John Williams of Shadowstats Speaks

Shadowstats : Expect Hyperinflation within a year

June 2, 2009

Shadowstats, the statistical tracking website that keeps tabs on things such as the money supply, the real unemployment rate, true debt figures, etc etc has announced today that The U.S. economy is in an intensifying inflationary recession that eventually will evolve into a hyperinflationary great depression. Hyperinflation could be experienced as early as 2010, if not before.

Basically the author, John Williams has come to the same conclusion that Tribble Agency did earlier with a similar report.

Basically it appears that our shared belief is rather simple…. the government has printed off a ton of money, and that money has to go somewhere. Our conclusion is that the additional money will end up into the price of milk, bread, clothes, and of course gasoline.

Example prices that one may expect if this prediction comes true:

Regular Gasoline - $12.49 dollars a gallon
1 gallon of milk - $13.24 dollars a gallon
Credit Card balance rate - 84%
Oil Change - $123.00
Whopper with Cheese - $18.48 + Tax

One month later:

Regular Gasoline - $21.87 dollars a gallon
1 gallon of milk - $17.12 dollars a gallon
Credit Card balance rate - 98%
Oil Change - $179.50
Whopper with Cheese - $21.16 + Tax

You get the idea, and since inflation like that never is evenly spread with income, the chances are you will be faced with prices like this and salaries like that

Shadowstats is stating this future as an absolute. However I do see “an out” to this, and this out is one of the reasons that Paul Volker is on the Obama task force, because in the 1980’s his mission was to “suck out inflation” and he did it by causing a massive federal funds rate hike, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in ‘81 as well.

This caused the mother of Recessions, massive layoffs and pretty much a economy in tatters. Basically when comparing our current crisis to the most recent in history, it’s always compared to early 1981. But there was a reason he did this, Volcker had to take that money out of the economy and curb the lingering 1970’s era inflation, and the chances are Obama has him on staff so he can rinse and repeat.

Something is going up, either inflation or the interest rates, but something has to give. What do I know? I’m just some guy who’s degree is in economics.