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The Real Hyperinflationary Fireworks Occurred At Jackson Hole Saturday

August 29, 2016

Pardon me if this article starts out a bit disjointed, as I accidentally erased the notes I took last night, amidst the 155th “Sunday Night Sentiment” attack of the past 161 weekends.  And afterwards, the 689th “2:15 AM” raid of the past 793 trading days, which I was able to document in real-time because someone called me at 3:00 AM, acting surprised that I wasn’t on “European time.”  I mean, do I have a French, German, or British accent?

Thankfully, the amount of notes was minimal, as amidst the “summer doldrums,” trading volumes are exceptionally low – with “volatility” at 20-year lows, care of the most maniacal, relentless market manipulation in global history.  Which, of course, is occurring because the global political, economic, and monetary situation has never been uglier.  Not to mention, the powers that be MUST maintain the status quo to enable a Hillary Clinton victory – as if Trump wins, their ability to staunch the bleeding, and control the future, will be dramatically weakened.  For what it’s worth, I strongly believe Trump will win – as like the “surprise” Brexit result, I believe Americans’ actual political leaning is far different than the propagandized “strong Clinton lead.”  Frankly, it strains credibility that anyone would believe this to be true, given the historically horrible economy, the e-mail server scandal, and all out criminality of the Clinton Foundation.

As I wrote in this weekend’s epic “imminent end of an obsession with idiocy,” written at 4 am Saturday morning, Friday’s Jackson Hole shenanigans could not have been more pathetic – starting with Whirlybird Janet’s mind-numbingly dovish speech; which comically, was expected to be interpreted “hawkishly,” simply because she ambiguously stated, based on not a shred of economic fact, that the “case for a rate hike has strengthened.”  Thus, the need to for Vice Chairman Stanley Fischer to be interviewed immediately thereafter on CNBC, to make sure the Fed’s “message” was properly received, that Yellen’s comments were “consistent with a possible rate hike.”  Sure, anything’s “possible” – including, as Peter Schiff notes, an alien invasion.  But possible and actual are two entirely different things, and since we’ve listened to the Fed speak of “possible” – and at times, “probable” – rate hikes for 3½ years, as the economy has relentlessly plunged, both here and overseas, I’ll take the under on such “possibilities.”  More importantly, as I have noted forever, at this point such actions would “accomplish” nothing but the destabilization of financial markets; default of variable-rate debts; and likely, as we saw last December, when the Fed was dumb enough to attempt a rate hike, a renewed surge in PM prices.

Amidst said “summer doldrums,” the “PM bullish, everything-else-bearish” headlines have continued to flow like an out of control river torrent.  Like, for instance, the U.S. Congressional Budget Office forecasting the national debt to rise from today’s $19.5 trillion, to exactly $28.2 trillion a decade from now.  I mean, this is the Obama Administration’s own predictions; from a department notorious for miserably understating anything and everything; such as the Fiscal (September) 2016 budget deficit – which, excluding “off balance sheet” items, is expected to come in at roughly $600 billion, compared to $450 billion a year ago, and the CBO’s initial estimate of roughly $500 billion.  And no doubt, they are assuming essentially no interest rate increases over the coming decade – as if an additional $9 trillion of debt, atop what is already history’s largest, and parabolically-rising, debt load, will have no impact on borrowing costs.

Throw in the weekend’s “other” news items; of Iran having cheated on Obama’s ballyhooed nuclear deal; data showing the Aspen, Hamptons, and Miami real estate markets collapsing as rapidly as Vancouver, London, and San Francisco; one of the Illinois’ largest public pension funds reducing its average “assumed future return,” getting the ball rolling on what will be an historic collapse of the pension and insurance industries; JP Morgan dramatically raising its expected odds of recession; and Julian Assange promising a new round of Hillary-destroying emails; and you can see why, amidst the quietest trading conditions of the year, on Sunday night, gold and silver opened $5/oz $0.25/oz lower, respectively.  Just like last Sunday, when gold opened $7/oz lower, and silver $0.40/oz.

Of course, per today’s title, these weren’t even the most “PM-bullish, everything-else-bearish” headlines of the weekend – as just after I hit send on “obsession with idiocy,” the Jackson Hole Symposium commenced its Saturday session.  Which frankly, was as ominous in its timing, as its content – in that it eerily resembled early February’s news flow, of expanded QE and cashless societies.  Only now, the “Dow Jones Propaganda Average” sits at an all-time (nominal) high, whilst the case for raising rates has supposedly “strengthened” – as opposed to early February, when markets were crashing due to, LOL, the Fed’s late December rate hike.

Honestly, if you didn’t know what markets were doing, the content of the Jackson Hole speeches would have you believe markets were crashing now.  Starting with Whirlybird’s Janet’s, LOL, “hawkish” speech Friday, in which she not only said admitted the Fed’s cluelessness by espousing “our ability to predict (interest rates) is quite limited, (given the need to) respond to whatever disturbances may buffet the economy”; but set the stage for the next round of QE, in stating “future policymakers may wish to explore the possibility of purchasing a broader range of assets.”

Yes, Saturday’s proceedings were when the “real hyperinflationary fireworks” commenced – “coincidentally,” as Atlas Shrugged cartoon character Ken Rogoff published a paper recommending the elimination of the $20, $50, and $100 bills.  Putting said “coincidence” in perspective, Rogoff is currently a Harvard professor, after having “served” as a Federal Reserve governor and the IMF’s Chief Economist.  Just like Larry Summers, who “coincidentally” published an essentially identical “cashless society” endorsement amidst the early February market crisis.  Larry Summers, whose resume included Chief Economist of the World Bank, U.S. Treasury Secretary, Director of Obama’s National Economic Council, and President of Harvard.  In other words, the cashless society is as real as ever – in my view, one potentially imminent market crisis away.

Next up – and we haven’t even gotten to the actual Jackson Hole proceedings yet – none other than Barney Frank, whose “anti-Wall Street” Dodd-Frank regulations should make him one of the most financially conservative members of Congress, all but ordered the Fed to hold off on interest rate hikes before the election, so as to avoid “destabilizing” the markets.  As if the Fed had any such plans to start with – or that, god forbid, a stock market at its all-time high might actually decline.  I mean, you simply can’t make this stuff up.

Finally, the Symposium proceedings themselves, kicked off by the ominous conclusion of yet another Ivory Tower “economist,” Christopher Sims of Princeton University, in predicting that during the next financial crisis, “it may take a massive (QE) program, large enough even to shock taxpayers into a different, inflationary view of the future,” to prevent all-out collapse.  In other words, as reflected by perhaps the most distasteful, patronizing, and megalomaniacal comment a central banker has made since Draghi’s “whatever it takes (and believe me, it will be enough),” we’re entering a “brave new world of central banking,” per Atlanta Fed President Dennis Lockhardt.  Yes, as “brave” as Ben Bernanke was “courageous,” per the title of Ben’s recent book, “The Courage to Act.”  And more importantly, as devastating to the world’s “99%” – and their descendants – as a nuclear warhead. I.e., a “financial weapon of mass destruction.”

Yahoo! Finance, the head MSM lackey itself, described the oxymoronic proceedings perfectly, in stating “Federal Reserve policymakers are signaling they could raise U.S. interest rates soon, but are already weighing new tools they may need to fight the next recession.”  You mean, the recession we haven’t had for four years, making this “expansion” the third longest in U.S. history?  Yes, even Yahoo! Finance acknowledged participants’ suggestions of “new policy tools down the road”, like raising the inflation target (proposed by San Francisco Fed President John Williams last week) or the monetization of non-government-backed assets like corporate debt, per Yellen’s “broader range of assets” comment.  Even Lockhardt himself, “brave new world” and all, admitted the Fed’s gargantuan, $4.5 trillion balance sheet might never be reduced, in stating “I suspect there are colleagues who are contemplating a statically large balance sheet is going to be a fact of life, central to the (Fed’s) toolkit.”  Essentially, he’s admitting the Fed has no “exit strategy” – whilst incredibly, claiming a $4.5 trillion balance sheet of toxic, high duration, massively overvalued securities is a “tool.”  No, Dennis, it is not an “asset” to have an unsellable portfolio, just as it is not a Cartel “asset” to have record high naked short positions!

That said, the day’s biggest “hyperinflationary fireworks” were reserved for representatives of the current inflators-in-chief of the central banking community, the ECB and Bank of Japan.  Regarding the former, Draghi didn’t personally attend, but sent one of his top lackeys, Executive Board member Benoit Coeur – whose name, ironically, means “heart.”  Coeur, in true central banking fashion, said the ECB would be powerless to “stimulate” further unless governments step up fiscal policy efforts.  Quite ironic, as the only way to finance said efforts, when said governments are effectively bankrupt, is via “helicopter” money printing.  Irrespective, he predicted “we may see short-term rates pushed to the effective lower bound more frequently in the event of macroeconomic shocks; and the stimulus provided by lowering interest rates to that level, would be of course be much weaker.”  In other words, negative interest rates are here to stay, even though they won’t work.  Other than to destroy savers and generate hyperinflation, of course!  And putting the icing on his moronic cake – and generally speaking, the abject failure of the ECB’s policies – Coeur noted how the ECB’s stimulus measures “were taken on the implicit assumption they would be transient,” just before noting – as described above, by both himself and Dennis Lockhardt – that they were here to stay.

Last but not least, leave it to the most psychotic money printers the world has ever known – until now, that is – to not only make the boldest, most unhesitatingly hyperinflationary statements of all, but appear to actually brag about prior “success” in the process – when indisputably, it has failed more miserably than any central bank in history.  Which was, the “bold” and “courageous” statements of Bank of Japan governor Haruhiko Kuroda, that “there is no doubt there is ample space for additional easing in each of the three dimensions” – of asset buying, monetary-base guidance, and negative interest rates.  Which of course, caused the Nikkei stock market – which the BOJ will shortly own all of – to soar, whilst gold and silver were attacked at the Asian open.

In other words, what was propagandized to be a “hawkish” Fed presentation, was in fact the most transparently dovish central banking statement imaginable.  Which, given the aforementioned “strength” of (PPT-goosed) stock and bond markets, could not be more ominous regarding the true state of the global economy, or what central bankers – and their cohorts in Washington and on Wall Street – are about to unleash on a largely unsuspecting world.

And LOL, as I’m about to hit “send,” the US markets opened, with Treasury bond yields plummeting, knowing full well the odds of a September “rate hike” or as negative as the Fed Funds rate will ultimately become.


Courtesy of

Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies.

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