Wednesday, November 2, 2016

All fiat currency eventually reverts to its intrinsic value of zero.

Venezuela is in the throes of hyperinflation.  It is the final stage in the death of a faith based currency.  It is that time when people have lost faith in the issuing authority and thus in the currency itself.  You know it is in the end game when they begin weighing piles of paper notes for trade purposes instead of worrying too much about the face value of them.

Soon their money will die and then the people will be forced to come up with something new.  Maybe they will stupidly reinvent the "new, new new bolivar" and con the people into using it.  Or maybe they will take on the US dollar as their own currency like so many other idiot 3rd world nations have done.  Maybe they will finally wake up and decide that gold is money and everything else is debt.  I'm not holding my breath for that last option. History teaches that it's just too honest an outcome to happen without an armed revolution.  After all, if the people won't fight for their freedom, why give it to them?

Sooner or later we here in the US will begin to see massive inflation.  I still think it will be preceded by another massive stock market and real estate deflationary crash but whether sooner or later it is coming.  We will know it is likely started when this chart of the velocity of M2 finishes tanking.  Maybe it will take 1 year to begin but probably not much longer IMO.

Those who have trusted everything to the fake money will get screwed, period.  Those who think the government is organized crime and that fake money is the work of the Devil will not get nearly as screwed, especially if such beliefs are accompanied by retirement savings in pure precious metals and augmented by many months of food stocks and a sufficient supply of defensive measures such as hand guns, shot guns and AR15s with enough associated ammo for each type of weapon.

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