Saturday, November 19, 2011

Inflation and the Debt Crisis

Ever wondered why costs in Singapore keep rising? The simple answer is the creation of SGD out of thin air by the central bank and the fractional banking system. Here's some data:

From Sept 2010 to Sept 2011 
M1 money supply rose almost 20%
M2 rose 11.3%
M3 rose 11.3%

From Sept 2008 to Sept 2011, 
M1 rose 69.4%
M2 rose 33.9%
M3 rose 32.6%

Brace yourself, more inflation (theft from the population) is coming!

And for those who think that US doesn't have QE3, technically they are right in the sense that it is not official and there's no program called "QE3" that has been announced by the Fed. I would beg to differ! Ben Bernanke had himself announced that he's gonna keep interest rates at 0% for a substantial period of time. How can he do that? That's right, by printing money. QE3 is just a euphemism for money printing folks! It doesn't matter whether they name it QE3 or not. It has already been going on since the end of QE2 in June 2011. Otherwise, interest rates in the US would have spiked up dramatically. The Fed is there to print money and buy up govt bonds.

Our 40-year old monetary system is a con-job. It allows govts and bankers to grow really big, at the expense of the general population. This system will implode on itself spectacularly, as I have repeatedly said. We are seeing this play out in the form of sovereign debt crisis in Europe right now. People are focusing their attention on the European countries. Pretty soon, attention is going to be turned to the US. We are seeing protests in US right now, and it is only going to get more violent. 

The economic turmoil that is coming will dwarf any of those we've experienced in our lifetime. The world's debt has crossed the world's GDP. The central banking system creates money out of thin air to keep this going. But it will end soon. I am not sure how it will play out exactly in Singapore. But I think interest rates will rise and put a lot of pressure on prices in low-interest-rate-dependent sectors such as the housing and banking sectors.

Till then, I'm steadfastly holding on to my gold and silver. I am going to make my 8th purchase of the year soon, and am looking to accumulate more when the chance arises.

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