01 Jun 2009

EPJ Goes to Red Alert

All Posts No Comments

Robert Wenzel over at EPJ has summoned everyone to battle stations. In a series of recent posts (1, 2, and 3) Wenzel links to some big guns (like Nassim Taleb) who are hunkering down for hyperinflation.

If you’ve been following Wenzel, you know that he has a taste for starting fights, but he doesn’t like to go out on a limb with his actual market predictions. Yet he’s now saying:

The end of the current financial system, as we know it, may be eminent. If you would have asked me even two weeks ago if collapse was imminent, I would have said it was highly unlikely, now I am saying it is possible. Bernanke may be able to patch things up short-term, if he is lucky, but long term the U.S. financial structure is in serious trouble. There is just too much Treasury debt that needs to be raised. An international panic out of Treasury securities, even a slow controlled panic, means the Fed will be the major buyer. This will ultimately mean record inflation.

And keep this in mind, we have never seen a collapse of a currency like the dollar. Even the Wiemar inflation can not serve as an example. Since the dollar is the reserve currency of most of the world, a panic out of the dollar means more dollars will return to the U.S, shores than any country has ever experienced.

Comments are closed.