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Page added on February 18, 2014
Expert Warns of Hyperinflation: “The American Way Of Life Will Be Destroyed”
If there’s one thing that’s certain about what’s happening in the world right now it’s that uncertainty is pervading every aspect of the global economy. From fabricated employment statistics and consumer spending reports to obscene levels of debt and a failing domestic monetary policy, the writing is on the wall.
According to top Casey Research analyst Marin Katusa, who has met with energy ministers and business leaders in over 100 countries, it’s only a matter of time before the world’s reserve currency goes the way of the German Reichsmark and Zimbabwe Dollar.
What we’re talking about here is nothing short of an outright collapse of our banking system, hyperinflation of the US dollar, and a complete destruction of the world as we have come to know it.
This is a must-watch for those trying to understand what’s happening with the economic landscape, how to position yourself for an unprecedented paradigm shift in how Americans live their lives, what to expect as this crisis unfolds, and how to find opportunities when everyone else is in panic mode.
If the petro-dollar ends, the American way of life will be something that will be destroyed.
The inflation will be over 100% because Americans are getting their lifestyle subsidized by the rest of the world.
This is a very complicated issue… but to be summed up quickly, the world has already started trading commodities and oil, not in the petro-dollar.
And if the petro-dollar finally does die, the American way of life is gone.
(Full interview and transcript via Future Money Trends)
When that happens – when the rest of the world finally turns its back on the United States – you’d better be positioned in the right assets… tangible assets.
Failure to do so will leave you exposed to a financial collapse unlike anything we’ve ever seen in America.
You want to invest in gold… and that’s why you really want to invest in tangible assets… because the bank system will crash.
And I’m not trying to be a doom and gloom guy, this is just factual.
You want to invest in silver, and gold, and companies that produce what the rest of the world wants, which is gold and silver.
It should be clear that China, Russia, oil-producing nations and emerging markets are positioning themselves for exactly what Marin Katusa describes. They have already established unilateral agreements to replace their petro-dollar transactions with either their own currencies or gold. When the timing is right, they’ll pull the plug, at which point all hell will break loose.
The only assets that will survive the destruction will be physical goods such as those commodities essential to survival – food, energy, water, etc.
On the monetary front, when the dollar becomes worthless, confidence in the system itself will be lost on a global scale. We saw similar effects in 2008, when banks refused to lend to businesses, individuals and even themselves for fear of counter party risk. This will leave only one viable mechanism of exchange that will be trusted by trading partners. If you happen to own some, then while everyone else is trying to figure out how to acquire food or pay for other needs, you’ll be thriving.
Insiders and the well informed like Doug Casey, Rick Rule, and Eric Sprott who want to protect and preserve their wealth are already diversifying out dollar-denominated assets. Foreign governments are doing the same, to the tune of billions of dollars being used to buy up assets in the gold production and mining sector (something sovereign wealth funds also did back in late 2008 at the height of the crisis):
The money now is showing up. For example, Rick [Rule] went and got Korean money, and then also Chinese Money. That’s a billion and a half dollars that is coming in to this sector. K.K.R, a major fund, has now put up a billion and a half dollars to set up shop in Calgary for the junior resource sector. You see a lot of funds now, starting to say, “hey, we are getting back in to the junior resource sector because it is so cheap.”
…
If you go to the BRI website, they talk about all of the big shareholders. You have Tocqueville, Sprott, Sun Valley, KCR…
There’s a reason that well known investment firms run by contrarians like Sprott and Casey are buying gold. Because they know what is coming down the pike.
Yellen is going to continue where Bernanke left off, with the troubles. And the reality is, this is going to make a stronger bull market for gold and silver, and it’s going to be even a better market for the junior resource sector.
If gold and silver are heading to new highs it’s because something has gone terribly wrong in our economy and financial markets.
That being said, if gold is rising and the dollar is collapsing then in all likelihood we’ll see stratospheric price increases in everything from food to fuel, so preparing a contingency plan for this scenario is absolutely critical.
The scenario described here, as noted by Marin Katusa, is not just doom and gloom. It’s fact. The system as we know it is under pressure from all sides. When it implodes you’d better be ready.
30 Comments on "Expert Warns of Hyperinflation: “The American Way Of Life Will Be Destroyed”"
Davy, Hermann, MO on Tue, 18th Feb 2014 2:01 pm
It should be clear that China, Russia, oil-producing nations and emerging markets are positioning themselves for exactly what Marin Katusa describes. They have already established unilateral agreements to replace their petro-dollar transactions with either their own currencies or gold. When the timing is right, they’ll pull the plug, at which point all hell will break loose.
Well, wishful thinking that the rest of the world is positioning. They are digging the same hole in many cases worse. China is a fine example of a semi-free market economy succumbing to the same failures of the failed capitalistic system. Gold, an alternative world currency, new petro $ are all wishful thinking. There is no way for these various entities that can barely agree now will organize such an undertaking. All the other major currencies have their problems. The US is a critical node in the global economy. If it goes like mentioned so does the world. It is naïve to think the rest of the world can decouple. Gold will be good locally but it has zero chance as a global world currency because if it gets to that point there will not be a global world economy to be used in. I by all means think own gold, silver, physical assets, and a whole buffet of other items. I just think this guy needs to move up a level and see the real systematic risk and results that come with a major change to a complex interconnect global social/economic/political system. These are all organs of a body. You do not live without a major organ unless you are on dialysis, heart pump, or respirator.
shortonoil on Tue, 18th Feb 2014 2:35 pm
If you don’t fully understand the connection between Central Bank printing, and World Petroleum Depletion you are playing the part of a deer standing in the headlights!
http://www.thehillsgroup.org
nemteck on Tue, 18th Feb 2014 3:32 pm
The language structure of this article,information flow, and repetitions suggests a writer not used to write. It is high school level.
All the gold in the world is not enough to support world trade. So, IOUs, that is paper money, have to fill the gap.
Northwest Resident on Tue, 18th Feb 2014 3:32 pm
Looks like another gold and silver advertisement from SHTF dot com. Visit the site for a few days in a row and I think you’ll notice that they are always pumping gold and silver as your only financial salvation — and they conveniently have links to places where you can buy gold and silver online. And of course, if you buy, then SHTF dot come gets their little cut too. Not to say that the world isn’t falling apart exactly as the article states. I would have more respect for them if they didn’t turn every “bad news” article into a sales promo for gold and silver — stuff which probably isn’t going to help you much if at all in a collapse scenario.
Northwest Resident on Tue, 18th Feb 2014 3:54 pm
Actually, this article is so bad it deserves to be bitch-slapped repeatedly.
“It should be clear that China, Russia, oil-producing nations and emerging markets are positioning themselves for exactly what Marin Katusa describes.”
Total BS. Here’s some interesting info on China which is more factual, and leaves one wondering how China is going to save itself, much less “position themselves” for taking financial control of the world from America:
“Here’s where the addiction shows: According to the BBCs Robert Peston, “China has built a new skyscraper every five days, more than 30 airports, metros in 25 cities, the three longest bridges in the world, more than 6,000 miles of high speed railway lines, 26,000 miles of motorway, and both commercial and residential property developments on a mind-boggling scale”. All in just the past five years.
While debt rose at a very rapid clip of 15% of GDP every year(!), to go from 125% to 200% of GDP in those same five years. Peston is ever so right when he says: “when a big economy is investing at that pace to generate wealth and jobs, it is a racing certainty that much of it will never generate an economic return“. Like the west, China has tried to buy growth, and borrowed to pay for it. In doing so, it went way beyond what Bernanke and Draghi would have even dared to dream of, ignored all economies of scale and ran headfirst into a giant diminishing returns sinkhole.
Analyst Charlene Chu: “In 2008, the Chinese banking sector was roughly $10 trillion in size. Right now it’s in the order of $24 to $25 trillion. That incremental increase of $14 to $15 trillion is the equivalent of the entire size of the US commercial banking sector, which took more than a century to build.
China will have replicated the entire US system in the span of half a decade.”
And a LOT more from “How China Fooled The World (Robert Peston-BBC)”
http://www.bbc.co.uk/news/business-26225205
Davy, Hermann, MO on Tue, 18th Feb 2014 4:00 pm
@N/R – I am glad someone else is here to break the china bubble that some people here have. I am wondering who is going to screw who 1st. The US or China or china/us screws the world. This is high stakes poker. When these bubbles burst it will be everyone that gets screwed I imagine!
Northwest Resident on Tue, 18th Feb 2014 4:14 pm
Right on, Davy. Like you have pointed out in a number of your posts, China is in as bad or worse shape than America in terms of financial “strength”. Anybody who reads that bbc article I posted and still thinks that China is cleverly out-maneuvering America to take over as top dog is just not very good at assimilating facts into a big picture. Truth is, China is TOAST. But so is America and the rest of the world — we’re all in this leaky boat together. And one hell of a big wave is heading our way …
shortonoil on Tue, 18th Feb 2014 5:01 pm
The Chinese Central Bank has printed more than two and one-half times the amount of money as the FED and BOJ combined. That has allowed the construction of 26,000 miles of highways, and 5 skyscrapers every week (with a few airports throw in for good measure). That has turned China into a huge energy black hole. Construction of that scale consumes vast amounts of energy; energy that China didn’t, doesn’t, nor will she have. China has driven herself into a state of energy poverty that she can not escape from. It doesn’t take much imagination to figure out who she’s likely to blame this problem on.
Northwest Resident on Tue, 18th Feb 2014 5:15 pm
shortonoil — True. And yet we read that the Chinese elite are bailing out of China as fast as they can, buying up residential and commercial real estate all over the world — and moving there along with their families and assorted entourages. If you ask me, the top-level Chinese people realize that their country is one big puff of air away from disintegrating, and they’re getting out while the getting is good.
I often wonder if about 20 years or so ago, TBTB and assorted financial elite saw the black smoke of peak oil creeping over the far distant horizon, predicted the financial contraction that was coming on fast, and decided to have one big fat glorious BAU “going away” party in China before closing out this version of civilization. You know, everybody gets to rack up billion$, buy whole islands, hire private armies, buy mountains of gold and silver and assorted supplies — get prepared. They may or may not have planned it that far in advance, but they certainly have “partied” in China, now it is all about to end and nothing to look forward to but a long, nasty hangover.
Davy, Hermann, MO on Tue, 18th Feb 2014 5:38 pm
@N/R – we read that the Chinese elite are bailing out of China as fast as they can, buying up residential and commercial real estate all over the world — and moving there along with their families and assorted entourage.
People’s actions speak louder than words. The capital flight is prenominal out of China. It is being done in the shadows also. China is a quasi-free market and society. Capital flight is regulated but the system is so corrupt and porous. There is so much money as N/R described above that regulation are pointless. The flight is at the very top of the party also. There has been some high level corruption cases in China. I am sure the capital flight is for a variety of reasons but you can bet the Chinese rich are going to hedge their fortunes. China is a murky place for business. If we think our numbers are suspect China’s make the US numbers look like a Mormon banker’s balance sheet.
bobinget on Tue, 18th Feb 2014 5:43 pm
A few questions;
What if a person HAS no wealth to protect?
If the so called ‘petrodollar’ collapses how will gold be priced?
Does it matter if gold goes to $5,000 per ounce if cash is worthless?
Do you know where the diesel fuel that grew your carrots or chicken or soybeans or breadsticks hails from?
Ever live a day without gold? Oil? Which one was more manageable?
tahoe1780 on Tue, 18th Feb 2014 5:58 pm
http://www.zerohedge.com/news/2014-02-18/china-sells-second-largest-amount-us-treasurys-december-and-guess-who-comes-rescue
We don’t need no stinkin’ dollars…
Davy, Hermann, MO on Tue, 18th Feb 2014 6:30 pm
@bobinget – your real wealth is your mind and soul so try to protect that 1st! I do not price my gold it is value on its own or more like insurance. I buy 1/10 oz eagles. Small eagles will trade well for food, fuel, and goods. If cash is worthless there will be no BAU economy it will be local. I don’t think gold will fluctuate beyond a certain point like oil. Unless that is we are near or in a collapse. Gold values are in relation to other assets in our BAU economy so they can only fluctuate so far. In the local economy it is hard to say how the gold price will shake out if there is a collapse. I imagine gold will be based upon the relative value of say food or fuel.
@Tahoe – I take it you are not American. Anyway did you fully read the article or skim it? Understand also this author is caught in the trap of down dollars up China meme but we know how China really is. Japan is worse yet than China!
How about this part:
That’s right: at a time when America’s two largest foreign creditors, China and Japan, went on a buyers strike, the entity that came to the US rescue was Belgium, which as most know is simply another name for… Europe: the continent that has just a modest amount of its own excess debt to worry about. One wonders what favors were (and are) being exchanged behind the scenes in order to preserve the semblance that “all is well”?
The point is all these central banks are playing high stakes poker. They are working together but also positioning against each other. Yet, they all need each other because one banks debts are another banks assets. It is more complicated than that because all global banks are tied together in cross holdings. Debt and collateral has been rehypothecated so many times that who knows whose collateral it really is. We have a global shadow banking system with a phenomenal amount of cds’s outstanding. We saw what happened to AIG and other overseas financial institutions. The Chinese market is a microcosm of this global arrangement being a semi-open financial system. So, China is even more tied up from the inside out. We are talking a tangled ball of yarn that will never be unwound!
PapaSmurf on Tue, 18th Feb 2014 7:01 pm
This clown is borderline illiterate. Articles like this are what gives Peak Oil a bad rep.
noobtube on Tue, 18th Feb 2014 7:23 pm
Currencies come and currencies have gone.
And yet, life and trade continued.
Plenty of reserve currencies have failed in the past and yet, the whole world didn’t end (Dutch, Spanish, English, French, Chinese, Roman, etc.).
Of course, the old currency meant the end of the country with it as a dominant force.
Why do Americans act like the whole world is going to suddenly end just because they can no longer leech off the world with their worthless dollars?
Life will continue as it has plenty of times before. It’s just that the United States will suffer big time.
And, some will ask, after the fall, where is your American exceptionalism now?
DC on Tue, 18th Feb 2014 8:39 pm
Amerika is going to find itself in the worst of both worlds in the near future, a worthless (former)petro-dollar hegemon AND gold-less. I am of the suspicion that the US corporate banking cartel has far less, if any of actual gold reserves. The recent incident where the Germans were told it would take 7 years to get *their* own gold back served to raise a lot of eyebrows.Even the official representatives of Germany were only allowed, and only reluctantly at that, into the very first chamber(where they really couldn’t see much of anything) Everyone was asking when the last time amerikans supposed gold stocks were actually physically audited by a 3rd party. Turns out-hardly anyone can remember the last time.
Amerika can continue to exist as viable empire as long as it petro-dollar remains intact. It could, in theory, survive the revelation that amerika has no, or little actual gold reserves. What it cant, or wont do, is survive the loss of both. Does anyone even know where ‘the’ gold actually is anymore?
The idea that gold is worthless and oil and food are, is a strange one. Why is it so hard to wrap ones head around that both will be equally valuable? Economies have come and gone-currencies with them. Gold has never dropped to ‘worthless’ ever, not once, no matter what was happening in the ‘official’ economy. Did gold suddenly become worthless in Weimar Germany, or the Great Depression, when hunger and homelessness were off the charts? No it didn’t, and it wont even if our highly abstracted hyper-complex corporate controlled ‘economy’ goes to pot. Its great if you can grow you own food and have access to water, thats great. Just make sure you have a little gold about….
shortonoil on Tue, 18th Feb 2014 11:27 pm
In 1932, during the height of the Great Depression, a 640 acre ranch was sold in Texas for 1 OZ. of gold. In 1933 a forty room Hotel was sold in San Francisco for 1 OZ. of gold. The end of BAU will not be about $5000 gold or $400/b oil. It will be about the price of oil in your own back yard. When the price of oil in Houston just no longer matters, not even one little bit —- BAU will be gone!
GregT on Tue, 18th Feb 2014 11:50 pm
Gold has been considered a store of value for at least 2600 years. The US dollar has been around for about 220 years, of which 180 it was backed by gold. The US dollar went off of a gold standard in 1971, when gold was pegged at $42.22 per troy ounce. In the 42 years since the US dollar was taken off of the gold standard, gold has risen against the dollar by 3125%.
2600 years vs 42 years, hmmm.
If the US dollar does go into an inflationary spiral like all fiat currencies eventually have, gold will rise in price accordingly. When the dollar is worth nothing more than the paper that it is printed on, or the mountains of debt that it represents, gold will still be gold. The 32,000 tonnes held by the world’s central banks, and the 140,000 tonnes of physical gold in the hands of the people, say that gold is still a store of value.
Davy, Hermann, MO on Wed, 19th Feb 2014 1:31 am
@noobtube – the dollar is now a global reserve currency in a complex interconnect global economic system. You cannot compare other historic reserve currencies in past to the dollar today. The function of the dollar has change with all the new financial products that are now a part of the world economy. You are mistaken if you think BAU status quo will continue normally without the dollar! The same is true with the other major currencies. With the interconnected nature of the financial world you just don’t phase out currencies. Another point, hyperinflation will affect all currencies and financial products denominated by fiat currencies. They will fall together with loss of confidence. This is why what is happening is so dangerous in US, China, Japan, and Europe. It is one big carry trade of currencies with central bank motorization. It is a prescription for a fall of the economic system we are all in together!
@DC – while I agree the Bullion Banks have leased out, sold, and rehypothecated their gold I do not believe the US government has done the same with its reserves. There is no mandate for gold sales. Gold production and sales are watched closely. At no point have we seen a large US gold reserve movement. The FED may have done the same as the bullion banks with their reserves but not to the same extent. I agree on the enduring value of gold but we have never had a complex global world collapse like may be coming. We don’t yet know how gold place in a collapse will be. You can forget a gold backed currency. The details are difficult and in the current geopolitical climate unlikely. Sure great idea to have gold but your gold will run out pretty quick if you have not made other preparations.
GregT on Wed, 19th Feb 2014 1:57 am
davy,
I don’t see the current geopolitical climate surviving for all that much longer, I see globalization receding, with a return to localization. I do agree though that gold is not the answer, at least not in the interim. People don’t generally trade for trinkets in a survival situation, unless they own all of the goods needed for survival.
Gold might be recognized as a means for trade after a reset though. Something will be needed, and if the dollar does go, somehow I don’t think people will have much confidence in another fiat based monetary system for a while. Tally sticks, beans, and seashells probably won’t be very popular either, and it’s kind of difficult to carry a goat around in your pocket.
Davy, Hermann, MO on Wed, 19th Feb 2014 2:07 am
@GregT – yeap, agreed, gold will be a ready-made currency in a reset, if, we are lucky enough to have a reset. There is more than enough physical gold to do the job. In a greatly reduced world economy, no longer global, gold will be the logical currency. All parts of the globe are comfortable with it. There will still be global trade just not globalism. Globalism days are numbered. Someday we will tell our kids how the world was connected in so many fascinating ways.
Makati1 on Wed, 19th Feb 2014 2:19 am
China is pushing for a ‘basket of currencies’ in which the dollar would be one of many. THAT is where they seem to be heading, not to replace dollars with gold.
The IMF is also working in that direction. If that were to be implemented, only the holders of ‘Charmin’ paper we call dollars would be hurt and hurt bad. And, yes, China knows that, but they also see their dollar holding shrinking daily and will get to the point where they are worthless. When there is nothing to lose…
Wars can be financial and we are in one right now. A world financial war. The rush to devalue is on in most trading countries and the US is loosing. The Fed is trying to keep the dollar value up to prevent deflation which would destroy the Western banking system.
When the dust settles, it is the West that will be in the 3rd world and most other countries in little or no worse condition than the situation now. The question is: “Will the US start WW3 as a last gasp attempt to keep power?”
DC on Wed, 19th Feb 2014 2:29 am
So Greg, you are suggesting that a goat-backed currency would be a bhaaad idea 😕
Davy, Hermann, MO on Wed, 19th Feb 2014 2:42 am
@Makati – pretty obvious that a world currency is currently not workable. The Chinese and the Europeans are not ready to be reserve currencies. There is no workable way to make these currencies gold backed either. It requires a dedicated coordination among several nations but before that the Chinese and Europeans must upgrade their currencies. The Chinese are up to their armpits in debt and far worse than the US FED. The financial war is being won by none Makati. We will all be losers and sink together. I don’t see the US wanting a WWIII. We are in a multipolar world now. We are no longer in the same world as just a few years ago geopolitically. The rules of the game have changed along with the economy.
GregT on Wed, 19th Feb 2014 2:43 am
Thanks for the chuckle DC !
DC on Wed, 19th Feb 2014 2:54 am
Would a geat backed economy lead to people grumbling all the time about how we were now living in a nanny-goat state?
I could see it happening you know.
Northwest Resident on Wed, 19th Feb 2014 3:02 am
DC — So you DO have a sense of humor!
DC on Wed, 19th Feb 2014 3:09 am
>:P
Stephen on Wed, 19th Feb 2014 3:55 pm
Makati,
I don’t see a global currency working well either. Just look at the Euro for example, when Greece and Cyprus were in bad financial trouble.
I also don’t see Gold doing much when resources run out and what matters is FOOD. There is no way to turn metal into food, if industrial production has stopped, the same with paper money.
Personally, I think the real future may be a barter or gift economy with a big debt jubilee if the world economy fails. Real cash may be king too. I personally don’t think Hyperinflation will happen, except maybe for food. Things that no longer work or require too much energy to run, will experience Hyper-deflation at the same time. This pricing will likely tear the big banks apart with it. If the US does print more money, it will likely replace some of the dying debt with some real cash, but there won’t be a lot of things that require loans due to the fact that the lifestyle will be completly different with less energy available for transportation.
Davy, Hermann, MO on Wed, 19th Feb 2014 3:58 pm
I read somewhere that hyperinflation is complete loss of confidence so when we get there with any of the major currencies the game may be over for BAU status quo