U.S. Dollar at Risk of a Hyperinflationary Collapse

Gold and Silver Remain the “Canary in the Coal Mine” of Hyperinflation


Jerome R. Corsi, Ph.D.

The ultimate fate of the current U.S. dollar is now at serious risk of a hyperinflationary collapse, with the COVID-19 pandemic crisis providing the trigger.

This warning is being sounded by economist John Williams, the creator of the widely followed website ShadowStats.com.

“Decades of gross financial mismanagement by the federal government, gross monetary system mismanagement by the Federal Reserve, and conflicted, albeit related joint government and Fed mismanagement of the economy and banking system are being laid bare, exposed by the COVID-19 pandemic shutdown of the U.S. economy and related societal turmoil,” Williams wrote in his subscription newsletter published on June 4, 2020.

As a traditional economist, Williams worries that the recent multi-trillion dollars spent in various federal stimulus programs amounts to a simple formula for inflation: namely, too much money thrown at too few goods tends to trigger rising prices.

Williams notes Consumer Price Index (CPI) inflation in the United States from 1970, the last year of the gold-backed U.S. dollar, to date has been 561 percent.

At the same time, the increase in the U.S. dollar price of gold from 1970 to date has been 4,314 percent.

Williams is concerned that an examination of the Federal Reserve’s balance sheet is beginning to look “a lot like a tacit acceptance of ‘Modern Monetary Theory’ (MMT), just printing money as needed ‘without consequence.’”

MMT, Williams explained, centers on the concept that a sovereign state, such as the United States, can print money at will, with no need to balance a budget or sell bonds.  The theory assumes that the U.S. cannot default on debt denominated in its sovereign currency, the U.S. dollar, since the U.S. can simply print any dollars needed to cover its obligations – an idea once espoused by Federal Reserve Chairman Alan Greenspan.

“Applied to the United States, the theory advocates that the government simply print whatever dollars it needs, for example, to provide a guaranteed minimum income and/or employment to the general population,” he wrote.  “There is no need to issue bonds.  Should inflation pick up and become a problem, the U.S. government simply has to take excess cash out of the system to contain it, by raising taxes or then by selling bonds, per MMT.”

Williams notes that despite ups and downs around wars, the California Gold Rush, and through World War I, the graph of inflation shows what appears to be a fairly stable level of prices up to the founding of the Federal Reserve in 1913 and to Franklin Roosevelt’s banning domestic ownership of gold in 1933.  But following President Nixon’s closing of the gold window in 1971, inflation took off in a manner not seen in the prior 250 years, at an exponential rate.

“When a currency is debased, precious metals function as stores of wealth,” Williams warns.  “Over the millennia, gold and silver have served investors – those holding the physical precious metals – with a stable, liquid and portable store of wealth against inflation or monetary turmoil, as well as often providing a vehicle for financial and personal survival in times of political and social upheaval.”

Williams observed that roughly the same amount of silver that would buy a loaf of bread in ancient Rome would buy a loaf of bread today in New York City.  A Broadway enthusiast who could get a third-row seat for a prime New York City play in 1925 for the cost of a five-dollar gold price, could get that same seat today for the value of the gold content of the same five-dollar coin.”

Williams concluded his analysis commenting that “gold and silver prices remain the ‘canary in the coal mine’ of hyperinflation,” especially in the economics of the current COVID19 pandemic, when Congress contemplating multi-trillion dollar “economic stimulus” laws seems strangely business as normal.