Fed Decision: Will Print Another $600 Billion--Hello Zimbabwe

Well we got more money printing, but it was less than the $1 trillion expected. The Fed will print another $600 billion by the end of Q2 2011. Nothing really new here. We are going the way of Zimbabwe as money printing becomes the general tool to "boost" the economy. So far the markets have sold the news. The sky is the limit for commodities as a result of dollar debasement.

I will leave you with a very germane quote from the famous book on inflation "Dying of Money" by Parsson. It explains how hyperinflation starts and how once it begins, it is impossible to stop:
Holders of money wealth express their revolt by the simple act of getting rid of their money and money wealth and declining to hold it in the future any longer than necessary to get rid of it. They do not fly flags or demonstrate in the streets to express their revolt; they simply get rid of their money. When a sufficient inflationary potential has been laid up by the government in all the available reservoirs, that is all that is necessary. If the simple desertion of the money becomes widespread or universal, the latent inflation surfaces in the form of disaster. The duller the holders of money wealth are, the longer the government can go on storing up inflation but, by the same token, the more cataclysmic must the eventual dam burst be. The Germans were among the dullest and most disciplined of all holders of money wealth, and this alone permitted the government to build up so huge a pool of unrealized inflation before the burst.

The desertion of the money holders has many of the aspects of a panic, like any desertion in the thick of a struggle. All may be orderly in one moment and in full flight in the next. As slow and imperceptible as the inflationary economics were, the economics of disaster are sudden and unexpected. A filling of reservoirs which may have taken years may be emptied in a day.


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