Prepare for the Hyperinflationary Great Depression

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John Williams, a career consulting economist and the force behind the antidote to government falsehoods that masquerade as economic statistics -- ShadowStats.com -- published there earlier this month a subscribers-only document, "Hyperinflation Special Report [Update 2010]."

I have not yet been able to lay hands on the actual document [a 36 page pdf with sleep disturbance potential], but I've encountered some writings of those who have seen the real thing they quote excerpts from it.

If anyone has access to the report, uploading it here would be a nice thing.

The file in this torrent is a half-hour podcast interview of John Williams by Eric King that took place two days after Williams' hyperinflation report came out.

What Williams is saying is more or less this:

The US government's financial situation is much worse than generally understood. This shows up when you use ordinary GAAP-type accounting [Generally Accepted Accounting Practices -- the kind required of business that includes pensions, in this case Social Security and Medicare]. The real deficit for 2008 is not the approximately 500 Billion reported. If one includes unfunded liabilities for Social Security and Medicare the 2008 deficit was about $5.1 Trillion, and he forecasts 2009's to be $6.8 Trillion.

Adjusting Social Security and Medicare downward is politically impossible.

The US government and Federal Reserve will deal with this situation by printing money.

As soon as foreigners stop buying US bonds the Federal Reserve will take over. This will be a currency event that results in hyperinflation.

The currency event and hyperinflation will happen sometime in the next five years as soon as 2010.

From the report:

Quote:

The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold.

[ . . . . ]

The crises have been generated out of and are centered on the United States financial system, triggered by the collapse of debt excesses actively encouraged by the Greenspan Federal Reserve. Recognizing that the U.S. economy was sagging under the weight of structural changes created by government trade, regulatory and social policies -- policies that limited real consumer income growth -- Mr. Greenspan played along with the political and banking systems. He made policy decisions to steal economic activity from the future, fueling economic growth of the last decade largely through debt expansion.

The Greenspan Fed pushed for ever-greater systemic leverage, including the happy acceptance of new financial products, which included instruments of mis-packaged lending risks, designed for consumption by global entities that openly did not understand the nature of the risks being taken. Complicit in this broad malfeasance was the U.S. government, including both major political parties in successive Administrations and Congresses.

[ . . . . ]

The U.S. has no way of avoiding a financial Armageddon. Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover obligations. The alternative would be for the U.S. to renege on its existing debt and obligations, a solution for modern sovereign states rarely seen outside of governments overthrown in revolution, and a solution with no happier ending than simply printing the needed money. With the creation of massive amounts of new fiat dollars (not backed by gold or silver) will come the eventual destruction of the value of the U.S. dollar and related dollar-denominated paper assets.

What lies ahead will be extremely difficult, painful and unhappy times for many in the United States. The functioning and adaptation of the U.S. economy and financial markets to a hyperinflation likely would be particularly disruptive. Trouble could range from turmoil in the food distribution chain to electronic cash and credit systems unable to handle rapidly changing circumstances. The situation quickly would devolve from a deepening depression, to an intensifying hyperinflationary great depression.

Well, you probably get the flavor.

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