Hyper Inflation Is The Recovery Plan

By Peter Costa

Since 2008 the US economy has been hit with a wrecking ball. It started with sub prime mortgages faltering and has escaladed into a credit crisis. From toxic mortgage debt to the banking crisis unfolding, the US economy has been in need of surplus capital. In the last 2 years with the combined private bailouts and stimulus packages we have spent well over $2 trillion trying to keep the economy afloat. As each year passes the need for capital is only compounding. Our deficit is at an all time high and projections for the future seem grim. As new budget plans are purposed for 2010 we can start to gauge where the year will take us and how close we are to hyper inflation.

With only 2 months into the new decade the US government has been working rigorously trying to revive the US economy. A purposed $3.8 trillion budget plan is floating around congress and is grossly inflated from years passed. Behind all the fancy wording and political jargon we all know that the rescue efforts are nothing short of continuing to pump money into the system in hopes of recovery. This plan is similar to an individual applying for more credit cards to cover the current outstanding ones or a Ponzi scheme bringing in more money to pay off old debts. Like the later everything has its breaking point and sooner or later we will hit that point. With unemployment numbers at an all time high this has been the main focus of the new budget plan. If the US government gets their way we could see a $3.8 trillion budget plan passed this year. Why is this alarming? It does not take a mathematician or renowned economist to know that this is going to lead to hyper inflation. You cannot print up $3.8 trillion and avoid devaluation of the dollar it is next to impossible. We have lost confidence with our major lenders such as China and have seen many countries begin to abandon the greenback.

China has lost such confidence in the US dollar that for 5 months now they have stopped purchasing US treasuries. On Tuesday, 16th February, the US Department of the Treasury released Treasury International Capital [TIC] data for December 2009. It revealed that China sold over $34 billion US Treasuries in December 2009. With this recent news China is no longer the largest holder of US debt they have passed the title to Japan. “For over a decade now China has increased their US Treasury holdings by 8 fold, it is extremely alarming that they are now dumping them and paints a picture of where our economy is heading” stated Ronald Fricke president of Regal Assets. A tsunami of Treasury auctions are set to take place this year, amounting to a total $2 trillion to fund this year’s budget deficit. The Fed is likely to monetize a sizable portion of this debt due to the difficulty the Treasury will face off-loading such a large quantity onto the market. This would have been an easy feat in the 90s or the first half of the last decade, but with the debt ceiling now in excess of $14 trillion, the market will soon realize that buying US government debt is not “risk free” with a default likely. If we are not able to unload the required Treasuries on foreign countries, citizens of the United States may be the next target. There is a bill that is currently being passed around congress that is looking to nationalize retirement plans where if approved will make it mandatory for individuals to place a portion of their retirement holdings in US Treasuries. This will be a devastating blow to the individuals that have already incurred massive losses on their retirement plans and could cause major chaos. As lofty of a bill as it may be I am appalled that forcing Treasuries on US citizens would even be an option.

Based on what has been unfolding since 2008 I am not saying that gold and silver are going to do well I am insisting that they are going to do well. Hyper inflation is the next logical step in our recovery plan and for the people pulling the strings I do not feel that they have even taken into account the devastation it will cause. More importantly I am convinced that who ever is pulling the strings does not care about the US or the dollar. The more I research the more I feel that this may be a carefully orchestrated collapse. In any event we need to wake up and turn our useless pieces of paper into honest currency that cannot be manipulated by government. It is time for us to preserve what we have worked so hard for. Social Security? Not likely. IRA and 401Ks? Not all of it. For centuries royalty and the elite have been preserving their wealth in precious metals. It is time to follow suite before you get left with the short end of the stick. No one else is going to get our back, it is literally left up to us to take action.

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