EXCLUSIVE INTERVIEW
Jay Taylor on Deflation, Inflation and Why This Crisis Could End in Hyperinflation
By Anthony Wile - June 10, 2009

Introduction: Jay Taylor is editor of J Taylor's Gold, Energy & Technology Stocks newsletter. Throughout his career Mr. Taylor worked as a commercial, then as an investment banker. Most recently, he worked in the mining and metals group of ING Barings in New York. Prior to that he was involved in the first gold loan made in modern times in the US to Amax Minerals, a 250,000 oz. loan facility led by Citicorp. In 1997 he resigned from ING Barings to devote himself full time to researching mining & technology stocks, writing his newsletter and assisting companies in raising venture capital.

Daily Bell: Thanks for spending some time with us.

Taylor: Thank you for giving me the opportunity to talk to your readers. I enjoy your daily missives. They represent a breath of fresh air in what has become an extremely poisonous and dangerous anti-free market environment.

Daily Bell: You were among the first to predict a price deflation in the Western world as a result of the tremendous money bubble that was punctured in 2008. Are we there yet?

Taylor: Deflation is a very natural market response to market excesses caused by the excessive creation of money and credit. The inflation we have had in recent decades-since the 1970s when we suffered considerable consumer price inflation-has been mostly in the financial markets. Stocks had risen to absurd levels as excessive amounts of money was pumped into the financial system. With so much money available for the banks to lend out, banks paid little or no attention to the credit worthiness of borrowers. They just simply booked loans and banked fat bonuses.

Since Nixon took the world off a gold backed monetary standard in 1971, there have seemingly been no limits to the extension of credit and hence growth in the money supply. Endless amounts of money created since then not only resulted in huge amounts of debt but it also resulted in mal investment. If that is a new term to your readers it's because the Keynesian economics indoctrination they have gotten never introduced it to them. "Mal investment" is an Austrian economic concept which simply implies that as excessive money and credit is created, capital is badly allocated into enterprises and wasteful consumption that does not generate income nearly as efficiently as if excessive money were not created.

Eventually, as my good friend Ian Gordon points out, over a period of 60 or 70 years, nations and their central bankers reach a point where debt becomes so extensive it cannot be repaid and the system implodes into a debt induced deflationary depression. As the cumulative effects of mal investment begin to build, policy makers find they need to create money and credit at a faster and faster pace leading to still more mal investment and debt that cannot be serviced in what becomes a feedback loop that can only end when the system finally suffocates and implodes into a debt deflation.

Once a nation's debt grows exponentially, it has reached a state of insolvency and a state of no return. Up to that point, it would have been possible, though increasingly difficult politically over time, to allow market forces to work by deflating the system and bringing it back to equilibrium. But a free market system would have been preserved. In my view, The U.S. has now reached a point of no return, which is why free markets are being abandoned by Washington in favor of an increasingly fascist economic model where government and industry is in bed together to protect their own interests against competitive rigors of a free market.

In the sense that our system is broken and that we have reached a point of no return until the system collapses completely, I think that "we are there." However, I do not believe the deflation process has yet run its course. By one account I saw recently, only about 1/3 of the bad debt in the U.S. has yet been written off. So I believe the financial system still has an awful lot of contraction and pain ahead of it. And eventually it will spill over even more into the real economy in the form of lower prices. Already, for the first time since the 1950s we have had a year-over-year decrease in the CPI of over 1%. It's not a question of whether we are going to get deflation. We already have it. The only question is what the magnitude of that will be in light of policy makers fighting deflation with everything they can think of including a trashing of the free market system itself!

Just looking at the economy it's hard for me to see how anyone can be optimistic. S&P 500 profits are down 90%. That's a bigger decline than was suffered during the Great Depression and so, the PE ratio of the S&P 500 now is by far greater than during the 1930s. Why would we see consumer demand pick up when we are losing 600,000 jobs per month? Why would industry begin to hire with profits plunging like they are? Of course that could change, but why should we expect it to if only 1/3 of the bad loans are written off yet?

Daily Bell: From an Austrian, free-market point of view, we have seen tremendous inflation of money stuff itself. Can you explain to our readers the difference between inflation – over printing of currency – and price deflation?

Taylor: Austrian economics defines inflation as an increase in the money supply and deflation as a decrease in the money supply. Understanding how money is created in a fractional reserve banking system such as we have now is key to understanding why it is that you can have a decrease in prices at the same time policy makers are pumping money into the banking system as the Fed and Treasury are doing in spades right now.

The actual money supply grows when banks are making loans. The trouble is, they are not able to expand the money supply now because just as during the 1930s banks can't find many credit worthy borrowers even though the Fed is pumping money into the monetary base of the banks at a rate of nearly 40% per annum! Therefore, even as the Fed is pumping money into the monetary base, M-3, the broadest measure of money is declining sharply.

The velocity of money is a key to understanding why when money is being pumped into the banking system, more comprehensive, less liquid measures of money are not growing. When people are fearful of losing their jobs or meeting their mortgages they begin to save. And banks won't lend because they too fear defaults by borrowers, which will lead to insolvency and bankruptcy for them as well. This is very much what is going one now. The velocity of money is turning over much more slowly even though newly created money from thin air is pumped into the banking system. Of course we must also acknowledge that the banks are continuing to write off loans and with their low equity to debt ratios, a relatively small percentage of defaults leads to bank insolvencies.

In any event, it is this lack of velocity and an inability on the part of the banks to lend that is leading to falling prices — in spite of the Fed pumping money into the system. Before we met that point of no return that I talked about earlier, when the Fed pumped money into the system it did in fact stimulate the economy or at least more bubbles, which to an extent flowed into the real economy, though much of that, like the housing boom, ended up doing more harm than good because much of this was nothing more than "mal investment."

Of course price deflation is a very arbitrary definition. We think of the CPI as prices of goods and services people need to live on. The composition of the items in the CPI are defined by government and often times have little to do with the real world. Also, assumptions are made about prices are highly hypothetical. I would argue that over the past two or three decades we have had an enormous amount of inflation that does more or less correlate to the money supply growth. However, most of that inflation went into the financial markets and not into the CPI, which is why most of the deflation thus far has come out of the financial markets rather than the CPI. However, if I'm right, there is more deflation yet to come from the real economy too as measured by the CPI and PPI.

Daily Bell: You are a fine hard money writer and thinker. Please tell our readers more about your formative years and what motivated you to move in this direction professionally.

Taylor: I was always very interested in economics because I found the stories of relative poverty my parents suffered when they were teenagers and young adults to be a fascinating topic. But what really stimulated my interest in economics, and more specifically in gold as a monetary metal, was a thesis by a college professor at Hesston College, named Dr. Payton Yoder. Yoder was convinced there was a correlation between the debasing of a currency and declining work ethics and moral standards.

I began to think more seriously about Dr. Yoder's thesis in the late 1960s and into the 1970s as neither Presidents Johnson or Nixon were honest with the American people in telling us that the Vietnam war and the Great Society (Johnson's socialism) were going to cost us a lot in terms of our standard of living. Rather than raise taxes or cut spending to finance these expensive programs, policymakers issued debt, which was subsequently paid for by printing press money.

When Nixon took us off the international gold standard in 1971, there were no longer any obvious constraints in this debt/money creating process so that by the end of the decade we were facing the beginning of hyper inflation that in turn bred speculation because you could make more money speculating in the markets than by working for a living. Indeed this new fiat currency era bred an "us against them" mentality that had not existed previously. Increasingly, those involved in banking and the financial markets began to become wealthier at the expense of those who actually created wealth. The miners, manufacturers, farmers, inventors, etc. found their living standards shrinking while Wall Street million dollar bonuses became commonplace and the Federal government grew like a jungle weed. Dr. Yoder was right. Morality and work ethics began to decline with a debasing of the currency because work and production were no longer being fairly rewarded. What was being rewarded was a pernicious though hidden system of theft.

Of course the rest of the world was not happy about Americans printing extensive amounts of dollars, since dollars were and still are the reserve currency. So leading up to Nixon's decision to take us off the gold standard was a run on our gold supplies by the French and other nations who wanted to trade their dollars in for real money-for gold rather than watch the purchasing power of their dollar holdings head toward zero.

It was this realization that the dollar would become increasingly worthless and/or the U.S. economy would continue to decline as a result of a currency debasement and declining work ethic that caused me to keep a close eye on gold. Then during the late 1970's I started investing on a small scale in junior gold mining shares when they were booming. I was fascinated by the prospects of making big money by helping companies find real, legitimate money in the ground, so I started my newsletter in October 1981 as a hobby. My daytime job was with Credit Lyonnais in New York where I worked as a credit analyst and later with other major banks in New York as a lending officer and eventually as an investment banker at ING Barings as a lender for mining projects. Since 1997 I have worked full time on my newsletter and related endeavors like my new radio show Turning Hard Times into Good Times.

Daily Bell: There is a spiritual element to your approach. Can you elaborate?

Taylor: Thank you for bringing that up. Most people would like to separate anything spiritual from temporal. But I do not believe a person's worldview can be separated from the way he analyzes and understanding what is going on in the temporal world. Individually, our "spirits" have so much to do with how we approach life. I have a Christian worldview and to the extent that sometimes, by the grace of God I actually practice what I claim to believe, I have made this a better world. Why? Because If I am really LIVING a Christian life, I am loving my "neighbor", as myself, which means I don't need any government laws forcing me to do good things or to avoid doing harm to others. By living as a Christian is supposed to live, I have done more for the cause of creating "freedom" than anything I could ever do by killing some foreign soldier on the battle field.

At various times in the past-I think after the Great Depression and then perhaps again after World War II, a large percentage of Americans took their Christian faith seriously so they tried to live the way Jesus taught and lived. However, in no small part because of what Dr. Yoder talked about-how the debasement of the dollar has caused people to think they can get something for nothing-Americans have replaced a spirit of love and faith in God with a faith in politicians. I don't blame a debased currency entirely because as a Christian I subscribe to the notion of "original sin" which simply means we are not inherently good and getting better but that we are born as sinners and thus at least in part, we are inclined to pathological actions. The only answer for me personally, I believe, is to be found in my faith in God. But If I have lost that faith, then I turn to "Caesar" for solutions rather to God. History suggests Caesar wasn't a very nice or benevolent guy. In my view, the decline of our once great nation and its economy is as much a result of a spiritual decline as anything else and so, to understand the direction of a nation and its economy as well as the mess we human beings make of our own lives, I think you have to factor in the spiritual realm.

Daily Bell: What were the proximate causes of this economic crisis?

Taylor: An easy and quick answer for our current malaise is the debasement of our currency, which in turn made it possible for excessive debt and mal investment as discussed above. There is no way that the global monetary system could have become so out of balance with trade surpluses and savings by some nations and trade deficits and indebtedness by others if we had stayed on a global gold standard.

That said, even when we had an international gold standard, life was certainly not perfect because politicians and bankers would always find ways to cheat and steal from the common man either by clipping the coins or cheapening the metal or taxing citizens or some other dishonest means. Again, I don't think you can separate spiritual issues from temporal issues. Why do human beings cheat each other? The real question in my mind is what kind of destructive spiritual force did Keynes and the monetarists bring with them to convince themselves and the world that things would be better if we removed gold from money so that bankers had no constraints put on them to the extent they could rob and pillage the general public? Taking gold away from the banking system was like putting a fox in charge of the chicken coup. WE citizens are the chickens. Wall Street is the fox and he has been licking its chops big time since Nixon took us off the gold standard in 1971.

The big problem now is that for the first time in history there are no countries in the world that have been on a gold standard and thus practicing honest money. Accordingly, the magnitude of mal investment and indebtedness is now far greater than anything ever before witnessed in history. That's why I think we are facing a horrendous depression that will first be typified by a deflationary process beyond belief.

Daily Bell: How do you see the economic crisis evolving?

Taylor: At the moment, I think we are getting a bit of a reprieve in the deflationary process and I think we may have a bit more to run on the upside in the equity markets and perhaps in the commodity markets as well. However, because so much more debt and mal investment has to be reversed, not only in the US but around the globe, I think we will be facing more deflation.

In fact, the only way I think a further massive deflation can be avoided would be through the outright issuance of huge transfer payments, not to the bankers but to common folks. I'm talking about an outright communist policy that robs the rich and gives to the poor and middle classes. If you hand out huge amounts of money to the lower classes, whose numbers are growing rapidly in America these days, you can stimulate demand.

That policy would definitely overcome deflationary problems because the masses would start spending to buy creature comforts especially if the checks were big enough. I believe that will eventually be done, and so does Presidential candidate Ron Paul, whom I interviewed on my radio show Turning Hard Times into Good Times. To listen to it now, click here.

However, for now, I think Washington politicians who are the evil bedmates of the bankers, will continue the bailout process to the bankers so they can continue to take their bonuses offshore and convert out of dollars before the dollar collapses. Once that parasitic process has been completed and/or when masses of Americans storm the Whitehouse and Congress, I think policy makers will declare a "Let them eat cake" policy by running the printing presses to hand out trillions of increasingly worthless dollars to the masses. If we are going to get hyperinflation in America, this is how I think it will happen. So for now, I see more deflation and very possibly a stronger dollar vis-à-vis other currencies because the money supply cannot grow through the lending process. If we are to get a hyperinflationary event here in America, it will happen by massive transfer payments from the Treasury funded by printing press money. I hope I'm wrong about that, but that is my best guess as to how this increasingly pathological economic and financial market mess will play out.

Daily Bell: So you are predicting greater deflation still? Will price deflation get worse?

Taylor: Yes. And then possibly it all ends in a horrible hyperinflationary process as just discussed.

Daily Bell: Do you think there will be substantive price inflation at this point?

Taylor: No not at this point. The recent run-up in prices of copper and other base metals, energy as well, is highly suspect and I think driven by speculative interests made possible by money pumped into the banking system. But with very slow or negative growth in end consumer demand I do not see how we can expect a growing world economy. Don't forget it was the US consumer, living beyond his means for so many years, who was the engine for the global economy. More likely in my view, is deflation if banks begin writing down huge loan losses as soon as we anticipate. Then we could see another decline in prices akin to and very possibly much worse than what we experienced last fall. In fact at this point in time, that is my call.

Daily Bell: Do you see increasing centralization and globalization of fiat currencies?

Taylor: At the moment, I don't see that happening because with global deflation gaining strength now, we are also seeing increasing trade restrictions being put in place and a rising nationalistic spirit. However, that same nationalistic dynamic may encourage regional blocks to become stronger. So for example, if the US and China trade less due to restrictive trade measures, we will look internally or perhaps to our neighbors to the north and south to satisfy our needs. Out of meeting our own selfish needs, we might seek freer trade with our neighbors.

Daily Bell: Do you see an Amero on the horizon?

Taylor: Yes I do. I think we could see the emergence of an Amero as a currency used between Canada, Mexico and the US. Plans are most definitely in place to do that by the same ruling elite who gave us the Federal Reserve and who are dictating policy to our President and Congress. Congressman Paul also notes that plans are in place to build a super highway linking Canada the US and Mexico. Whether it happens remains to be seen and will depend on how long the existing ruling elite can hang on to power. I happen to think that economic conditions and injustice caused by the current ruling elite's systemic theft from the masses via fiat money, may well lead to a revolution. If that happens an Amero may be less likely. But behind the scenes there is every indication the ruling elite have an Amero in their plans for us whether we like it or not. Of course they will try to sell it to us as if it is for our own good, just as they have spun the myth about the Federal Reserve Bank.

Daily Bell: How do you see the IMF evolving?

Taylor: The IMF is a product of the spoils of World War II, as is the World Bank and the United Nations. However, I believe the western world is now in decline and with that decline will come a declining influence of the IMF and other UK-US dominated institutions. As a growing economic super power, the Chinese are rightfully asking for more influence within the IMF and other institutions. They will get increased influence or they will strike out on their own. Indeed they seem to already be doing that. For example China and Brazil recently arranged to avoid using US dollars in trade between their two nations. Russia too is reportedly insisting on using its currency for trade rather than the US dollar.

The IMF does not permit member counties to use gold as money. The Russians now say they think the world should return to a gold standard. The Chinese appear to be heading in that direction as well. To the extent these other national interests are strong enough to tell the US dominated IMF to take a hike they may actually offer the dollar some real competition by backing their own currencies with gold. Now which currency would you rather receive for the sale of your oil or what ever you are exporting? US dollars, which are IOU's backed by nothing? Or a Russian Rubble that is exchangeable into gold? The IMF and the Anglo/American Empire has had a monopoly on global trade since World War II. But as an internal economic and currency cancer destroys western economies and monetary systems, the IMF will lose its impact and/or the composition and control of the IMF or some similar international organization will change over time.

Daily Bell: Do you foresee a fundamental crisis bringing the dollar down?

Taylor: In time I think that will happen – but how much time I don't know. I think as long as the global system continues to deflate the dollar may get stronger vis-à-vis other currencies, though not necessarily against gold.

Gold on the other hand should also get stronger. We say that because, as Hoye also points out, with each of these past five credit contractions, the real purchasing power of gold has risen. In other words, gold along with the senior currency buy more, not less. That is why gold mining has been so profitable during deflationary events, as strange as that may seem to most people who think gold is good only as a hedge against inflation. It is the best thing in the world to own in a strong deflationary depression too.

Daily Bell: Is central banking in danger of losing credibility?

Taylor: Yes, I think it is. In fact it should have lost it by now. By keeping the people down on the old mushroom farm (keeping them in the dark and feeding them fecal matter) policy makers, with the help of mainstream media, have aided and abetted the thieves who run Central banks and their political cronies who pass laws making their thievery legal. But thankfully the Internet and sites like yours are helping to enlighten the public. In time, as Pinocchio's nose gets so long it can no longer be hidden, everyone will see it was the central bankers who did us in. That is when I think we may get a revolution.

Daily Bell: What is going to happen in the near future regarding the current financial system?

Taylor: I believe we will continue to witness a contraction of bank balance sheets and, as a result, a contraction of private sector lending. Governments will foolishly try to step in to make up for a lack of lending by the private sector. It will not work in terms of stimulating economic growth and prosperity. For that to happen the market has to purge the excesses of the past, which by the way were caused not by free market capitalism but by the absence of free markets, starting with the market for money. By outlawing gold and silver as medium of exchange, policy makers threw a huge monkey wrench into the gears of efficient and free markets. Signals to deploy capital in horribly inefficient manners have cause economic dislocations so severe that no amount of meddling can now fix the problem before the system self-destructs. Huge contractions of money and credit still await us and policy makers will not be able to override this problem by doing more of exactly what got us into this mess in the first place. However, that is exactly what they will do because nothing else is politically acceptable.

Daily Bell: How long do you see this economic crisis lasting?

Taylor: It would be over quickly if policy makers would only stop meddling. But assuming, as I do, that more and more intervention will take place at a faster and faster pace – thus creating even more mal investment, debt and economic dislocations – I think the current malaise could last for a decade or two or even more.

Daily Bell: What can people do to protect themselves?

Taylor: They have to start by recognizing a couple of basics, starting with the fact that the establishment is not telling us the truth about the origins of this financial mess. Having recognized that, they need to understand that gold is money, not because some law was passed that made it so, but because natural law determined it so. Markets have chosen gold as money for thousands of years because it has all the attributes of money. Doug Casey likes to quote Aristotle who first wrote about the five attributes of gold, which have caused markets to always choose it as money, as follows:

1. It is Durable – That's why we don't use wheat.

2. It is Divisible – That's why we don't use diamonds.

3. It is Convenient – That's why we don't use lead.

4. It is Constant – That's why we don't use real estate.

5. It has Intrinsic Value – That's why we don't use Paper! Ha! Ha!

Having recognized gold and to a lesser extent silver as money, people need to start opting out of our flawed monetary system and into the real time honored honest monetary system, gold and silver. They need to own both metals and store them in a safe place.

I don't want to sound like an extremist, but I think it also makes sense to have some cash lying around in case civil unrest or a breakdown of infrastructure makes it impossible to get cash out of ATM machines when you need it. It may be better to have your money in Federal Reserve notes under your mattress rather than in a bank account where your money could disappear as more loans are written off. Sure you supposedly have FDIC insurance, but it may take weeks, if not months, to get your money out when and if your bank goes down.

Also given the prospect for civil unrest and infrastructure breakdowns, I think it makes sense to have vital supplies of food, water and energy sources stored and accessible during an emergency.

Daily Bell: Do you see foresee better times ahead for junior mining stocks?

Taylor: Indeed I do, especially for gold mining stocks. I say that, given my views on deflation. As noted earlier, during these major credit contractions, the real price of gold rises thus leading to higher gold mining profits. That was true during the 1930s and it seems to be happening again from what I see in the companies I follow in my newsletter.

Daily Bell: Where do you see the price of gold going before the economic crisis finally subsides?

Taylor: If we continue to deflate, I think we might see $3,000 or $4,000. If we end up hyper inflating, I think it could be any number. How much would an ounce of gold sell for if you needed a wheel barrel of $1 million dollar bills to buy a loaf of bread? Given the potential for hyperinflation, assuming governments hand out huge amounts of money to the masses, any discussion of how high the price of gold could go borders on the absurd. What is the price of gold in Zimbabwe in terms of that country's currency? I don't know, but it's a number so high it may be incomprehensible. What is a far more important question to ask is, how much will an ounce of gold buy? In that regard, gold is going to rise very dramatically. And it will be very understandable.

I like to look at gold in terms of a unit of the Dow. At the bottom of major bear markets, as witnessed over the past 100 years, the Dow to gold ratio has always approached a ratio of more or less 1:1. It is now about 9:1. That's down from 44:1 at the peak of the equity markets in 2000. I think before this bear market in stocks is over, or before this bull market in gold is over, gold will buy at least 9 times more stocks than it buys now. My friend Ian Gordon is looking for a 500 Dow and a $4,000 gold price. I don't know for sure how these numbers will play out, nor does anyone else. All I know is that gold is in a secular bull market and stocks are in a secular bear market. As the global economy heads into a horrific depression, whether it ends in deflation or hyperinflation, gold will increase in its purchasing power from where it is now. People around the globe will flee paper money/investments in favor of real money with real intrinsic value.

Daily Bell: How about silver?

Taylor: I like silver too. But it is more of an industrial metal than gold. As such, I do not expect it to do as well as gold, given my deflationary view. That being said, it is the only other honest monetary metal. It serves as "the poor man's gold" and if we come down to a barter economy, you will want to own some for practical needs such as buying a loaf of bread or a gallon or milk.

Daily Bell: What endeavors are you involved in that you want to point out to our audience. What's most important to you that you would like our audience to be aware of and support?

Taylor: I have started hosting a web-based radio show that I think everyone should listen to. It's called, Turning Hard Times into Good Times. The premise of the show is to prepare listeners for the rough times ahead by helping them to understand the origins of our current malaise. We have many enlightened people on our show such as: Congressman Ron Paul, Marc Faber and Ed Griffin just to name a few. I also encourage your readers to visit my website, www.MiningStocks.com, where they will find the excellent writings of my partners, Roger Wiegand and Chen Lin.

Daily Bell: On behalf of all of our readers we thank you for sharing your views with us. And we encourage all readers to visit your site to learn more about your groundbreaking insights.

Taylor: Thank you for giving me the opportunity to express my views in your excellent educational publication.

After Thoughts

We confess we used to read Jay Taylor's voluminous and rigorously reasoned publications during the 2000s and wonder how he could focus so relentlessly on deflation when all around us were evidences of inflation – especially price inflation. But now, given the puncturing of the bubble and evidence of both money supply deflation and price-deflation (in various sectors) Jay Taylor looks less like a lone prophet and more like a man who was merely ahead of his time.

Perhaps we have merely adjusted our perspective, or perhaps Jay has simply explained in more detail his thinking, but we find ourselves fairly well aligned with his perspective. Without attempting to present Jay's perspective (you can read it above) we would only say that this current crisis has been an eye-opener. It's shown us something that Jay apparently understood long ago – that inflation and deflation can exist within the same historical eras and that price inflation and deflation can exist within the same exact time periods as well (look for an upcoming white paper on this phenomenon).

What is also fascinating to us is how this profound discussion has "gone missing" so far as the mainstream media is concerned. It is perhaps trite to observe that we know more about rock-stars if we watch and listen to mainstream Western media than we do about fundamental issues regarding wealth and the steps we need to take to protect ourselves and our loved ones. In fact, what should be increasingly evident to readers of the Daily Bell (and Jay's publications) is that these issues are among the most important that people will ever face, and they are necessary to understand – and face – today.

Yes, these issues are current. It is not hypothetical anymore. And eventually, before the business cycle turns, the inflation that Jay explains will also become a serious factor with which we shall have to contend. And that inflation could easily become hyperinflation given the amount of money that central banks have dumped into the system.

Regarding inflation, we return to Dr. Antal Fekete's wonderful insight that inflation consists of two flavors, electronic and paper. Central banks are loathe to provide individuals with paper money, much preferring to "print" electronic money for money-center banks. This maintains the control that central bankers crave but it is even more confusing for the average citizen because despite the massive amounts of money being shoved into the system, the results are slow to show up. Electronic money is often bottlenecked within bank coffers and that is what has taken place today.

Lord knows when the bottleneck will be un-plugged, but we anticipate the reaction will be fairly powerful – and involve serious inflation, even hyperinflation. Average citizens of the West won't know what's hit them to begin with, but they will soon figure it out. Understanding the game shows and celebrity factoids won't help then. It will be too late. As for us, we'll continue to read Jay Taylor's enlightening publications to receive our warnings in advance.

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