Short interview of Bill Haynes, President of CMI Gold and Silver

King World News weekly wrap included a short interview with Bill Haynes which is worth a quick listen.  The link can be found here and the interview runs from 1:15 into the MP3 to 4:24.  Skip everything before the 1:15 mark unless you like to listen to commercials.  After the 4:24 mark the discussion changes to silver levels in the COMEX which might be interesting but which are beyond the scope of today's blog post.

It's a fast paced discussion of basic material which is why I think it is worth the time to listen to.  The salient points are the societal impacts of funny money and those listed by Haynes are remarkably similar to what I have been observing and writing about for years.  The quick summary is:

• Hyperinflation destroys society
• The road to hyperinflation begins with inflation.
• Inflation turns people into speculators.
• It distracts them from producing things of economic value.
• When the hyperinflation arrives it changes the mores of society. 
• People who were previously honorable begin to default on contracts.
• People living on fixed incomes then call for the government to confiscate other people's wealth to make up for the wealth they lost because of the deteriorating investment market.
• Government is the cause of the problem and government intervention will make it worse.
• Dollar will not go away over night but it will certainly happen over time.
• Only a small percentage of the people will be prepared for hyperinflation by having their assets in tangible assets.
• Hyperinflation makes it difficult for businesses to operate.  That includes the business of farming.  Massive shortages are the historical result of hyperinflation.
• Food shortages lead to riots.  People say it can't happen here but yes it can.  People are people no matter where they live.

Note that Haynes is not calling for immediate hyperinflation and neither am I.  The credit destruction and de-leveraging is reducing the global money supply faster than Ben Bernanke can print up new money from thin air to take its place.  This reduction in credit produces a net reduction in the global money supply relative to the stuff that is for sale (i.e. production) and that is the definition of deflation, not inflation.  Alan Greenspan, master con man and architect of the global credit bubble, is on record saying that there will be no lasting bottom until housing recovers.  Unfortunately, housing has not recovered and in fact the data suggests that it has another 20-30% to drop before a bottom is found.  Even more unfortunately, each time we hit one of those milestones, the data suggests that we have another n% of drop ahead of us.

Having said all of that, there will come a day when the bad credit and debt are wiped out and that's when the massive inflation is likely to kick in.  Government has been printing up all this money - tripling the monetary base in the past 4 years.  When banks begin to lend again it will be on top of a much larger monetary base and so credit expansion will be faster than we have ever experienced in this country before.  Speculators will not want to get left out of the feeding frenzy and so, as Haynes recounts, they will avoid honest work in favor of the chance to make a lot of money for doing very little real work.  In other words, they will be leveraged gamblers.  All the new credit they take on will increase the money supply relative to the stuff for sale and that is going to be massively inflationary, and perhaps even hyperinflationary.

To recap, society is nothing more than people working and living together for the common good.  Sound money is required in order to retain the basic fairness principle of economics which is that if you work hard to produce something of value that you are the beneficiary of the fruits of your labor.  When this principle breaks down then society breaks down because people begin to believe that they would be better off on their own.  When government comes in with a dishonest money system, there have to be winners and losers.  Government picks the winners based on those who support the reelection and funding of government and everyone else is a loser in the deal.  The end result is a breakdown in societal mores, civil unrest and in extreme cases civil war and the breakdown of the federation.

The worst part about all of this is that the breakdown tends to "go AIG".  In other words, the breakdown tends to happen quite rapidly with most people left saying "we never saw it coming".  But the signs are all around us right now.  The honesty of the money supply is being called into question on many fronts.  Utah has made gold and silver coins legal tender again.  Ron Paul wants to audit the US gold supply.  Banks continue to fail on a regular basis in the US and abroad.  The Eurozone is a house of cards waiting for a stiff wind to blow.  Good honest people are strategically defaulting on their homes and other forms of credit debt while at the same time housing prices continue to fall.  Banks are holding trillions in shadow inventory in both residential and commercial real estate.  Government is on a mission to obfuscate the extent of the problems.

This is not a sustainable healthy situation.  It is a scam in the collapse phase; a slow motion train wreck of the economy and very likely of American society.  The only way to fix this is to go after the root cause which is the gross unfairness which is imposed upon society by scam laden fiat currency and fractional reserve banking.  No amount of patching and mending will fix what ails us until we make the money supply honest again.  Unfortunately, perhaps 1 in 10,000 understands this.  Most people are distracted by the symptoms that they do not see the root cause.  In America, the solution must start with a complete audit of the gold supply and of the Federal Reserve and then the Federal Reserve must be shut down and our money must be made honest again through some commodity backing with gold and possibly silver at much higher prices as the backing commodities.  You can argue Dem vs. GOP until you are blue in the face but things will only continue to get worse until the basic task of returning to an honest money supply is completed.  The best way for Americans to do their part in making this happen is to elect Ron Paul in 2012.  None of the other candidates are focused on fixing the dishonest money supply because none of the rest of them want it to be fixed.  They all intend to cash in on the scam before it collapses under its own weight.