I consider this blog category of Biblical Economics as the fringe versus the “Establishment”. The Establishment wants to be in control and maintain that status of control over its citizenry. At the center of this control is self-interest. On the other hand, “fringe” thinking results from Love being at the center of thought. It is well known around the globe that the U.S. has an arrogant view of entitlement. In my travels, I have first hand experience of this world view of the U.S. I tread lightly during these travels.
The establishment would have us believe that hyperinflation is due to a change in money supply. That is only partially true for the true cause of inflation includes the velocity of money (the number of times it is transferred or spent in a specific period of time). When the public loses confidence in their currency, they attempt to convert their currency to other assets that retain value, whether it be bread or gold. They quit hoarding the currency because they lose confidence in its purchasing power and opt for other assets they believe will hold value in the future. Thus, hyperinflation is caused by a loss of public confidence.
How do you manipulate public confidence? You use the media and manipulate tangible asset prices by keeping them “low” versus your currency. Gold is known for its intrinsic monetary value and to a lesser degree, silver. This is why there have been notable attempts to keep the price of gold and silver at bay. Once gold and silver breakout into the public’s view and become a sought after investment, hyperinflation is on the horizon. A breakout in the price of gold has a direct impact on the confidence of the public that their currency is becoming worthless. When this happens, the velocity of currency dramatically increases since people do not want to hold that currency but immediately convert it to another asset that will retain its purchasing power. This is why I have been preaching the view of holding some of your wealth in tangible assets as an insurance policy against hyperinflation Sure we need currency to conduct normal business activities but we are close to the edge of global hyperinflation. The latest $1 Trillion bailout of the Euro with the help of the U.S. (you and me) only confirms the seriousness of the global crisis of public confidence.
When people fear the future and trust money, they hoard money. When they fear the devaluation of money, they get rid of it by converting it to a tangible alternative. If you are highly leveraged, this becomes a problem. You don’t have the flexibility to move out of the currency since it is required to pay your obligations. You need liquidity. This is why I’ve been urging the readers to simplify and get out of debt as quickly as possible.
The media will report on the hyperinflationary crisis only after it is in full swing. Congressman will do nothing to prevent the crisis since they only deal with crises after the fact. With that in mind, expect the crisis to occur. Prepare for it. Only Our Heavenly Father knows the day it will escalate.