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Bill Bonner on The Failing US Bond Market, and The Coming Hyperinflation

Daily Bell: Is America headed for a recovery or another recession? Bill Bonner: Neither. It is in a Great Correction of the credit expansion that began after WWII. This will continue for many years to come and probably lead to enough excess money-printing by the feds to create a hyperinflationary blow-up. This will be the end of the monetary system that was set up – almost unwittingly – in August 1971. More than that, hyperinflation will shake the foundations of modern political, social and economic institutions, and probably bring many of them down. The social welfare state, for example, was invented by Germany's Iron Chancellor Otto von Bismarck more than a century and a half ago. In their late, degenerate form, they depend on delivering benefits in the present while pushing the costs – in the form of national debt – onto future generations. A bout of hyperinflation will make this model inoperable, because governments will be unable to finance further huge deficits at low rates. It will also mark the end of Keynesian interventionism, as it will be obvious that central financial planning doesn't work. Daily Bell: Why has Bernanke been so relentless about money pumping? Bill Bonner: He believes he has to fight the Great Correction. Daily Bell: Putting everything together it is as if the powers that be are pushing and shoving toward maximum chaos. Can it all be coincidence or is there a purpose behind it? Out of chaos a new world order and a single currency? Bill Bonner: Hm-mm. Again, this presumes more of a grand design and more control than the 'powers that be' actually have. Daily Bell: Given all the uncertainty where would you be investing now? Bill Bonner: In gold and silver. Both remain good investments.

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