The National Inflation Association (NIA) believes it is very unlikely that our representatives in Washington will have the political backbone and courage to implement any of the National Commission on Fiscal Responsibility and Reform’s  proposed cuts in domestic and defense expenditures and increases in tax revenues. [Instead, as the NIA sees it,] the U.S. is on a path towards exploding budget deficits in the years ahead that could cause an outbreak of hyperinflation by the end of calendar year 2015. Words: 887

So says the National Inflation Association (www.nia.us) in edited excerpts from their original article*.

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

The NIA goes on to say:

NIA’s Proposal to Prevent Rampant Inflation

The only way the U.S. will be able to prevent hyperinflation is if:

1.  the U.S. government dramatically cuts spending across the board immediately and if

2. the Federal Reserve raises interest rates from near zero percent (where they have been for nearly two years) to a level that is higher than the real rate of price inflation.

Considering that the Federal Reserve still claims to fear deflation and just announced massive quantitative easing, we see very little chance of any major interest rate hikes taking place during the next six months.

Commission’s Proposal is Too Little Too Late to Avoid Rampant Inflation

Even if the commission’s proposals were implemented [according to their plan] they would be too little too late because it calls for cuts ($100.2 billion in domestic savings and $100.1 billion in defense savings – plus another like amount in increased tax revenues – by fiscal year 2015) to be gradually implemented beginning in early 2012 and it includes absolutely no meaningful cuts to social security. The only proposed major changes to social security are raising the retirement age to 68 in year 2050 and 69 in year 2075. There is absolutely no chance of the U.S. dollar surviving past the year 2020 unless much more drastic spending cuts than the commission has proposed are implemented within the next twelve months.

Commission’s Proposal Under-estimates Interest Payments on National Debt

The commission says that if we fail to implement their proposed spending cuts, we will likely see interest payments on our national debt reach $1 trillion by 2020 based on 5.3% interest rate on our 10-year treasury bills. As the NIA sees it interest payments on our national debt are likely to reach $1 trillion in 2015 because, by 2015, we expect the 10-year yield on U.S. treasuries to be substantially higher then 5.3%.

Editor’s Note: Don’t forget to sign up for our FREE weekly “Top 100 Stock Market, Asset Ratio & Economic Indicators in Review”

During the 1970s, the last time we had an inflationary crisis like the one we are rapidly approaching, the yield on the 10-year bond exploded to a highs of 7.47%. With the Federal Reserve likely to be forced to raise the Fed Funds Rate to around this same level, based on our projected public debt in 2015 of $14 trillion, our interest payments will likely rise to $1.046 trillion or 29% of projected tax receipts, and this is a very conservative estimate.

Food Inflation Crisis Coming in 2011 – and Hyperinflation by 2015

The Federal Reserve’s M2 money supply [will experience an annualized increase of]… 13.25% monetary inflation over the next year. The M2 multiplier, or M2 divided by the monetary base, currently stands at 4.426, compared to a long-term average of 10 and, based on a projected monetary base of $2.5851 trillion and a long-term average M2 multiplier of 10, the M2 money supply has a chance of rising as much as 194% to $25.851 trillion over the next few years.

In the short-term, if the M2 multiplier remains at 4.426, it is likely the M2 money supply could rise to $11.4416 trillion next year, up 30.22% from its current level. With the UBS Bloomberg CMCI Food Index currently up 30.5% from its low in August, it appears as though the market has already factored the upcoming 30.22% increase in the M2 money supply into agricultural commodity prices. Even if food manufacturing companies and retailers agree to accept 2/3 of these rising costs in the form of lower profit margins, Americans will still see about a 10% rise in retail food prices come early 2011.

Washington Politicians Will Cause Rampant Inflation With Their In-Action and Mis-Action!

The upcoming food inflation crisis and eventual hyperinflation will come as a direct result of our representatives in Washington trying to prevent a much needed recession by propping up real estate prices through bailouts, stimulus plans, tax rebates, and other wasteful programs. The only thing that our elected representatives care about is remaining in power. They only see our current problems and not the problems that will arrive next as a result of their actions. Their goal is to make the average American as dependent on them as possible…

Massive price inflation [is just around the corner!]

*http://inflation.us/hyperinflationguaranteed.html

The most important thing you need to know is that silver is the single best investment for the next decade. In the opinion of the National Inflation Association (NIA) investing in silver is the only sure way to tremendously increase one’s purchasing power over the next ten years. Words: 865

So says the National Inflation Association (www.inflation.us) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) The NIA goes on to say:

Throughout world history, only ten times more silver has been mined than gold. If you go back about 1,000 years ago between the years 1000 and 1250, gold was worth ten times more than silver worldwide. From year 1250 to 1792, the gold to silver ratio slowly increased from 10 to 15 and the Coinage Act of 1792 officially defined a gold to silver ratio of 15. The ratio remained at 15 until forty-two years later when the ratio was increased in 1834 to 16, where it remained until silver was demonetized in 1873.

The gold to silver ratio remained between 10 and 16 for 873 years! It is only over the past 100 years that the gold to silver ratio has averaged 50. History will look back at the artificially high gold to silver ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. This fiat currency experiment will end badly in a currency crisis. The wealthiest people will be those who bought silver today and were smart enough to research and pick the best silver mining stocks.

Editor’s Note: Don’t forget to sign up for our FREE weekly “Top 100 Stock Market, Asset Ratio & Economic Indicators in Review”

While the vast majority of the gold ever produced remains sitting in vaults, 95% of the silver produced has been consumed by industry for thousands of applications in such tiny amounts that most of it will never be recycled and seen on the market again. Nobody knows the exact above-ground supply of silver today, but most likely it is somewhere in the neighborhood of 1 billion ounces. That’s a total worldwide market value of only $17.4 billion, when the world has over $7 trillion in foreign currency reserves, mostly in fiat currencies that they will need to diversify out of due to rampant inflation.

Besides the fact that the world has been ignoring the monetary value of silver, silver prices are artificially low due to a large concentrated naked short position. It’s not a coincidence that the day silver reached its multi-decade high of over $21 per ounce in March of 2008, was the same day Bear Stearns failed. Bear Stearns was a holder of a massive short position in silver. In our opinion, this was likely a naked short position because there is nobody in the world who owns such a large amount of silver for Bear Stearns to have borrowed.

The reason why we believe the Federal Reserve was so eager to orchestrate a bailout of Bear Stearns, is because Bear Stearns was on the verge of being forced to cover their silver short position. Because the silver market is so small and tightly held, if Bear Stearns was forced to cover their short position, silver prices could have potentially risen to $50 per ounce or higher overnight. The world would have seen how economically unstable our country is and confidence in the U.S. dollar would have rapidly deteriorated.

JP Morgan still holds the silver short position they inherited from Bear Stearns. The concentrated naked short position in silver today is the largest short position in the history of all commodities, as a percentage of its market size. Eventually, JP Morgan will have to cover this short position or it could jeopardize their existence.

The best evidence that the short position in silver is naked and not backed by real silver, is the differential between what silver trades for on the Comex and what real people are willing to pay for physical silver on eBay. Every hour on eBay, there are dozens of one ounce silver coins selling for approximately $25. That’s about a 43% premium over the current spot price of silver. With so much demand for physical silver, we doubt the silver shorts in the paper market will be able to manipulate prices downward for much longer. A major short squeeze could be right around the corner and silver could take off in a way that shocks even those who are most bullish.”

The fiat currency experiment will end badly in a currency crisis. The wealthiest people will be those who bought silver today and were smart enough to research and pick the best silver mining stocks.

*http://inflation.us/silverbestinvestment.html

Editor’s Note:

• The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
• Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
• Sign up to receive every article posted via Twitter, Facebook, RSS feed or our FREE Weekly Newsletter.