Inflate or Die
by Richard Russell
by Richard Russell: You
'Bear' Beware, You Better Take Care
Years ago I
coined a phrase that described the US's predicament. The phrase
was "inflate or die." As far as I'm concerned,
inflate or die is even more to the point today. Here's why. The
US possesses 8,133 tons of gold, or more than three times the amount
of gold held by any other nation (Germany is second with 3,396 tons
Have you ever
wondered why the US hangs on to its gold like grim death? And at
the same time the US talks down gold? Have you wondered why the
US appears (like China) to be encouraging its citizens to buy, hold,
and accumulate gold? Why is the US government distributing gold
coins to Americans? Why did the US government come out with a new
Buffalo solid gold coin and advertise that coin widely?
Why did Nixon
slam shut the gold window when France wanted the debts that the
US owed France to be paid in gold rather than dollars? Why did Nixon
and company refuse to give up any more US gold?
is that the top US leaders knew that gold was our only true tangible
money. A few of our most knowledgeable leaders distrusted the Federal
Reserve notes that we, the US, were printing and buying goods from
the rest of the world with. They knew that with the growing US debts,
we'd never be able to pay them off. And they knew that eventually,
through spending and compounding, the growing debts and deficits
would wreck the US economy and maybe even destroy our democracy.
Now with a
national debt of over $15 trillion, the choice has really come down
to "inflate or die." There's a primary bear market in
process now. This is the "die" part of the choice
"inflate or die." If matters continue as they have been
going, the US, as we know it, will indeed die. Bernanke is
no fool. He can see that quantitative easing is not working.
With QE1 and QE2 and "twist" already baked into the
US economic system, business is still lousy, unemployment is still
at 8.2%, and no amount of Fed stimulation seems to be able to turn
the economy brighter.
There are still
only two choices inflate or die. The die part of it would
be to allow the bear market to play itself out to the end
to the bitter bearish end. But this would be Great Depression number
2, and the country would surely not stand for it. It might even
foment a revolution. But how about the inflation part? This would
require truly a massive amount of Fed money creation. The printing
presses would have to go wild. Furthermore, enormous inflation would
almost surely wreck the country (remember German inflation after
World War I, and the rise of Hitler?) So inflate or die would have
serious (more likely disastrous) consequences.
is now deflating. And the Fed appears helpless to halt the deflation,
no matter what they try. The antidote for deflation is a devaluation
of the currency. The Fed has failed in its desperate attempts to
halt deflation which is becoming worse as the weeks go by.
Americans (voters) are increasingly discouraged and disappointed
with both the Fed and Congress.
OR DIE. Wait, there is one more thing that can be done. We have
this vast store of gold, the biggest hoard of gold the world has
ever seen 8,133 tons of gold.
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© 2012 321 Gold