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The Currency War, Part II

However, even our dim-witted political servants can comprehend the inevitable result of competitive devaluation: all their paper currencies utterly worthless, the fraudulent Paper Empires of their Oligarch masters nothing but confetti. The only way to delay this outcome is to:

a) Lie about what they are doing

b) Manipulate markets to hide the effects of their actions

Hyperinflation should be an event of pure arithmetic. Exponentially increasing money printing (i.e., an exponentially increasing rate of currency-dilution) should produce identical but inverse curves. One curve shows the money-printing going to infinity, while its mirror image shows the value of currency going to zero at the same rate.

However, hundreds of years of empirical evidence show us that the typical hyperinflation is not an arithmetic event but rather a "crisis of confidence." To properly understand this requires understanding a colloquial term: the "con-man."

This colloquialism is, in turn, the shortened form of "confidence man." This reflects an understanding that (ultimately) all swindlers require first obtaining and then maintaining the confidence of their chump(s). The dynamics are simple.

When the con-man has our confidence we trust what he says, and thus don't look carefully (and think carefully) about what he is actually doing. However, the moment the con-man loses our trust/confidence we suddenly closely scrutinize what the con-man is doing to us; we recognize the sham/swindle/fraud and the proverbial "jig is up."

Logic tells us that hyperinflations should be events of pure arithmetic. History tells us most hyperinflations are a "crisis of confidence." Translation: the "final stage" of most hyperinflations is the interval between when a currency actually becomes worthless (in economic/mathematical terms) and the Chumps realize that the paper is worthless, i.e., the moment the governments (and the bankers lurking behind them) lose the trust of the Chumps.

Thus history and logic have answered our questions. We now know precisely why our governments are lying to us about their currency-destruction game. And we know why the success of that lie is a do-or-die imperative. Now we get to the really disturbing part.

Our paper currencies are already effectively worthless. This can be demonstrated unequivocally in several different ways. Permanent 0%/near-zero interest rates alone make these paper currencies virtually worthless; and the simple economics/mathematics that demonstrate this are laid out in a previous commentary .

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