Flation And The Surge Of Silver

‘Flation’ is guaranteed in the next few years. We will see in-flation, stag-flation, hyperinflation and de-flation. Many of these flations will happen simultaneously. Currently we have major monetary inflation combined with asset inflation. Credit growth and money printing have in recent years benefited the ailing banking system but have not yet reached consumer prices and therefore there is no ordinary price inflation.
This is why Italy, Greece, Spain, Portugal and many more EU countries are totally bankrupt. These countries have been forced to use a currency which has made them completely uncompetitive and unable to export or function. At the same time, Germany has benefited from a weak Euro which has made their export industries very successful.
Velocity of money will accelerate in 2017
In 2017, velocity of money is likely to increase, leading to stagflation which is higher prices without growth. But as the problems in the financial system deteriorate, hyperinflation in most major economies is virtually a certainty. The build-up of debt and derivatives in the last quarter of a century guarantees that desperate governments will print unlimited amounts of money in a frantic attempt to save the financial system. What has happened to the banking system in Italy in recent years makes the Medicis look like saints. Mismanagement and corruption has driven Italian banks to insolvency. The problem is the same in Greece, Spain, Portugal, France, Germany etc as I discussed in last week’s article.
Hyperinflation will be fast and furious
But these problems are not limited to Europe. Banks in Japan and China will have the same pressures and so will the financial system in the US and emerging markets. The last financial crisis started in 2006. Since then global debt has gone from $140 trillion to around $240 trillion. Those extra $100 trillion should have led to massive hyperinflation already. Instead all central banks are complaining about deflation and are doing all they can to create inflation. There is a misconception that inflation is good for the economy. Inflation is a disease that leads to the destruction of money and of savings. Lost central bankers have no other solution for a failing financial system. But to solve a problem with the same methods that created it in the first place is the road to ruin.

This post was published at GoldSwitzerland on December 16, 2016.