Thursday, January 13, 2011

John Williams: Hyper-Inflation Is Coming

John Williams of ShadowStats expects hyper-inflation, possibly in the next 6 to 9 months. I think he is a little early in his timing, but he may not be off as far as to its actual occurrence. I fully expect double digit inflation by the end of 2011, but we have a ways to go before hyper-inflation, which I would classify as inflation over 30%.

Williams' analysis is right on. However, I would note that he is only discussing the problems at the Federal level. Meredith Whitney, on the other hand, is only discussing problems at the state and local level. They are both right. There are two freight trains heading at us.

Here's Williams:



  1. Do you think gold/silver will drive hyperinflation, or just a symptom?

    What about agriculturals?

  2. Wenzel,

    What do you think about his comments about the role the trade deficit plays in all of this. Relevant?

  3. I find it funny how the interviewer is tittering like a school girl... "Hahaha! Oh John... be seeerriious! Surely you're joking! Teeheheee." No joke sweetheart.

  4. @1 - Gold/silver tend to be used as money in a freed market. Hyperinflation will be driven by excess printing of fiat money and the obvious fact that governments the world over will only be able to repay their debts in exceptionally diluted currencies. This could/will lead to a total loss of faith in paper currencies (not backed my anything tangible) and *poof* hyperinflation.

  5. Hi Mr. Wenzel,
    What would be considered the definition of inflation?

    CPI? PPI? Commodities? Stock market?

    It seems we all have our own definitions, and I just wanted to know your definition.

    Mark Oles

  6. I'm surprised he didn't have a more articulate rebuttal to the host's comment about Volcker subduing the inflation of the late 70s / early 80s. If the Fed were to raise interest rates above the real rate of inflation, as Volcker did, they would hasten a government default, which would instantly destroy confidence in the dollar, thereby severely diminishing its artificially high value. Not to mention they would likely hasten the bankruptcy of our already bankrupt banks. When Volcker jacked interest rates through the roof, the U.S. economy was far more productive and the government was not nearly in as precarious a situation as they are now with their debt and deficits. Volcker succeeded in raising the value of the dollar. Bernanke knows that if he chooses this tactic, he will bankrupt the government, which will destroy the dollar more quickly than will QE2, QE3, QE4, QE5, QE6....