Hi Jim,
You predict hyperinflation. I can only see that happening if people have the money to spend. If their IRA is toast because the stock market has melted down, they will have no cash to spend. They have already lost the equity in their homes and most are under water. Jobs are in jeopardy, everyone is cutting back, no one is going on a spending spree. If the Administration was to eliminate the income tax and sent $10,000 checks to everyone, then prices will rise like you predict… but they won’t give up taxes that easily. Ben will have to use a B-52 money drop.
Deflation can occur if no one has any extra money to spend. Most businesses finance their inventory and pay interest on their loans. If their products are not moving, they will not raise prices, hell, they may take a loss so they can clean out the back room and make this months payment.
Sooner or later the Government will default on its promises, it is just a matter of time. Then, interest rates will skyrocket. I just can’t see how prices can rise when everyone is out of work or broke. I think they are deliberately trying to destroy America so they can give us a solution to the problem: the new world order – a one world government with the bankers in charge and our Constitution, will be history.
All the new money that has to be created out of thin air has gone to the bankers, not the people. How can prices rise if the common man is destitute?
CIGA Bill

Dear Bill
Hyperinflation is a currency, not an economic, event. That is not factored into your set of parameters leading to your conclusion.
Governments do not default, they reschedule and print more money. QE can provide pieces of paper, but not buying power.
All your points below that you offer to sustain deflation is the meat from which hyperinflation occurs. Governments of the Western world will provide all the fiat money to bail out everything but Main Street, but there will be no increase in buying power.
I have written on this subject at least 200 times, and seem not yet been able to communicate what is an economic/political axiom. This currency event, not an economic event, has happened before and will again.
Did the same conditions and formulas you put forward to sustain deflation not exist in Weimar, Zimbabwe and 34 other examples? Is not what the Western world is doing now EXACTLY what was done in Weimar, Zimbabwe and 34 other examples?
Respectfully yours, Jim

Jim Sinclair’s Commentary
And so it will be provided. Another event answer to Bill’s question.
EU chief says eurozone bailout could be increased
BRUSSELS – The European Union president says EU governments will increase a massive euro750 billion ($1 trillion) bailout package if it isn’t enough.
EU President Herman Van Rompuy told Belgian magazine Trends Tendances on Thursday that "if the plan isn’t enough, my answer is simple: in this case, we will do more."
He says he doesn’t think that’s likely because the size of the financial rescue on offer for eurozone countries who can’t repay their debts already "stunned the world."
Germany is providing the largest chunk of the debt guarantees that back the fund.
More…


Jim Sinclair’s Commentary
Meanwhile Financial TV blares out the crap concerning the economic recovery.
Now all the trouble is in the EU and everything is just dandy here albeit a few hiccups.

Economy may never recover from banking crisis, warns OBR Francis Elliott, Gráinne Gilmore

The economy, more damaged by the banking crisis than previously admitted, will grow more weakly and may never fully recover, the new Office for Budget Responsibility (OBR) said yesterday.
The conclusion adds billions of pounds to the total that George Osborne must find if he is to restore the public finances to health.
Public sector workers were warned yesterday that taxpayers could no longer afford their “unreformed, gold-plated pension pots” as the Lib-Con coalition Government used the first OBR forecasts to step up efforts to prepare voters for next week’s Budget.
Growth is forecast at 2.6 per cent next year and 2.8 per cent in 2012, far below Alistair Darling’s predictions for 3.25 and 3.5 per cent respectively. This leaves Britain’s structural deficit — which is impervious to the economic cycle — bigger than feared over the next five years. It will hit 8.8 per cent of GDP, or £123.7 billion this year, compared with Mr Darling’s forecast of 8.4 per cent of GDP. By 2014-15 it will have fallen only to 2.8 per cent of GDP, the budget office said, rather than the 2.5 per cent anticipated by Labour.
More…



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