Monday , 4 March 2024

The Road to Eventual Hyperinflation & Financial/Political Collapse

…What I outline below is not a forecast but a potential scenario which I sincerely hope won’t come to pass but the risk of going down the road to political and financial system collapse, social unrest and even civil war, eventual hyperinflation and anarchy, is certainly there.

…The prospects for the dollar are doomed with what is happening in the U.S. economy causing surging deficits and unlimited money printing.

…It is only a matter of time before inflation picks up as the frantic printing accelerates further in line with the collapsing economy.

The current explosion of the Fed balance sheet combined with surging government debt will increase money supply exponentially. This will also lead to the dollar decline accelerating.

The likely course of events in the next few years – the NIGHTMARE SCENARIO as I like to call it – is as follows:

  1. Accelerating deficits and debts;
  2. Falling dollar and other currencies;
  3. Unlimited money printing to save banks, failing companies, and failing financial system;
  4. Ever higher subsidies for furloughed and unemployed;
  5. Universal Basic Income is introduced in most Western nations (i.e. everyone is paid a basic wage whether they work or not) and this will lead to ever fewer people working;
  6. Higher unemployment means more printing;
  7. More printing leads to more currency debasement;
  8. This leads to higher velocity of money and higher inflation;
  9. Central banks lose control of rates as long end of bond market sells off. High long rates push short rates up. Rates reach 5% then quickly 10% and on to 15-20%, at least;
  10. At 10% rates interest cost on global debt of $275 trillion would be $27t, or 34% of global GDP, and that would be totally unsustainable – so much more money printing required;
  11. Bad debts surge leading to defaults, sovereign, corporate and private;
  12. Unemployment escalates leading to more UBI and more money printing;
  13. Banks start falling [failing?] including the $1.5 to $2 quadrillion derivatives market;
  14. Money printing reaches $ quadrillions leading to hyperinflation;
  15. The financial system collapses together with major parts of industry and society;
  16. Social unrest, civil wars, cyber wars and major conflict will be rampant;
  17. As governments lose control political systems fail leading to anarchy.

Obviously governments and central banks will desperately try to introduce resets, new digital currencies, do a bit of hocus pocus with debt to pretend it has disappeared. The U.S. might even revalue its alleged stock of 8,000 tonnes of gold but their bluff will be called. The effects of any measure governments take will only be temporary as the world realizes that it really is bankrupt.

I sincerely hope that all the above is really a nightmare in the form of a dream and will never take place because, if it does, the world is back to the Dark Ages or the Dark Years are here as I wrote about in 2009 and revisited in 2018.


…In a period of such severe crisis which I outline above, gold will obviously assume the role it always has, namely as money and the only money which will maintain its purchasing power and act as insurance and wealth preservation. Remember, though, it must be physical and stored outside the banking system in a very safe place and jurisdiction.

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Editor’s Note:  The original article by Egon von Greyerz has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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