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Every nation, whether rich or poor, powerful or feeble, can at any hour once again adopt the gold standard.

Survive Hyperinflation - Common Sense Ideas and Suggestions (Update #2)

Hyperinflation: When associated with depressions, hyperinflation often occurs when there is a large increase in the money supply not supported by gross domestic product (GDP) growth, resulting in an imbalance in the supply and demand for the money. Left unchecked this causes prices to increase, as the currency loses its value.

Further Understanding Without Forceful Audacity

Weimar Republic. Serbia. Zimbabwe. Bolivia. Argentina. Over the decades there are many examples of how hyperinflation has decimated economies and destroyed people's savings and ruined their lives. In every case the common denominator is a loss of confidence in the country-government; foreshadowing a loss of confidence in the country's brand of fiat currency, followed by a hasty rejection of that currency by everyone who is involved as a stakeholder (in-country citizens and foreign debt holders). The effected brand of fiat currency, along with the government debt-bonds become like the proverbial hot potato - stakeholder panic in the stampede to divest.

The confidence one enjoys for a government is not unlike the respect granted to a man of perceived strong character; difficult to rehabilitate once tarnished or lost. I am afraid confidence in Washington has been all but spent. - Marshall Groves

The citizens of America are currently living in the shank of an uncomfortable moment; foreign lenders have only recently come to recognize in real terms that in their heart of hearts they have truly lost confidence in the US government and the US dollar. For decades it had become commonplace to hear criticism aimed toward America; strident, sniping anti-US commentary based on nothing more than feelings of petty inferiority and base jealousy; the negative narrative has now changed, has become more muted. Reason: Favourite whipping boy or not, when push came to shove, you could always with confidence count on America. No matter where you were on the planet, a fistful of US dollars usually got the job done. I am sure that right now many in the world would still prefer holding US dollars rather than their own pathetic in-country currency. This situation will not last forever. 

On the surface the lenders appear to be soldiering on as if nothing is amiss; continuing to invest in US debt with nary a ripple in the pond. Behind the scenes it is quite another story as many of America's lenders are deeply concerned and are whispering about life after the US dollar. Some of this chatter has leaked out into the public domain, but it has not yet been given the in-depth coverage it deserves. That does not mean however that the folks,  both at home and abroad are unaware the US dollar is heading for trouble. Quite the contrary, as an ever growing number of Asian investors continue to flock to gold and silver. It really is all a matter of confidence!

If foreign debt buyers desert a government and that government's debt-bonds can attract only one buyer - its own central bank, expect the value of the currency to collapse. The government will not be able to print and distribute money fast enough to stay ahead of the death spiral. -- Martin Kress (Weimar Exhumed)

A Foregone Conclusion? Global Confidence in Washington Wanes
...Entitlement Spending Continues Unabated

So obviously something has to give. On the menu will be hyper-taxation, take-your-breath-away inflation, or nation-destroying hyperinflation. Consider: As the current Kakistocracy in Washington continues to embrace out-of-control spending and the dollar-debt numbers continue to skyrocket, the obligations for America to manage its debt (never mind, actually paying it back) will become increasingly onerous and more difficult with each passing year. Even now...right now, it has become impossible for the US to grow itself back to sustainable recovery and solvency. Raising taxes is a fool's game, but Washington will do it and that will only make matters worse.  National solvency in America is a thing of the past, thanks to a leadership that can only be described as a Remarkable Band of Incompetents.

Defaulting on the debt is impossible to even contemplate; even by this conspicuously inept administration. Instead, Washington will be forced to devalue the dollar and encourage a dangerous level of inflation onto the American people in the faint hope that they can pay down their debt by offering foreign creditors a dollar of diminished value.  None of this is open to debate; the only question is when it will happen. Along the way do not be surprised to see currency wars, trade wars and a bout of deflation; a condition that will strike fear into the hearts of Keynesian's everywhere. Their reaction to deflation will end in disaster - be it a return to Military Keynesian or a return to printing gobs of paper money, which in turn will lead to war and inflation.

If we are very, very, very lucky we will experience a bout of Jimmy Carter inflation. If we are not so lucky, America will experience a more pronounced case of hyperinflation not unlike what occurred in Zimbabwe. Do not look to the current administration to help you because they cannot even help themselves. For all intents and purposes we will have to survive by our own devices; as did the Serbians during their bout of hyperinflation in the 1990's.

If you are thinking that perhaps defaulting on the national debt would be less painful, think again.   

For the sake of argument, let us consider what would happen if America chose to default on its massive debt; although the implications are too terrible to really contemplate by anyone other than a Paul Krugman and his merry bank of neo-Keynesian numbskulls. As America is already the largest debtor nation on the planet the problems would begin immediately. Within hours of announcing debt default, the worth of the US dollar would plummet. Within days, no one would trade with America and no one would lend the US a dime. Around the world there would be a virtual stampede to dump US dollars, accelerating the collapse of dollar value. Even our current level of post-2008 reduced consumption would slow to a trickle and then cease entirely as an economic depression that would begin in America before reverberating around the world like a harmonic tremor. The debt defaults that wreaked havoc upon Argentina and Zimbabwe would be small spuds compared to what would happen in America - massive shortages of all the essentials of life. Within a week there would be chaos, riots, and military law. And OBVIOUSLY...the current brand of in-country fiat currency (US dollar) would no longer function as a store of value in the face of such punishing systemic instability. If you had matches you might want to use your Benjamin's to start a cooking fire in a nearby park. 

So if default is out of the question (and it truly is), we must face up to the fact that we will have to suffer through inflation. With hard work and determination and a change of direction in Washington, we will prevail. We can beat inflation. We will be dented, but not broken. But what if our inflationary period jumps the fence and morphs into hyperinflation?

Hyperinflation will result in the emergence of the barter system in America. Credit cards would no longer be honoured, electronic payment systems would cease to function and trade and commerce would work only through barter and black market; the value of cash would quickly erode.   

If the only point left to discuss is the severity of the inevitable bout of inflation (and the  collapse of the US dollar) through either severe inflation or hyperinflation, why are you still holding on to your stock of US dollars? The ideal would be to hold half of your liquid assets in gold and silver coins. An inflationary period will be part of our economic future, so if your only concession to this looming challenge is to hold gold and silver, I guess that is better than nothing. If you wish to increase your level of involvement I have a few ideas for you to consider...

Surviving Hyperinflation, Common Sense Suggestions

  • Keep your passport current. If you do not have a passport, get one. 
  • Hold three months supply of cash in a safe place in your home. There will be bank runs, count on this. Do not be caught short because your credit cards will become useless pieces of plastic within days of a debt default.
  • Arrange to hold 25% of your liquid assets outside of the US, or if that is difficult, exchange a percentage of your US money for the Canadian dollar. I expect the Canadian dollar to (temporarily) hold value.
  • Maintain a pantry, or stock a broom closet with food reserves and medical supplies such as aspirin, vitamins, cold remedies, family hygiene products, cooking oil, toilet paper. Three month minimum and rotate out the canned foods to expiry date.
  • A supply of barter items for use as trade  - small bottles of liquor, cigarettes, chewing gum, ammunition, flashlight batteries, matches, toilet paper, disposable lighters, etc.
  • Remain in the business of gold. Maintain a small amount of gold and silver coins for when simple barter will not carry the trade. Gold and silver coins may not become the unofficial world reserve currency - but it is guaranteed that metal currency will most certainly become the premier currency in your local black market. 
  • Own a scooter or a motorcycle if you have a guaranteed source of fuel. If not own a bicycle.
  • Buy a portable world band shortwave radio, as this may be your most reliable source of information that is not controlled by government. To survive you will need information, not propaganda.
  • Seek out and develop a support group of like-minded people who realize the seriousness of the situation.
  • Social unrest and crime will increase as the systemic failure deepens, afford yourself firearm protection. Recommended: A handgun, a shotgun, bear repellant, machete and a retractable cobra stick.
  • A backup generator, sufficient fuel and a sturdy refillable container.
  • A non-electric water filter for long term use. Water purification pills should only be used for a short time due to a build-up of iodine in the body, thus a water filter is the way to go


Alarmist Reporting?
...Or a Prudent Wake-Up Call

I sincerely hope that one day we can all look back at this update and laugh. I do not want to face a world at war and the inflation a war brings, never mind hyper-inflation - but I fear we must face the reality of tough and trying times ahead. When it comes to the threat of hyperinflation and how this will impact the world's reserve currency, I leave you with this:

Hyperinflation will occur when the social, legal and layers of political structure that create the value of fiat currency weaken and collapse. When a government wilfully continues to borrow money excessively with no clear plan on repayment; and their empty promises of repayment are denied by simple mathematics, the value of that currency will rapidly erode to zero. 

Probably the most depilating aspect of hyperinflation is the feeling of worthlessness; not believing in your currency translates into losing faith in yourself. Not only is money rendered without worth; so are all forms of wealth and income associated with dollar denominated worth.

Gold and silver on the other hand have been recognized as (real) money for 4,000 years.

Larry Myles



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Larry Myles is neither a geologist nor a financial analyst. I do not purport to offer personal investment advice nor recommendations. While all statements of fact are derived from reliable sources, an d are believed to be accurate, I make no warrant that they are so. You must do your own research and check statements of fact for yourself. My opinions are precisely that, my opinions. I do not accept any responsibility for any gains or losses you may experience resulting from actions taken based on my opinions. If not otherwise qualified, you should consult with your own personal financial advisor before engaging in any investment activities. Larry Myles Reports does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Larry Myles may actively trade in the investments discussed in this publication. Larry Myles may have a substantial position in the securities recommended and may increase or decrease such positions without notice. I do not know your personal financial circumstances. I am not your personal financial advisor. You must do your own due diligence. By entering this web site, or reading LMR reports, you acknowledge and accept the foregoing.