Monday, October 06, 2008


Despite Bernanke's assurances to the contrary, these bailouts mean tremendous inflation of the money supply. The U.S. can no longer avoid hyperinflation - it is here. The effects can hardly be overstated when the reserve currency of the world is debased so rapidly. Empires disintegrate and social upheaval occurs. Dollar depreciation is not apparent to the masses yet, but once the realization occurs, the social effect will be explosive. I believe this is why a U.S. Army brigade from the 3rd Infantry Division has been given orders to patrol America “to help with civil unrest and crowd control."

The dollar is doomed but most people don't know it yet. I recently spoke with a friend who was born in Mexico, and he agreed that the American public cannot imagine their currency failing. While U.S. citizens think that a currency crisis is the end of the world, Mexicans have experienced this multiple times. The central bank lops a few zeros off the currency and it's given a new name. The smart people have moved their wealth into a different form long before that happens. Even if Jim Sinclair is correct and the U.S. Dollar is rescued by linking it to gold in a Federal Reserve Gold Certificate Total Value Ratio, it will not be the same dollar we know today.

Americans will soon learn to change their mindset from focusing on their return on capital, to worrying about conserving the capital they have left. We have seen the beginning of this paradigm shift in the run on banks, and the flight to Treasury instruments. Investors need to insure their portfolio is full of precious metals and other commodity-related assets. While hard assets have suffered lately, that will inevitably change as mistrust spreads throughout the financial system. If you position yourself appropriately, your wealth can not only survive the currency crisis but also secure your future.

by Jennifer Barry

Are we headed for the Germany of 1923?


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