The answer to the WHO is us. We need to stop putting our trust to solve problems in the hands of others (governments,bankers,…). We have to act ourselves, in our own best interests. Only when all participants act voluntarily and on their own behalf do you end up with a "fair" system. It's only through the force of government limiting our choices for money that has allowed the system to go haywire. Without that force currency users would quickly change whenever a currency was being abused.
The only way to get to that point is through education. We have been told by those that wish to control us that we need them. That we have to have control or the wold will fall apart. We have to expose the lies and get people to trust in themselves.
"will there be an asset strripping deflation ahead of the hyperinflation?"
Not a chance.
Since the ultimate "debt holders" are the Central Banks and because they have a controlling influence in the world, they will never allow a prolonged deflation. Bernanke has staked his career on this very issue.
Cnetral Banks will target a modest inflation over a period of years and hope to devalue their currencies as the way out of debt. This might work for a while, but will require ever increasing monetization of debt.
Chris Martensen is calling for a coordinated Central Bank Intervention. I agree, that coming soon.
The Central Banks are in too deep to change course. They will attempt to inflate at all costs.
I appreciate your thought, oliveoilguy. Two additional questions:
Please explain how it works that the Central Banks are the ultimate holders of debt.
Why is my local bank willing to loan me $300,000 at 3.6% interest for 30 years. Even modest inflation will make their return on investment zero or negative. Isn't there someone at the bank who realizes that this is likely and has the wisdom to stop making long-term low interest loans that are sure to make the bank lose money?
It seems to me that few if any discussions of this nature even think of the derivatives on bank balance sheets. It is true that as long as both ends of the derivative contract perform exactly as per the contract, the banks have little or no risk. I have been in isolation preparing, and haven't been able to, or interested much in following details in the financial world. For example, if one end of the contract fails to perform, usually the bank is on the hook (as a result of their greedyness) for at least the end that failed to perform. (usually more) Last I heard the estimates of derivatives outstanding usually used the word QUADrillions. Because the world financial system went bankrupt 17 Aug 2008, I don't think there will be much time for hyperinflation. The governmernts have been colluding massively with the banks to relax reporting rules so they appear to be solvent. They aren't, and as what is happening in much of Europe, (largely unreported in N America) shows, the papering over problems are not nearly enough to hide the magnitude of the gaps in the system. More ineffectual bailouts. (Which won't stop the bank and CURRENCY runs which are already out of control.)
While the trigger event may be different (and may not) I like the scenario painted by Allen Curries novel "Operation Phoenix" at www.AllenCurrie.ca as I expect there will not be time for hyperinflation, just collapse.
I would dealy love to have some inside information about Greece who had zillions in derivatives. IMHO, Greece has much further to fall.
It is interesting to note that the last time the Fed DID NOT interfere with a depression (1920/21) the depression was very vicious, but lasted less than 18 months. Iceland, who refused to bail out the bank(s), less than three years later is recovering nicely with a lower unemployment rate than the European average. (Which is not to say it is now the land of milk and honey) They had huge pressures, including being placed on terrorist lists, by nearly every other country in the world to do it the way the US is doing it. On the other hand, it is generally agreed that government interference extended the "Great Depression" from 1934 onwards. Governments seem to value the banking system (read their treasury) more than democracy itself. Let the peasants eat cake, but make sure they pay for our (and the banks) stupidity. Peasants get no vote in this matter.
" Please explain how it works that the Central Banks are the ultimate holders of debt."
The short answer is that they are the "ultimate printers of money", and they receive debt in exchange for money they put into circulation. They get treasury bonds from the Federal government in exchange for "Federal Reserve Notes". They hold MBS paper and GSE debt securities. I would go out on a limb and surmise that much of the debt they hold is of low quality.
On your second question? 2. "Why is my local bank willing to loan me $300,000 at 3.6% interest for 30 years? " It is unbelievable to me as well.
[quote=sand_puppy]I appreciate your thought, oliveoilguy. Two additional questions:
Please explain how it works that the Central Banks are the ultimate holders of debt.
Why is my local bank willing to loan me $300,000 at 3.6% interest for 30 years. Even modest inflation will make their return on investment zero or negative. Isn't there someone at the bank who realizes that this is likely and has the wisdom to stop making long-term low interest loans that are sure to make the bank lose money?
Appreciate your help in understanding this.
Sand_puppy,
Central Banks are the "Ultimate printers of Money" and in exchange for "Federal Reserve Notes" that they create they aquire Treasury Notes (Debt). They also hold Mortgage Paper (MBS) and GSE debt. Since much of this debt on their balance sheet is worth very little, they will most likely hold it for a long time. With all that bad paper, they must surely favor inflation.
On question #2 "Why is my local bank willing to loan me $300,000 at 3.6% interest for 30 years?" It makes no sense.
By there very nature recessions are Deflationary (we are in a recession), and not a stretch that Peak Oil will by its nature cause Recessions and logically more frequent. So how do we get an absolute Hyper-Inflation? I can see high inflation but hyper-inflation with our suppose gold reserves?
For now I will study both sides (inflation-deflation) because I just don't see for the foreseeable future how debt destruction can be avoided on a massive scale. Anyways, prepared to change my mind on a moments notice. If I was only married to the idea of Inflation then I would own gold only, but if we get the market correction that is now anticipated then large profits would be left on the table. Gold will remain a nice position in my portfolio (20%) but as an insurance. The remainder of cash will drift in and out of oil E&P.