Black Swan Insights

Showing posts with label hyperinflation. Show all posts

Eric Sprott on King World News

Hat tip to King World News for again delivering another insightful interview with Eric Sprott, of Sprott Asset Management. He has an excellent track record of navigating the markets and the economy. He is a highly respected financier who does what financiers used to do--provide capital for new and emerging companies to grow, create jobs, and benefit society. Unlike today where financiers have become parasitic viruses who steal money from the real economy and threaten the world's financial system. In the King World News interview Sprott discusses everything from failed bailouts, QE 2, insolvent German banks, gold, and more. Of note Sprott says that QE 2 might already be occurring through a backdoor arrangement between the Fed and the banks. Fed lends banks money at 0% and and the banks buy treasuries at 3-4%. Sprott also sees the economy falling off a cliff and that QE 2 from the Fed will not work this time. The bond market will not get fooled again. Finally, Sprott says there is a possibility for hyperinflation which makes gold a must own asset.

Here is the link for the entire interview.

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Marc Faber Predicts more Money Printing by October 2010

Marc Faber was interviewed on Bloomberg yesterday and predicted that due to weakness in the economy, the Federal Reserve would begin a new round of Quantitative Easing (money printing) by October 2010 to prevent deflation. His outlook for the economy is not positive.

Here is a link to the video: Click Here

If Faber is correct and the Fed prints $2-3 trillion more this wold be a boon to gold and other hard assets. However this money printing will eventually lead to hyperinflation despite what the deflationists say. I think history is pretty clear that the Federal Reserve will never allow deflation even though it is a natural part of the credit cycle.

Black Swan Insights

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Surviving Hyperinflation

With the recent weakness in the economy, we can now expect the Federal Reserve to reinstate their quantitative easing (money printing) program. Most pundits now expect the Fed to print another $2-3 trillion to prevent deflation at all cost. With this level of money printing, we are likely to enter hyperinflation some time in the future (3-5 years). The deflationists will disagree, but let's face it: History tells us that large amounts of money printing will eventually lead to hyperinflation (defined as more than 50% a year). But the deflationists will deny this with Japan as an example and claim that money printing does not lead to inflation. My answer to them is pretty simple: Look at all of the countries throughout history that have printed money and see what occurred. Every such country except Japan has experienced high inflation, if not hyperinflation. So knowing that the US will suffer this fate, what can you do to protect yourself?

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