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How To Hide A Hyperinflation - Part 1 by Jeff Nielson

How To Hide A Hyperinflation - Part 1 by Jeff Nielson
By Jeff Nielson 2 years ago 12631 Views 26 comments

In previous commentaries; readers have read firm conclusions that the U.S. government (via the Federal Reserve) has already hyperinflated its currency – past tense. Yet what do we actually see as we look around us? We see this obviously/blatantly worthless currency with its exchange rate versus other currencies propped-up at a particularly absurd extreme. Where is the “hyperinflation”?

Regular readers can automatically answer that question. We see the hyperinflation in the chart below: the exponential increase in the U.S. monetary base (i.e. its supply of money). Both the shape of the curve and the quantum of the total increase shriek “hyperinflation”.

“Inflation” is an increase in the supply of money. This is the universally accepted economic definition for this term. What most people think of as “inflation”, the serial increase in the price of goods, is merely the inevitable consequence of inflation – inflating the money-supply.

If “inflation” is an increase in the supply of money, and the U.S. supply of money has increased literally at a hyperbolic rate, then by economic/mathematical definition, the chart above represents hyperinflation. Case closed.

Or is it? Where is the massive price-inflation, which readers have just been told is an “inevitable consequence” of this hyperinflation? Part of the answer is that this hyperinflation has been hidden, and thus the price-hyperinflation has been delayed. The other part of the answer is that, historically, actual “hyperinflation”, meaning a currency officially plunging-to-zero, is “a confidence event.”

What this means, is that history tells us there is always a lag between the time a currency has been hyperinflated (as we see above), and it actually loses all official value as a medium of exchange. The length of that lag represents the amount of time which the Chumps using this worthless currency can be deceived into believing that it is not worthless.

With respect to the U.S. dollar, which as shown above is now worthless-by-definition, this deceit is the culmination of a multi-decade program of fraud and manipulation, along with the saturation propaganda from the Corporate media that the U.S. dollar is a “strong” currency. Tell a Chump, every day of his life, that the U.S. dollar is “better” than the other (worthless) currencies, and it will take a long time for such a Chump to see/understand the Truth.

Now for specifics. What’s the first and most-obvious way to create the illusion that a worthless currency is a “strong currency”? Manipulate the exchange rate higher, through brute-force, criminal manipulation of foreign exchange markets. U.S. and European Big Banks have now been convicted of serially manipulating the USD (higher), going back to at least 2007.

The mystery here is not that the Big Banks (and primarily U.S. Big Banks) have been caught serially manipulating the dollar for at least the better part of a decade. The chart above proves that a crime of this nature must have been taking place. The “mystery” is that with these banksters engaging in this serial crime, in a market which trades in the trillions of dollars per day, how could it possibly have taken eight years for U.S. and European prosecutors to “notice” this ongoing misconduct?

The answer is that it couldn’t take that long. Rather, what this represents is that after these Big Banks had been serially manipulating this market for 8 years, it was no longer possible to cover up such massive, systemic crime. Indeed, currency manipulation has been one of the Big Bank’s favourite forms of economic terrorism while this “investigation/prosecution” of Big Bank currency-rigging was taking place.

First it was the Indian rupee which was attacked via market manipulation, and had its exchange rate taken to “record lows”. Then it was the Russian ruble. And these are only the major currencies which have borne the brunt of recent economic-terrorism-via-currency-manipulation. For another example; just have a look at Venezuela’s currency, another obvious target of U.S./Big Bank terrorism.

But currency manipulation is only one of the ways in which the Big Bank crime syndicate, Federal Reserve, and U.S. government hide U.S. hyperinflation, and thus the fundamental worthlessness of the U.S. dollar. The second plank in this campaign of crime is to fake “demand” for U.S. dollars.

The primary vehicle for this branch of crime is the massive, serial fraud which takes place in the U.S. Treasuries market. For readers not familiar with the fundamentals of the bond market, here is a brief overview.

The “price” of a bond is directly/inversely proportional to the interest rate on that bond. As the interest rate rises, the price declines, and vice versa. The interest rate on bonds which trade in global markets (such as U.S. Treasuries) is supposed to be a direct function of the “risk” associated with that debt.

Specifically, the greater the risk of default, the higher the rate of interest which is supposed to be demanded on that bond, by the lenders in the marketplace who finance that debt. Officially, the U.S. government is the most-indebted nation on the planet, with a “national debt” of roughly $18.5 trillion.

The U.S. pretends to have a total national GDP of $16.75 trillion, though several of those “trillions” are nothing but smoke-and-mirrors, economic fudging. Yet even officially, the U.S. is already well past the 100% debt-to-GDP level which signifies a “debt crisis” (and massive interest rates on its bonds). But the real story in this endemic fraud is the U.S.’s “unofficial” debts/liabilities.

As calculated by a former economic advisor in the Reagan administration (and now university professor); U.S. debts-and-liabilities exceed $200 trillion – not (a mere) $18.5 trillion. The greater than 1000% difference between these two numbers is based on massive accounting-fraud by the U.S. government, whereby it (officially) has converted $trillions of its debts into “liabilities”.

It is precisely to prevent accounting-fraud of this nature that all U.S. (and Western) corporations are required by law to report their debts-and-liabilities as a single number, via the “GAAP” accounting principles which are a universal standard in the world of accounting, except for our governments. By those universal standards, the U.S. is not merely insolvent, not merely bankrupt, but absurdly bankrupt.

It has only been able to ward-off a formal declaration of bankruptcy (already) via systemic accounting fraud, which would have resulted in criminal convictions if the same fraud had been perpetrated by a corporation. The accounting-fraud of the U.S. government makes “Enron” look squeaky-clean, by comparison.<

U.S. Treasuries are worthless, the massive debts of a completely/ridiculously bankrupt entity. This directly and necessarily implies that the interest rates on these fraud-bonds should be near infinity. Instead, we saw U.S. Treasuries recently trade at a “negative” rate of interest.

What we are supposed to believe is that some “lender” paid the U.S. government for the privilege of loaning money to the most-bankrupt entity in the history of nations, and this does not even account for the (supposed) lender’s future losses, as “inflation” further erodes the value of the bond. The only thing greater than this fraud, itself, is the insanity which the Corporate media, bankers, and U.S. government are attempting to peddle to us here.

How is this fraud perpetrated/financed? More fraud, of course. There are no “buyers” for U.S. debt, in such multi-trillion dollar quantities. Of all the potential buyers on the planet (primarily sovereign governments), most have no available funds to purchase these fraud-bonds, even if they weren’t worthless.

Of those few, remaining nations which have actual “surplus” funds to finance such purchases (like China), most have already voluntarily ceased any/all Treasuries buying. Indeed, at the same time we have seen the ultimate fraud of “negative” interest on U.S. Treasuries, the largest holder of these fraud-bonds, China, has been dumping Treasuries, in the hundreds of $billions.

Is there any way that the price for U.S. Treasuries could rise (and the interest rate fall) while the largest, foreign holder of those Treasuries, was dumping these fraud-bonds, in unprecedented quantities? Of course not. In any quasi-legitimate market; this would have caused Treasuries prices to plummet, and the interest rate to spike – even if these fraud-bonds were not already, obviously worthless.

How does the US government or the Federal Reserve prevent the US treasuries market from actually functioning like a "market"? It's actually mind-numbingly simple. The Federal Reserve counterfeits US dollars by the trillions and uses this illegal currency to buy up the entire supply of treasuries.

Then comes the money-laundering, where the U.S. government foists these worthless bonds onto the “books” of its lackey accomplices: governments like Belgium and Japan. Supposedly (i.e. officially), the government of Belgium was devoting its entire, national GDP over a span of several months buying these (worthless) U.S. bonds. For those readers who find this “reality” implausible, there is only one, other, possible explanation: institutional money-laundering, on such a massive, systemic scale that it requires the participation of sovereign governments.

Will Smith 2 years ago at 9:41 AM
Was repeating the last paragraph meant for emphasis?
Helene Julien 2 years ago at 3:40 PM
That was my bad. Thanks for pointing that out!

Have a great weekend.
stevesmitty79 2 years ago at 10:28 AM
All I can tell you is parlay whatever dollars you have into tangible, usable, tradable assets before reality catches up with the money supply.
Vincent Cate 2 years ago at 1:14 PM
It is fine to define inflation as "increase in the money supply" but you must do hyperinflation in terms of price level because the velocity of money is very important in the starting of hyperinflation. A key part of what happens is that when prices start to move they can go up really fast even if the quantity of money is only going up slowly. There are lots of ways to explain hyperinflation, I have more than 30 at the link below. Let me try one here. When a central bank buys bonds the bonds become part of the backing for the currency they issue. They can later sell their reserve assets to withdraw currency and support the value of it. But using bonds in the same currency as reserves is dangerous as it is really backing the currency with the future value of the same currency. When this starts to go bad it can go bad quickly. The currency drops, which makes the bonds drop even more, as people project forward the drop in the currency for the period of the bond. However, since the bonds are also the backing for the currency, the currency drops more, etc. You get a death spiral.

Jeff Nielson 2 years ago at 10:15 AM
Vincent, I understand your point. However, you're assuming a particular progression in what is an irrational, unstable, and unpredictable process. It CAN be clearly spelled-out that the U.S. dollar has been hyperinflated (past tense). What cannot be articulated with equal precision is the precise mode of death for this paper.
Vincent Cate 2 years ago at 2:46 PM
The Reserve Bank of New Zealand increased the monetary base from $3b in autumn 2004 to $12.8b in December 2006. Inflation in NZ never rose above 5% or so in the ensuing 5 year period.

They issued new NZ dollars in exchange for some foreign currency. Then later they traded the foreign currency back to withdraw the NZ dollars. So even though the currency went up by a factor of 4 it was later withdrawn and nothing like hyperinflation ever happened because of this.

The quantity theory of money is not really true because the velocity of money does matter. The backing theory of money seems to always work. But backing your currency with bonds representing the future value of your currency is just asking for trouble.

Balance sheet data: http://www.rbnz.govt.nz/statistics/tables/r2/
Inflation data: http://www.rbnz.govt.nz/statistics/key_graphs/inflation/
Jeff Nielson 2 years ago at 7:08 PM
Vincent, the problem is that we're comparing "apples" and "oranges" here. Was the New Zealand banking sector LEVERAGED by close to 50:1 -- like the U.S. banking system? I greatly doubt it. That is the REAL "base monetary": fractional-reserve banking revealed in all of its fraudulent glory.

Then, on top of that, there was never the slightest intention by the Fed (or the corrupt ECB, corrupt Bank of Canada, or corrupt Bank of England) to withdraw any of the new funny-money they injected into the economy.

Yes, "velocity of money" is also a relevant factor. It's because there is basically ZERO velocity of money in the U.S. Ponzi system that it hasn't already imploded via hyperinflation. But because there is no resemblance between Western fraud-currencies and any legitimate monetary system, comparisons are problematic.
Vincent Cate 2 years ago at 12:39 PM
The Fed used to talk about an "exit strategy" but it is hard to know if they really ever intended to. It does seem like people like Peter Schiff were right though that they won't ever withdraw it.
Vince Cate 2 years ago at 7:29 AM
"What would we think if we saw a boy with a new bicycle, but four years later the boy is still riding around with the training wheels on his bike?"

Love it!
Dwain Dibley 2 years ago at 3:38 PM
According to that Fed chart, the U.S. bankster system is still $6.8-Trillion in the hole. They don't have the money to cover the customer deposits, which are credited and which, translates into bankster debt that they cannot pay. You must keep in mind that, with very few exceptions, all of commerce is conducted in credit/debt, not legal tender money. This means that when this fraud finally implodes, all that trillions in credit is going to !POOF! out of existence, leaving nothing behind but the massive debts, with only $1.39-Trillion in legal tender cash to service them with...... Something to consider...
Jeff Nielson 2 years ago at 10:17 AM
Don't worry, Dwain.

I'm VERY aware of how our "capitalist" system has been perverted into a system of pure debt/credit:

MIKE 2 years ago at 6:24 PM


Justin S 2 years ago at 10:28 PM
You better cover those S&P shorts now....every year that ends in 5 since the stock market opened (2015) has been an up year from the January 1st market open. Just sayin....
BGlett 2 years ago at 8:45 PM
Great article. Meanwhile, productive capital is neglected because financial debt churning and spending activity becomes more and more the national "product", while even more debt is issued in order for the financial/academic/entertainment/government nonproducers to be able to buy the real goods they need to survive. These were previously paid for via domestic trade in goods produced by hard capital and productive labor, with money only being an intermediary store of value. Add the lack of capital in to the financial denouement described in the article, and you will see just how deep our abyss-to-come is.
Jeff Nielson 2 years ago at 12:53 PM
BGlett, I wouldn't personally describe the problem in our economies as "a lack of capital". Rather (as you also observed) this capital is exclusively fed into our economies as DEBT.

All new "capital" (i.e. the money-printing) is handed to the Big Banks, for free. But they don't invest that capital into our economies. They LEND it into the economy, encumbering all this capital with compounding debt. Debt slavery.

john doe 2 years ago at 11:48 PM
The term hyperinflation is misleading as if it's some sort of
inflation, rather than something totally different.

Inflation is an increase in the tokens used as money, while hyperinflation is a repudation of the tokens so that they no longer are money.

Repudation doesn't take an increase in the number of tokens -- just a change of mind on their value.
Jeff Nielson 2 years ago at 12:56 PM
John, people can (and do) words in different contexts. I provided the correct, economic definition of "inflation". I provided a chart which showed a HYPERBOLIC inflation. There is no other, possible term to describe what is depicted in that chart other than "hyperinflation".

That is a fundamental definition of that term. You're using that word in an empirical context. Some words in the English language have (literally) dozens of different definitions, in different forms/contexts.

Just because you have produced a different definition does not mean there was anything incorrect about the definition I produced.
Vincent Cate 2 years ago at 2:37 PM
It can take years of hyperinflation to get to repudiation. Prices go up really fast but the money is still worth something. Only after the hyperinflation is over do people really reject the currency. Hyperinfaltion is the process or transition period of of from normal money to rejected money. Normal money is both a medium of exchange and a good store of value. During the time of hyperinflation the money is still a medium of exchange but it is not a good store of value. It is sort of half dead, but not all the way dead. After nobody will take it, then it is all the way dead.

Vincent Cate 2 years ago at 2:55 PM
Hyperinflation is different enough from normal inflation to warrant a different name. It is really inflation with a run-away feedback loop, which normal inflation does not have. This is an important difference and worth a few minutes to understand.

Jeff Nielson 2 years ago at 7:13 PM
Now we're starting to get into semantics, in part because there is no hard-and-fast definition of "hyperinflation". Yes, the crash-to-zero process can (and does) unfold much differently from economy to economy.

The only "universal" here is what I indicated in the commentary: these currencies always become fundamentally worthless well before their official exchange rate begins the hyperinflation Death Spiral. After that, it becomes a matter of how successful is the "con"? How successfully can the government issuing this fraud-currency hide the fact that it is now fundamentally worthless?

It is because of the extreme control (and corruption) exhibited by the Western banking crime syndicate that their currencies haven't already made their final plunge-to-zero. In even a quasi-transparent/quasi-legitimate monetary system; it would already be GAME OVER for this paper.
Dwain Dibley 2 years ago at 12:50 PM
So, with credit constituting about 98% of the global "token supply", what "tokens" are you left with when the primary "tokens" !POOF! out of existence with their repudiation? Can't have a hyperinflation with no fuking medium....
American Patriot 2 years ago at 3:11 PM
Increasing the number of tokens without likewise increasing the number of goods is inflation, and and when it becomes well known by the masses that it is possible to increase the number of tokens infinitely, repudiation sets in. LVM has a very good example of the process from inflation through high inflation and into hyperinflation in his book the Theory of Money and Credit, using a typical "housewife".
American Patriot 2 years ago at 3:26 PM
I might argue, based on the Federal Reserve chart, that the increase from January 1913 (~0) till approximately 2010 (~.8T) is inflation, and that the exponential increase since about 2010 to the last point, about 3.2T, is only as yet "HIGH" inflation. Repudiation has not yet set in. We might expect the recent increase when the exponential function changed (2010) to eventually yield about 3.2/.8=4*100=400% price inflation given the monetary inflation from about 2010 till now, barring effects of repudiation and substantial change in the aggregate quantity of goods available. As Vincent suggests, there are indeed many possible routs for the death of a currency to take. All ultimately culminate in near total repudiation irregardless of the number of units then in existence.
Jeff Nielson 2 years ago at 7:17 PM
American Patriot, I have no disagreement with your observation here except one: you're analyzing our current system as if it was/is a LEGITIMATE system. There is ZERO legitimacy; 100% fraud.

The chart above IS conclusive: hyperbolic inflation of the U.S. money-supply -- i.e. hyperinflation. The U.S. dollar is fundamentally worthless. We're simply waiting for the smoke-and-mirrors deceit to fail, and for the final death-spiral to begin.

Note that the U.S. dollar is fundamentally worthless based upon NUMEROUS metrics. Here's some other angles of worthlessness to chew on...


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