Here is the key part from an article on Forbes concerning the preferred money supply, looking back on this –
“Focusing on TMS2, THE CONTRARIAN TAKE’s preferred money supply measure, we find that it increased at an annualized rate of 15.6% in November, bringing the three-month rate of change to an annualized 15.2%. That’s up from October’s 14.5% rate and 13.3% rate, respectively. In contrast, the twelve-month rate of change metric on TMS2, the measure we watch most closely, went the other way, ending November at a rate of 9.8%, down from October’s 10.5% rate, and marking the end, albeit barley, of 22 consecutive months of double digit increases.”
To paraphrase, at the end of 2010, the US $Dollar was being inflated at an annualized average rate of 15.2%, and still accelerating.
Fast forward two years and 3 months…
“As of last month, the money supply, as measured by THE CONTRAIAN TAKE‘s broad (and preferred) TMS2 metric (TMS for True “Austrian” Money Supply), posted a 14.6% year-over-year increase in February, making this the 39th consecutive month of double digit year-over-year rates of monetary inflation. All told, TMS2 is up a huge 50% over those 39 months.”
Now, place all this in the context of what those TMS2 metrics were, leading up to the housing boom turned credit bust turned Great Recession – 37 consecutive months for a cumulative increase of 50% from 2005 to 2008.”
In plain language, the string on this latest balloon can’t be much longer – we are already two months and many billions of $Dollars beyond the run up to the crash of 2008, and the economy of the US hadn’t yet been weakened then as it now has by our participation in the recent European devaluation swindle… and confidence is much, much lower now, too. When the string runs out, the citizens of the US will find themselves in for a crash which will cost our society the sum total of all the inflation incurred in the US between 2004 and 2012, plus a large portion of the Euro inflation taken over the last three years in the name of “liquidity”.
Why, you ask, are we going to pay for the 2004-2008 inflation again? Didn’t we already pay for that? The short answer is, “yes and no”. Most of what paid for the bubble of 2004-2008 after the collapse was money printed for the purpose, as with the $Dollars that have been used to bail out Europe. The only _real_ payment we, as a society, have truly made for the housing bubble was that, in the face of so much *Public Money Creation*, we lost all real capacity for *Private Capital Creation*. There is a big difference – Private Capital creates jobs, grows companies, removes volatility from the market, and increases confidence at all levels… but Public Money Creation has the exact opposite effects, and *that* is the pain we, as a nation, have felt, the price we have paid. But that price is only the interest…the principal was rolled over into the Money Printing exercises known as TARP1, TARP2, QE1, QE2, Operation Twist, the EU/EFSF bond-bailouts, and ZIRP, and so the principal is still waiting to be paid…
In round numbers we, as a nation, will take roughly a 75% hit in our buying power due to the slingshot effect which aggressive and sustained inflation of the money supply must inevitably bring when the iceberg flips..
Honestly, I do not believe that the FED, US Government, and large banks have the intestinal fortitude to do what would be needed to even slow this down, let alone stop it… some even speculate that this coming crash is actually intentional on their part. Regardless of any intent, my best recommendation is that you prepare, and do so quickly. The world may well look very different before the Fourth of July, particularly if we now engage in another war which threatens commodity prices and/or market confidence further.
Put your money into items of value which are independent of the $USDollar – gold and silver are nice to have, but food, ammunition, seeds, fishing gear, alcohol, cigarettes, and other popular consumables will be the meat of a barter economy at least for the short-haul. Farm land, real skills, and fearlessness will also be valuable beyond measure in the days to come.
The painful but simple closing thought is this…when you add it all up, the next crash will cause a loss of somewhere between 60% and 85% of all $Dollar-denominated equities (stocks), and will inflict a withering devaluation (haircut) upon US Federal bonds of somewhere between 40% and 70%. US State and Municipal bonds may only be worth a few cents on the dollar (85-99.9% devaluation), as they are “collateralized” by infrastructure which cannot be repossessed and produces no revenue. Jobs will evaporate, and banks will close. What you will have to rely on will be what you have put aside in anticipation of this event, and the people you can trust. All else will be as gossamer foam in a rushing gale…
Regards,
LT
Although you state one of the problems at the root of the upcoming economic collapse, until people understand what your article means, the economic policy of the United States will continue. Operation Twist is coming to a close and discussion of QE 3 is on the table. What other choice do they have? As in Atlas Shrugged, new programs, propaganda and corrupt/incompetent leaders brought down the country. But what really brought down the country was an apathetic and uneducated (economically) people.
If a reader does not understand this article’s warning, do more research on the M2 money supply, the funding of the ECB by the Federal Reserve and Austrian economics.