Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19
Is There a Stock Market Breakout Ahead? - 6th Nov 19
These Indicators Aren’t Putting to an Economic Resurgence - 6th Nov 19
Understanding the Different Types of Travel Insurance - 6th Nov 19
The Biggest Gold Story Of 2020 - 6th Nov 19
Best Money Saving FREE Bonfire Night Fire Works Show Sheffield 2019 - 5th Nov 19
Is the Run on the US Dollar Due to Panic or Greed? - 5th Nov 19
Reasons Why Madrid Attracts Young Professionals - 5th Nov 19
Larger Bullish Move in USD/JPY May Just Be Getting Started - 5th Nov 19
Constructive Action in Gold & Silver Stocks - 5th Nov 19
The Boring Industry That Hands +500% Gains - 5th Nov 19
Stock Market Chartology vs Fundamentals - 4th Nov 19
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons - 4th Nov 19
Stock Market Warning: US Credit Delinquencies To Skyrocket In Q4 - 4th Nov 19
Stock Market Intermediate Topping Process Continues - 4th Nov 19
Stock Market $SPY Expanded Flat, Déjà Vu All Over Again - 4th Nov 19
How To Buy Gold For $3 An Ounce - 4th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Prepare in August for Hyperinflationary Holidays

Economics / HyperInflation Aug 19, 2010 - 01:56 AM GMT

By: Dr_Jeff_Lewis

Economics

Ben Bernanke and the rest of the Federal Reserve are priming the pump for what could by a hyper-inflationary Christmas.  While the Fed continues to build a pile of kindling, the spark could very well be this holiday shopping season.


Imagine that you had a pile of wood put together to make a camp fire.  Your goal is to create the hottest fire imaginable, one that will last for quite some time.  You start with the smallest pieces, a few leaves, a couple of pine cones, and a few small sticks.  Next you throw on the larger timber.  A few logs and some old fence posts will do here.  Now, in the spirit of getting this camp fire going, you add a few gallons of pure gasoline.  That should be enough to do it, right?  Wait, what's that?  You forgot the matches?!

The above scenario is exactly what is occurring in the Federal Reserve.  They've done everything they can to create inflation.  They've laid the groundwork and poured on the gasoline in the form of M0 money creation, but now there isn't a single spark to be found that can ignite it. 

The Holiday Season

The gasoline they poured on the still unlit fire is slowly evaporating, and in a few month's time, it may be entirely dried up.  Ben Bernanke knows that his last hope at igniting the inflation candle will come in the fourth quarter of 2010. 

The gasoline is evaporating at a quicker than normal pace following a recession.  US exports continue to lag against our imports, and if too much cash is allowed to flow overseas, the inflationary recovery may never set foot.

Now or Never

This holiday season could prove to be vital for the Federal Reserve.  Their massive money creation scheme to prop up bank reserves has been 100% effective, but not a drop of the M0 money has yet to flow into the M2 money supply where it actually counts.  To go from M0 to M2, consumers have to borrow en masse, and then just like they do historically, fail to pay it off quickly.

The Back to School shopping season offered us a glimpse into real consumer confidence.  For those who are still employed, taking on personal lines of credit to make purchases is still second to cash, but at least someone is willing to borrow to some degree.  Holiday shopping usually accounts for far more than back to school shopping, so those who have enough cash reserves for back to school shopping will probably take out the credit card for a larger, more expensive, shopping season.

Get In While the Water is Warm

Silver and gold should perform well regardless of the outcome of the holiday shopping season.  If consumers go out on a limb and spend big, the groundwork will be laid for a massive expansion of the M2 in 2011.  If shoppers go to the store and spend conservatively, well, fear will return to the financial markets, and precious metals will boom again.  Buy now while both silver and gold are in their seasonal summer doldrums.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2010 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules