Hyperinflaion vs High Inflation with Eric Janszen - SilverFuturist

"The US is not on the gold standard, there is nothing stopping the central bank from adding as many zeros as they want"
EJ predicts short periods of deflation in this process. Then they add zeros to grow the money supply.

The amount of zeros they added exceeded even his expectations!

Money is lent into existance either by the govt or by the private sector, or by some combination. When the private sector is not lending (and supply is shrinking from loans being paid off or defaulted) the govt can borrow money into existance. Private sector debt is not expanding, never happened before. Debt deflation in the private sector. Govt has stepped in to compensate.

Stock bubble started this course where govt would have to step in to expand money supply growing.

Ron Paul's role in the political system is to bring up topics for debate that wouldn't normally be there. He represents a hard line view of the Fed. EJ - abolishing the Fed would be immediatly replaced by something worse. Need to change it. Worst solution, govt itself filling this role - politicians would have 1 hand on the spend lever and 1 hand on the print lever. This is why we have central banks. Need a layer inbetween central bank and politicians. Without Ron Paul there is no discussion at all!

Says high inflation in the 70s, not hyperinflation. Hyperinflation is the flip side of a deflation spiral, does not respond to central bank measures.

The recent high inflations - smaller nations without a FIRE sector (finance insurance real estate.) Argentina was a high inflation, not a hyperinflation.

Hyperinflation is a complete wipeout. An economy can function with high inflation for years at a time. A hyperinflation wipes out an entire generation, the wealth is gone. Creates a cultural stigma.

Every hyperinflation has occured from a curency collapse, not from excessive money printing. For hyperinflation:

1. must have ruined economy with no output, therefore no foreign investment. 99% of the time that was because the country lost a war.

2. political isolation - nobody wants to help you or own your currency, so currency collapse. Inflation cycle no choice but to print to keep goods and services flowing.

US economy, even in its worst day, is not going to have zero output. Worst case scenario - 8000 tons of gold reserve are there to save the currency.

Risk of a run on the currency? Open gold window and raise gold price high enuf so that ppl wouldnt redeem dollars.

Money supply becomes dependant on govt stepping in. Becomes less effective each time and becomes more inflationary and less deflationary each time. Eventually US runs out of buyers of treasuries, markets begin to discout the dollar. Policy is to gradualy inflate. Another 40% to go, dollar to 60 by 2015 or so. It doesn't work, we find ourselves at the end of the process. Foreigners will worry we will pay domestic creditors and not foreign creditors. Default process long and drawn out, can last years.

The world's reserve country issuer is not going to overnight have the crisis, has been going on for 10 years already.

EJ gives speaches to for high level military and maintains relationships. Military has been aware for many years about peak cheap oil. Legistalors slower, but in gear.

Took gold position in 2001 as a way of shorting bonds. He would not directly short bonds. If you are tempted to short US bonds, hold gold instead.

History of Interest Rates - massive tome. Interest rates can stay very high and very low for long periods of time, and a generation could assume it is normal when it is not. Once it becomes accepted, interest rates will change. Works like a tide coming in or out. Price of gold will reflect real inflation risk 2013-2015 after next election.

Must listen interview with Eric Janszen:
http://www.financialsense.com/node/8504 

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