Like a deadly cancer, it’s growing and intensifying. And we are nearing the tipping point.

James Rickards –
"The Fast Track From No Inflation to Runaway Inflation"

– Flash Points –

1 – A currency crisis is inevitable.
2 – The crisis will result in a total loss of confidence in the US dollar.
3 – Inflation is already here – growing like a cancer.
4 – Central banks will soon lose control.
5 – Soon afterwards, we will all realize that we too have no control. 

– Synopsis –

The economy is in crisis, but the Federal Reserve’s only solution is to throw more money at it. Those foolish money-printing policies might destroy confidence in the US dollar.   

Confidence, or Lack Thereof

The dollar and all other fiat currencies have no inherent value, only assumed value. And they can maintain that value only as long as we remain confident in the currency.

Even though the Fed (and the other major central banks across the globe) have been engaging in relentless QE money-printing programs for the past decade or more, most of us have not seen any of the expected and inevitable inflation.

Inflated Bubble = Inflation 

Nevertheless, while we may not yet be experiencing consumer-price inflation, we are certainly experiencing asset-price inflation. Plenty of it. The stock, bond, and real estate markets are all at dizzying, nose-bleed levels. They’re in wildly inflated bubbles. That’s inflation.   

Eventually, inflation will also hit consumer prices. Nobody can say when that will happen, but it’s unavoidable. And when inflation hits, it will most likely spin out of control. 

The 4 Stages of Money Illusion 

Inflation will come through 4 stages of what Rickards calls the “money illusion.” 

1 – The “Feel-Good”  Stage – Central banks print more money. It starts to trickle into the economy. We receive some of it, and think that we are getting richer.

2 – The “Have-It-Under-Control”  Stage – We notice that prices are getting higher. But we believe that all remains well. We trust that the central bank knows what it’s doing, and that it will never allow the situation to get out of control.

3 – The “Uh-Oh”  Stage (so named by @majes.tytyty) – The central banks lose control. Inflation gets out of control. We start to understand what’s happening, and we suddenly realize that we have no control.

4 – This stage can take either of two paths. One is “Hyperinflation.”  The other is “Shock Therapy.”  

Shock or Hyper-Shock 

In the case of “Hyperinflation,”  all fiat currency loses its value. In other words, our money is destroyed, and we become very poor.

In the case of “Shock Therapy,”  inflation could supposedly be prevented, by raising interest rates to about 20%. In other words, the economy is destroyed. That’s as bad as if we all became very poor.   

Currently, we are in the latter moments of Stage 1. Soon, we’ll head into Stage 2. But, of course, most of us will continue to delude ourselves into thinking that everything is hunky dory.

It’s not.

– Insight from Outside –

As James Rickards outlines so clearly, inflation is already here. Like a cancer, it may not be noticeable. But like a malignant cancer, it’s growing and intensifying. And we are nearing the tipping point.  

1 Pizza for the Price of 10. Woohoo!

Recency bias can easily prevent us from noticing any inflation. Moreover, recency bias can prevent inflation from actually taking hold. But only temporarily. The tipping point is near.

For example, if a pizza costs $10, we can expect that the price will NOT jump $5 overnight (that is, to $15). But if the price does climb to $15, we can then expect another, more rapid jump, to $20. And then another quick jump to $30. And the next jump might be to $60, or even $100. That's hyperinflation.