Tuesday , 23 May 2017


Inflation or Deflation: Are We Approaching the Tipping Point?

IDW-2014-06-27Might our IDW be suggesting a breakout in asset price inflation is about to take place? Could it in fact be presaging the start of John William’s hyperinflationary depression in which prices rise exponentially even in light of massive unemployment and bankruptcies?USDOne point worth noting is that commodities…have been showing price strength of late. Copper has suddenly shown new life, especially over the last couple of weeks. It closed at $3.16 this week and is up 7.6% since its March low. Oil is up by 6.8% since its March lows and the Rogers Fund is up 9.2% since its January lows.Prospects for Future InflationIf we are on the precipice of a serious inflation problem, we should start to see:

  • a major decline in the dollar index and
  • materials prices start to take off.
Prospects for Future Hyperinflation
For the kind of hyperinflation that John Williams is steadfastly predicting, we will need to see a collapsing dollar. Looking at the moving averages above, the dollar Index closed at 80.07 this week. That’s below the 50-day moving average of 80.61 but decidedly above the 200-day average of 79.61. Obviously the really big target would be the lows in 2011, when gold made its highs. The dollar fell below 74 then. If we are to see a collapse in the dollar of that magnitude, we might start to worry but for now the prospects of that happening appear fairly slim.
GUSDPercentage of Foreign Global USD Holdings
The percentage of Global U.S. dollar liquidity that is held by foreign central banks has been in a steep decline since 2008-09. (As the Fed is printing more and more dollars, foreigners are saying, “No thanks! We don’t want more of your fraudulent currency.”) It is a trend that could catch hold with lightening speed and that would likely send global markets reeling but for that to take place, monetary velocity will have to speed up and so far there are no signs of that happening as America’s dwindling middle class who is, out of necessity, holding on to every dollar they get to buy the absolute necessities of life. Thanks a lot, Alan Greenspan! Thanks a lot, Ben Bernanke for your policies of bankrupting America and its middle class!Conclusion[In answer to Taylor’s question Are We Approaching An Inflation Tipping Point? the answer is “not yet.”

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://jaytaylormedia.com/are-we-approaching-an-inflation-tipping-point/ (2014 Copyright © Jay Taylor Media )

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