Thinking When Desperate
Wednesday, 11/20/2013 18:30
If you're wrong time and again, you should be forced to think. Hard...
LAST WEEK,
writes Bill Bonner in his Daily Reckoning, Janet Yellen told the Senate what everyone wanted to hear: that the Federal Reserve would continue to support asset prices. With the 'Yellen put' in their pockets, investors bid up the Dow to over 16,000 by the end of the week.
What to make of it?
We're down in Nicaragua at a private meeting of members of our family wealth advisory service, Bonner & Partners Family Office. The aim of our service is to help our members protect and grow family wealth so that it is around for future generations. And we're thinking...
Thinking is the last resort. You only do it when you're desperate. When your opinions, predictions and guesses don't seem to be working out, you're forced to consider alternatives.
Although we have no doubt that Federal Reserve policies will prove disastrous, we have nothing but doubts about what form the disaster will take. John Williams of
ShadowStats.com recalculates the Consumer Price Index (CPI), official unemployment rates and GDP figures based on more honest data and alternative methodologies.
What he discovers is that the CPI is higher, unemployment is higher and the GDP is lower than the feds would have us believe.
Williams reckons there is only one outcome possible: hyperinflation. A year ago, he expected it in 2019. Now, he's moved up the schedule. He now expects hyperinflation to begin in 2014.
Why?
Because the Federal Reserve is more aggressive than previously expected...and because the rest of the world is losing confidence in the US Dollar and its guardians.
The overseas portion of the US money supply is huge – with Dollars in every central banker's vault as well as in the private accounts and hidey-holes of millions of people all over the globe.
When these people lose faith, the trickle of these Dollars returning to the US will increase. Prices will begin to rise – slowly at first, then suddenly, in a flood.
Will John Williams be proven right? We'll have to wait to find out!
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