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THIS WEEK’S EDITORIAL
CURRENCY COLLAPSE EVENTS — HYPERINFLATION — HYPERDEFLATION: Two possible currency collapse events are brewing at present that all readers should be aware of — one in Turkey and another in Lebanon.
Most people know of currency collapse events as “Hyperinflations”. In these thankfully rare events, collapse of the national currency occurs as it loses its most valuable characteristic — general acceptance. This happens when citizens lose all faith, hope and trust in their government to manage their nation and especially their financial system. However, it is important to understand that such events must always be driven by the existence of an alternative currency that is rising in direct opposition to the national currency that is collapsing.
In other words, a Hyper-Deflation always occurs at the exact same time as a Hyper-Inflation occurs. Prices rise dramatically for goods and services in one currency (the national currency) while they fall, equally dramatically, in the opposing currency. These days, the opposing currency is usually the US Dollar which has been allowed to circulate freely as cash in the real economy.
Some citizens become extremely poor in Hyperinflation events, losing almost all of the purchasing power of their savings. At the exact same time, other citizens become extremely rich because they have savings denominated in the rising, alternative currency.
In such a situation, CASH (savings) is KING ….. but only if it is denominated in the rising currency. And only if it is kept in a safe place (usually a trusted foreign bank).
Politicians should never, never, ever allow alternative currencies, especially the US Dollar, to circulate inside their nations. But they do — presumably because they are bribed to allow it to happen.
PRICES RISE AND FALL: In such collapse events, the prices of goods and services denominated in the National currency rise dramatically. Prices rise more rapidly than the money supply as people try to rid themselves of the devaluing currency as quickly as possible. They become reluctant to borrow in their own currency and therefore the supply of new credit money from bank loans dries up. This makes everything worse.
As credit money declines in volume, cash becomes much more significant. The banks teeter on the brink of failure as their loan books stagnate with bad loans accumulating at a rapid pace. The government then tries desperately to supply fresh cash as a replacement but this is quickly exchanged for the competing, alternative currency. It can be a rapid, almost terminal event for an economy as trust is eroded.
Mutual trust and general acceptance of the national currency is the glue of all financial systems. Once that is lost, then confidence in the purchasing power of the existing dominant currency declines and a self-perpetuating spiral of price rises begins.
The obvious culprit in these scenes of turmoil is always the alternative circulating currency which is usually the US Dollar. But corrupt, stupid, careless politicians are the most essential part of the equation. It is the faith and trust of the people that collapses; their faith and trust in their leadership.
Over the last 4 years, the Turkish Lira has fallen fourfold against the US Dollar. This trend has accelerated rapidly in the last four weeks. The annual rate of CPI inflation is now 20 %. If that continues, the prices of everyday goods and services will double in three years. That is not Hyperinflation (by a long way) but it is worrying for the citizens of Turkey who find life on a daily basis more and more difficult. This is a test – they must maintain faith and trust in their government. The government should immediately ban the acceptance of all foreign currencies in all purchase transactions for goods and services.
In Lebanon, the consumer price inflation rate is 173.6 % Year-on-Year. Again, this is not yet a Hyperinflation event but it is very close. Just a year ago, it was only 3 %. This is a test for the citizens as their faith in the government and the national currency has clearly been shaken.
HYPERINFLATION: When currencies actually start collapsing, prices can rise very fast indeed. Economists usually follow the definition that hyperinflation occurs when the monthly inflation rate exceeds 50% which is equivalent to a yearly rate of 12,974.63% Those numbers are hard to imagine. But the worst currency collapse in history is beyond imagination. Put your seatbelt on before you read on.
At the end of the Second World War, between the end of 1945 and July 1946, Hungary went through the highest inflation ever recorded. In 1944, the highest banknote value was 1,000 pengő. By the end of 1945, it was 10,000,000 pengő, and the highest value in mid-1946 was 100,000,000,000,000,000,000 (1020) pengő. A special currency, the adópengő (or tax pengő) was created for tax and postal payments. The inflation was such that the value of the adópengő was adjusted each day by radio announcement. On 1 January 1946, one adópengő equaled one pengő, but by late July, one adópengő equaled 2,000,000,000,000,000,000,000 or 2×1021 (2 sextillion) pengő. When the pengő was replaced in August 1946 by the forint, the total value of all Hungarian banknotes in circulation amounted to 1⁄1,000 of one US cent.
On 18 August 1946, 400,000,000,000,000,000,000,000,000,000 pengo became 1 forint. Please note that all of those events occurred in a period that lasted for only 18 months.
If you lose faith and trust in your political class, then these events can happen in any nation but only if a viable alternative currency exists and is in circulation. The entire political class of the Planet is now adopting authoritarian policies based upon advice from foreign NGO’s — Non Government Organizations — made up of unelected, self-appointed functionaries such as the World Health Organization. This is an extremely dangerous game for governments to play. Allowing non-representative foreign NGO’s to run your nation is akin to allowing a foreign army to dictate your lives. In effect, it is a new form of warfare.
ENERGY COLLAPSES IN PRICE: On 9th October, BOOM wrote in the editorial — “The prices of some commodities have recently become disconnected from economic realities. Oil and natural gas prices are surging for no apparent reason since late August.”
“BOOM cannot see how energy prices can rise any further. They should soon stall and start falling.”
“When economic reality dawns, energy prices will start to fall. BOOM expects sovereign bond prices to then surge higher as yield curve expectations adjust. So — watch for falling energy prices to trigger rising bond prices. If this happens as expected, a great bond buying opportunity is coming in the not too distant future.
Braver souls among us will consider going short energy contracts while going long bond futures. Timing is everything.” Last Friday the 26th November, all of that happened. The West Texas Crude oil price fell dramatically by 13 % in a single day’s trading. Bond prices rose sharply — just as BOOM had predicted.
In contrast, the US Dollar continues to rise strongly as BOOM pointed out last week. The lesson to learn here is that the US Federal Reserve has decided to kill CPI inflation inside the United States. All the doom and gloomers who predicted CPI inflation to continue in the US will be sorely disappointed as their predictions turn to dust. “Inflation is transitory” will go down in history as a demonstration of central bank power as the ever present dis-inflation and deflationary forces re-assert their influence.
And the idea that Covid 19 threat can be defeated by new, unproved so-called “vaccine” technologies will be seen for its flawed concepts. New variants of the virus will emerge under selection pressure caused by using these products during an epidemic. Using these products may make everything worse, not better. The Belgian super vaccine expert and Virologist, Dr Geert Van Den Bossche, has been warning the world of this since March.
GEERT VAN DEN BOSSCHE WARNS THE WORLD — DO NOT VACCINATE THE CHILDREN
Listen to his latest interview. It is chilling as he explains what is possibly coming to a world that has allowed fear mongering politicians and journalists to do everything wrong in combatting a virus. He especially warns against vaccinating the largest unvaccinated group, the children — and what will happen if they do that. Geert Van den Bossche Warns the World: https://www.voiceforscienceandsolidarity.org/videos-and-interviews/geert-vanden-bossche-interview-at-the-highwire
In economics, things work until they don’t. Until next week ………… Make your own conclusions, do your own research. BOOM does not offer investment advice.
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The truth is, economists don’t know anymore than the rest of us what is going on.
Only if a couple of them are standing in a wheat field and see a cloud of locust fly in and start eating away.
Then they can say “looks like the cost of bread is going up” with an air of cetainty.
Economists, especially the huge herd at the FED, are properly classified by N.N. Taleb as the IYI.
“Intellectual Yet Idiots.”
It aint what you don’t know that gets you in trouble,
it’s what you know for sure that just aint so.
All asset prices have been pushed into the stratosphere by Central Bank monetization of debt. They are much more likely to fall back to Earth than to continue to rise. When this happens there will be no bid for them resulting in a catastrophic free fall.
Well then we have nothing to worry about…..American’s have no savings. Glad we dodged that bullet! /s
Just Sayin’
They… the TPTB… will keep this fiat currency game going longer than we think, but only long enough to allow them to transition us plebeians into a greater system of control like a central bank digital currency. All privacy will be lost in a cashless world and your life will be either turned on or off by the whims of some algorithm that is constantly assessing your value and behavior within society. We all understand “today” is being setup to become their “tomorrow”. As a Christian, this system seems all too clearly to be steering us to take some form of mark or “digital” I.D. that will be the only way to live within this structure. I am not so sure that they will blasting this as a take the mark moment, but it may be more subtle so as to lure the sheep into the trap.
Agreed, but there is an alternative economic model based on a local economy. I will be writing about this in forthcoming Letters.
Yes!
It is literally not the only way to live and thrive unless you give the “beast” power; which you are doing through fear. They have no power…
AP- I too have been watching the currency collapse in Turkey and Lebanon closely. I am reminded that just one US five cent piece could have paid the telephone/utility bills of 100 people in the Wiemar back in the day.
I don’t agree with Steve, these economists here in the west know exactly how currency collapse works to the nth degree and they orchestrate collapses such as these along with the IMF.
I posted on another thread that Greece will be fining Greek pensioners 100 Euro per month soon until they get the vaccine, they might as well light it up in neon that they are full blown Nazis. Starving old people and shooting up children with poison, what else can you call these tyrants?
Agreed BL – they are doing everything they can to prepare for new centralised digital currencies following a general economic collapse resetting the global on system on to a much lower level for the 99% – stay on watch!
Inflation ramp up reviewed.
https://www.oftwominds.com/blognov21/runaway-inflation11-21.html