hyperinflationary. And at 16 months, inflation would have been extremely high, but not hyperinflationary. And at 15 months, inflation would have been very high, but definitely not hyperinflationary. And at 14 months, inflation would have been high, but very definitely not hyperinflationary.

I could go on through the other months, and I would, too, if I was getting paid by the word to write this Stupid Mogambo Crap (SMC), but I am not, and so I will not, but will, instead, entertain you with my latest hit tune "Boom boom boom, we're freaking doomed!"

This musical gem starts with a drum going "boom, boom, boom", getting the driving beat going really good, and then I wail at the top of my voice (to convey desperation and panic), "We're freaking doooooooommmed!", boom, boom, boom, "Too much new money and credit means", boom, boom, boom, "Inflation out the wazoo!", boom, boom, boom, "We're freaking doooooooommmed!" boom, boom, boom.

And perhaps with a catchy hit song with an infectious beat, people will learn about inflation all over again, and why the Founding Fathers wrote into the Constitution that money will be only of silver and gold, which they did solely to prevent the government from letting the banks increase the money supply, which causes inflation in prices.

But I realize that my tune will be a flop, as apparently people have to always learn the lesson of inflation by suffering because, as Mark Twain said about trying to carry a cat home by its tail, "it is a lesson that can be learned no other way."

The MOGAMBO GURU, for The Daily Reckoning
by Richard Daughty

http://www.kitco.com/ind/Daughty/dec082008.html