Deflation is Starting to Show Up; Can Hyperinflation Be Far Behind? (+3K Views)

1. Swiss government bonds (which are seen as a safe haven) are hitting new highs, with yields going as low as -0.1%. People are paying money to buy Swiss government bonds at 2 years (Chart 1).

2. The euro is rapidly dropping. Down 1% each day is a pretty big move (Chart 2). Investors are piling into the safe haven status of the U.S. dollar.

3. Precious metals have been dropping which signals deflation going to new lows recently. (Chart 3).

4. The U.S. dollar and supposedly “safe” government bonds are moving up just as we saw back in 2008… The Dollar Cash Index actually went up a lot (Chart 4) and currently stands at 82.

5. The U.S. savings rate, however, is not going up like it did in 2008 (Chart 5). If, and when, this trend reverses the real collapse will start because when people save money, debt will be paid off and the currency supply will drop. We see this already in the M3 money supply numbers in Chart 6.

6. The M3 currency supply [Yr/Yr % Change by Month]…has been dropping recently (Chart 6) which means that the Federal Reserve can’t increase debt fast enough to make up for the people paying off loans. The M3 (which was discontinued in 2006, but can still be accessed through Shadowstats.com) is important to watch because it tracks the broad range of bank accounts and is a perfect measure of inflation or deflation in the economy.

7. The exponential long-term growth in money supply has been stalling (Chart 7). If M3 actually starts contracting again (like in 2008), we could see turmoil in the markets for a second time. This time will be even more disastrous.

*http://seekingalpha.com/article/614231-deflation-sets-in-hyperinflation-to-follow  (To access the above article please copy the URL and paste it into your browser.)

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