USA TODAY HEADLINE:
Faith In Social Security Tanking
(Tuesday, July 20, 2010)
July 22, 2010
By Jim Deeds
“Washington – Battered by high unemployment and record home foreclosures most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.
A USA Today/Gallup Poll finds the majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who holds that view. And a record six of 10 non-retirees predict Social Security won’t be able to pay them benefits when they stop working.”
Loss of Confidence – Will Hyperinflation Come Next?
Most Americans don’t really know what hyperinflation is, other than “maybe 5, 10, or maybe even 15% price inflation.”
Jim Sinclair (www.jsmineset.com) recently defined hyperinflation and its consequences on his website: “Hyperinflation is always a product of a loss of confidence in currency, resulting in a “Currency Produced Cost-Push Hyperinflation.” What is out there today QE-wise is enough to result in hyperinflation as confidence falls in currencies due to two (current) characteristics; Quantitative Easing and volatility (in all markets). Loss of confidence in a currency can be brought about by many reasons, but there is one constant factor. When hyperinflation has occurred in modern history, every country involved was decimated as and when it occurred.”
We see a current loss of confidence (trust) in Social Security and rapidly declining trust in “government” now all across America. Since the money we use is spawned and put into circulation in America by both our government and our monthly Social Security checks, can a direct loss of confidence in our American dollar be next? Sure!
Are there current symptoms of coming hyperinflation in America already visible in our daily lives? A few of literally hundreds of random facts are already present to give us a pretty good clue:
In 2010, the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.
- It is projected that the U.S. government will have a budget deficit of approximately $1.6 trillion in 2010.
- If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
- The bottom 40% of income earners in the United States now collectively own less than 1% of the nation’s wealth.
- In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since 2000, that ratio has exploded to between 300 and 500 to one.
- More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009. (Above facts taken from CATO report).
A rapidly deteriorating unbalanced monetary system brings ever-increasing government control and influence in financial markets. But the disequilibrium can quickly spill over into our daily lives as – from a financial or work-ethic standpoint – less and less makes any sense.
Harry Figgie, in his observations of hyperinflation in Argentina in the ’80s and ’90s found an interesting sideline occurrence. As citizens lost faith in government honesty and its ability to “serve the people,” gambling and speculation quickly replaced any old-fashioned “work ethic” as the desire for “something for nothing” and “live for today” became a surviving person’s primary focus. Look around us; does this sound and look familiar in America today?
In a January 2006 McAlvany Intelligence Advisor newsletter, hyperinflation and its often-overnight occurrence were discussed in an article: “The Coming American Firestorm.”
The overnight financial and monetary change that occurs at the advent of hyperinflation was compared to the explosive mass destruction of the Hamburg Germany firestorm of WWII on 24 July, 1943. But, just like hyperinflation, firestorms are not new. The earliest recorded was the Great Fire of Rome on July 18, 64 AD. (Remember, Nero fiddled while Rome burned).
Today, zero interest rates and a worldwide “money-flood” distort all financial, asset, and employment and production markets. Huge imbalances and mistaken perception of true value do create once-in-a-lifetime opportunities for the few who look ahead. But the government’s rigged statistics and phony actions, combined with a 24/7 propaganda barrage to keep American people “in the dark,” make clear, decisive thought a challenge.
For the few savers left in America, one question could be worthy of some deep thought and consideration:
Does the future look brighter for today’s saver of other people’s debt (bonds, notes, annuities, savings accounts), or is a saving today of assets that people will need and use in the future a more prudent (and profitable) choice?
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