Addison Wiggin

This morning, we see Britain’s consumer price index grew in December to an annualized 3.7%. Fuel prices are growing at their fastest pace since July, and food prices are zooming at a rate last seen in May 2009.

Like the US Federal Reserve, the Bank of England has an inflation “sweet spot” of 2%. But Britain’s CPI has been above 3% for 13 months now. Unlike in the United States, even the “core” rate of inflation in the UK is rising at an alarming 2.9%.

“If history is any guide,” Chris Mayer contends, “inflation will likely get much worse. Everyone seems to know the US inflationary story of the 1970s. The official inflation rate hit nearly 14% by 1980.

“In other countries, it was worse. In the UK, inflation topped out at 27%; in Japan, 30%.

“The year 2011 is the year when inflation will play the role of wrecking ball,” Chris declares.

“Emerging markets have been a vital part of the investment story of the last decade, for sure. Yet rising food and energy prices pose a big risk to them.

“In India, food prices are at their highest levels in more than a year, rising 18%. The dabbawalla, when he is done delivering lunchboxes, trots off to the market and finds that the price of onions has doubled in only a few months. Even the basics, like potatoes, have become expensive to the average Indian.

“In China, the typical Chinese also faces rising prices for nearly everything. The official inflation rate recently hit a 28-month high. But it’s the surging price of coal that may prove to be China’s Achilles’ heel, at least in the short term. Coal is what powers the great boom in China. And coal is at two-year highs.

“The basics like food and energy are like brakes on these economies.”

But that’s not all they will put the brakes on… Here’s an old video of Jim Rogers, Vancouver keynote, saying that given the current reckless spending and printing strategy in Washington, we’ll eventually experience “an inflationary holocaust.” In 4:33 or so is the mark that he gets into the holocaust theme.

Here’s another one from our friend Ron Paul laying into Ben Bernanke a while back. In the 3:43 mark he “goes off” on the Fed chairman explaining how money printing is already hurting retirees.

And for good measure, here’s video of another Vancouver veteran, Nassim Taleb, saying he feels more jittery about a currency crisis now than he did when he left his native Lebanon during a meltdown.

Fact is, once it gets started, inflation is hard to stop. Not that Wall Street bankers or your friendly Washington representatives give a hoot. They’re not the ones who get walloped when money stops buying necessities…and interest rates spiral upward out of control.

Addison Wiggin
for The Daily Reckoning

Addison Wiggin

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.

  • steverino

    yeah, but s’pose we get “goldilocks” inflation?


  • et2cetera

    There’s no such thing as a “Goldilocks” inflation. Any inflation is inherently bad as it diminishes your store of wealth. This is done through diktat and impacts progressively worse for the lower incomes.

    Think about it – in order to match inflation – many people have done irrational things with regards to the housing and stock markets so that their savings are not eroded away. If there was no or minimal inflation, would the majority of people be so reckless in their money, and in turn encourage savings? From which, a more stable base to draw from for future investments rather than debt?

    Perhaps an updated adage to that old saying the desire for money is the root of all evil, could be inflation is the root of all evil?

  • Dumb Dumb

    Truly all these geniuses had spoken sincerely, smartly, truly and practically.
    Regretably, unsymmetrical in shape, these divine words should have been spat out and got into the heart of the attentive audience, at least somewhere back 30 years ago.

    Events and scenerios create heroes of historical value. Two types of fortune-teller subsist; first, the one who tells you will be rich when you are still downsize, and the second only inform the rich discreetly of his impending luxurious life.

    Procedures need to be concise, specific and practical and steer towards a clearly directed path. Vocal in the sense that cutting the throat of paper supply may render a sour feast for all.

  • CT

    Wait till these gold bugs see what I am going to charge for a bushel of corn. Punks.

  • steverino

    CT: i just checked the gold/corn ratio on the comex front month: 212.11 bushels for a troy ounce.
    you’re saying, it has peaked?

    that’s good to know!
    is the volatility increasing?

    and, we’re gonna postulate a nice, stable
    “market” for USA i.o.u.’s, too, right?


    and, you are waiting to sell the corn and buy the gold till when?

    august, 2011?

    let’s ALL Be as corny as kansas, in august,
    high as the flag on the 4th of july…

    …and hope yer stoolies in DC don’t waver, too! they’ve been sooooo good at keeping gold down and corn up!

    even DumbDumb can see how cutting the throat of paper may be akin to getting nailed to a cross of gold, aka, The Punisher.

    et2: jeeeeez! tell it to batmanke!

  • CT

    For your info Steverino when I sell to gold bugs it will be twice the going rate for a bushel no matter what others are bartering and trading with is as I would sell to anyone else. And all through it I will not give a wit what the comex ratio is.

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