Nothing has represented the rise of the hyperinflation meme more than the price of silver has over the last few years.  At every twist in the market the rise in precious metals and silver in particular, has been used as the cornerstone of evidence of “money printing”, debt monetization and raging inflation that was guaranteed to ravage the US economy.

But as Treasury bond yields crater  (and prices surge), the dollar rises and precious metals collapse, the hyperinflation theory is turning into a nightmare.  As of tonight, the price of silver has reached a -48% decline since their April highs – just shy of where I referred to it as a bubble and said it was an excessively risky market….

Unfortunately, millions of people have bought into this meme and “invested” their hard earned money in the false analysis of the doom sayers who sold this hyperinflation theme to an unwitting public.  It’s all another case of misunderstanding the modern monetary system as much of this theory was predicated on complete falsehoods regarding the actual workings of our monetary system.  And now millions of people are getting hurt.  It’s a shame.  And it didn’t have to happen.

Hyperinflation was never coming.  It’s still not coming.  But the theory was easily misunderstood and even easier to sell.  What’s most frustrating about the hyperinflation meme is that it was not sold to the American public by Wall Street or bad salesman.  Rather, in most cases it was sold by average joes and boutique firms looking to cash in on what they thought was rigorous and accurate analysis (usually based on Austrian economics).  But as we’ve seen time and time again here, misunderstanding the modern monetary system is bad for your portfolio’s health….

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Cullen Roche

    ==Except my conclusions wasn’t depression (Keen), stagflation (Janszen) or hyperinflation (Schiff) so I actually got it more right than they did==

    To be fair to Keen the USA would be in a technical depression right now if the government wasn’t running a 1.5 to 2 trillion dollar budget deficit.

    As for Janszen according to the MIT Billion Prices project inflation is running at 4%. With wages stagnant a 4% inflation rate feels like stagflation for a lot of people. He’s not completely off base.

    Ok Schiff was clearly wrong about hyperinflation. If Japan has taught us anything it’s that we can expect YEARS of mild inflation before the imbalances get large enough to trigger a currency collapse.

    • I guess why I like all three of these guys (admittedly they aren’t perfect) is because they correctly identified the problem.

      Years of unproductive, malinvestment would crash the US economy. Everybody in the MSM was focused on the latest unemployment report and GDP figures.

    • Inflation is running at about 4% because of oil prices and some pass thru to food prices. It has nothing to do with govt deficits. Being right for the wrong reasons doesn’t count.