Why I'm Praying for Government Incompetence

by Bill Bonner



"You Americans don't understand anything. You have to come to Argentina and live here for a few years. Then you'll understand America."

We had to ask, "Huh?"

"When you're here, you can see more clearly how things really work... and don't work. You see the real nature of things... especially government. Believe me, you Americans have all sorts of delusions.

"A government 'by, for and of the people'? Or, as Hillary Clinton put it, 'The government is all of us.' Not quite. And when you've been here for a while, you'll see your own institutions more clearly."

Our Man in Argentina

The speaker was a friend of ours. An American from Alabama who has lived in Argentina for 30 years. He lived through the hyperinflation of the 1980s... the boom of the 1990s... and the crash of the 2000s.

Are We a 'Criminal Element'?

by Bill Bonner 

 















Back in the USA, stocks rose again yesterday. The Dow finished up 128 points. Gold fell $25 per ounce yesterday... and everybody seems to think it will be going down forever. (A word of caution: probably not.)
Last week, we went to São Paulo, Brazil. There, too, we found taxi drivers who knew a lot more about monetary crises than the typical US economist. Said one:

I remember. I was just a kid. But my father would call and tell us to run to the grocery store. He had just been paid. We'd dash for the grocery story, meet him there and buy everything we could. We spent every cent in just a few minutes.

Our friend was recalling what it was like in the late 1980s in Brazil. The government had caused inflation... then hyperinflation. Prices rose so fast that as soon as people got some cash they ran to the grocery store to spend it.
Later, there was no point. In 1990, hyperinflation in Brazil reached 30,000%. What cost 1 real (the Brazilian currency) in 1980 cost 1 trillion in 1997. The hyperinflation wiped out the middle class... and wiped the shelves clean.
"It's hard to run a business when you don't know what your money is going to be worth," said our friend. "Businesses tended to just stop."



From Harare to Buenos Aires...

And here in Argentina, there came an announcement this week. The government will freeze the price of gasoline for the next six months.

Will the US dollar hyperinflate?

by James Turk - Goldmoney

The hyperinflation of a currency is typically described as an event, as if one day everything is normal and then the next day hyperinflation is manifest throughout the economy. This description explains, for example, how the hyperinflations that destroyed the currencies in Germany in the 1920s, Serbia in the 1990s and Zimbabwe more recently are generally viewed.

Hyperinflations, however, are not spontaneous. They do not appear “out of the blue”. It is therefore more accurate to describe hyperinflation as a process. There are many steps taken on the road to hyperinflation that ultimately and eventually leads to the destruction of a currency.

What is a hyperinflationary depression and could it happen?

By: Peter Cooper, Arabian Money

Think Zimbabwe a moment. This is the most recent example of a hyperinflationary depression. Basically in Zimbabwe the black nationalists ejected the white farmers and replaced them with locals who could not farm, crashed the economy and started printing money. Hey presto! Rampant hyperinflation and a very depressed economy.

The problem with printing money to solve economic problems is that once started it is very hard to stop. It is always easier to print more than deal with underlying issues such as over-spending and a government-dominated economy. Democratic politicians like turkeys do not usually vote for Thanksgiving.