Understanding the New Era we Face – No More General Terms Apply

QUESTION:  In regards to the “Crash or Collapse” post you just put up, we kind of wonder what you meant when you wrote at the end “This will not be like anything seen in past 200 years”

We were wondering, was that in regards to a crashing market or
crashing Bond market? I thought you said in the past ( since I read
all your stuff) that markets will suffer after Oct 1st, 2015 as well.

N

German-1925-Rentenmark

ANSWER: This is the way capital moves. HYPERINFLATION is just the extreme movement of capital when CONFIDENCE in government collapses. It is not gold that rises by itself, but ALL tangible assets. I have explained many times that the new currency issued in Germany to restore confidence (Rentenmark) was backed by REAL ESTATE. That was accepted by the people.

1931-SovDebtDefault

When I say this will not be a crash like anything we have seen in 200 years, it is because this will be a flight to private assets – not government. So public bonds will collapse but private assets will rise. We saw the sovereign bonds collapse in 1931. They just went off the boards. However, the USA was not in that category so the US debt survived.

Corp-Treas%

 

Nevertheless, the spread between US Treasuries and AAA Corporate paper declined. Smart money began to realize that if GM goes bust, there are still some assets there to be divided up. When a government goes bust, there is zero. Why government debt is considered “quality” when no government has EVER survived is one of the greatest con-jobs in history.

Argentium-Dekadram

Hunt-DecadrahmWe see people buying up real estate at the top end. Collectibles are taking off in price. The famous silver decadrachm of Akragas (modern day Agrigento, Sicily) is a masterpiece of ancient art that was struck at a time of great turmoil in Sicily, just prior to a Carthaginian invasion in which Akragas itself was virtually destroyed in 406 BC. This coin was sold at the Sotheby’s auction of the Nelson Bunker Hunt Collection in 1990. It realized the record price of $ 572,000 at that time. It was sold for 2’300’000 CHF (about $2.5 million) by Numismatica Ars Classica in Zurich at Auction 66 on October 17, 2012.  Today, it would probably exceed 3 million CHF.

People have been asking me if I can offer any high-end coins. Not really. But I have put the word out if there are any hoards found give me a call. Asset Inflation is running high as capital tries to get off the grid. Overall; inflation did not match the expansion in money supply by the Fed as most people think it should have, while food has risen solely due to shortages in supply – not monetary inflation – substantially different from commodities in general (i.e. gold).

Therefore, this will not be a crash where bonds rise and assets fall to dust. We are in a completely different sort of spiral. We do not face inflation in the classic sense. Food is rising due to shortages, general commodities are declining, while assets rise. We have to pay close attention to these distinctions – it is no longer general terms.