Jim,

As you have said countless times, this is it and it is NOW!

Replace Dates Country and Dollars with Now, the USA and Alf’s numbers!

CIGA "The Gordon"

Dear Gordon,

Now there is an example of a currency event causing hyperinflation. Note when it happens, it explodes.

Regards,
Jim

Jim,

In determining the path to hyperinflation I come to a stopping point at the wage-price spiral. If the past few months have shown us anything, it’s that the average working-class American lacks the backbone to make a stand again corporate fascism. Hyperinflation requires wage increases so the consumer can still afford goods. In Weimar Germany, the labor unions were apparently quite powerful, which facilitated the process. In the present-day US, other than UAW and a couple of others, the labor class is nearly powerless in the economic process. There is a shortage of good jobs in the real economy and thus workers will be beggars and they will have little bargaining power.

In your model how will higher commodity prices and a Treasury bond selloff translate into higher wages in this economy under such conditions to initiate a wage-price spiral when the workers have such little power these days?

All the best,
CIGA Subir

Dear Subir,

Let us assume the US dollar goes into a free fall whereby groceries are rising in price by 20% per week. Nobody is going to work five days for what will only buy them a half day’s worth of food.

Your thoughts are driven by the assumption that hyperinflation is a demand pull or cost (wage push) type of inflation when it is not.

Hyperinflation has always been and will always be a product of prices escalating as a result of a currency falling in value rapidly.

Currency Hedge Funds internationally utilizing enormous leverage as short sellers will bring hyperinflation to the USA, not unions.

October/November of 2009 will give the US its first taste of hyperinflation since the collapse of the Confederate Dollar hit the South or from the collapse of the US Continental for the Colonial hinterland citizens still holding them.

Respectfully yours,
Jim

Dear Jim,

As your views on the economy, gold, Pakistan and just about everything else have been stellar, I have a lot of respect for your opinions.

If you would, can you please elaborate on ‘Israel’s Miscalculation", and if possible opine on the better alternative??

Thank you,
CIGA Ed

CIGA Ed,

A lot of Iran’s words are right now a bluff, but Israel cannot take the chance that it is either a bluff or will not eventually be true.

The potential for Israel, now unilaterally, to act in the extreme is high.

You do not practice full out unless you anticipate a need for it soon.

To demand, under penalty of law that every citizen seek a bomb shelter in practice is quite out of the ordinary.

Let’s pray Pakistan is not in Taliban hands at that time. The surge in Pakistan is much to do about nothing in terms of sustainability, the key element in containing the Taliban.

Jim