Exponential Craziness Almost Seems Normal

Monday, February 29, 2016

Last Century Craziness

  • Weimar inflation in Germany 1921-1923:  The exchange rate for Marks changed from 90 Marks to the US dollar in 1921 to over 4 Trillion Marks to the US dollar in about 2 years.
  • Argentina devalued their peso and exponentially expanded the currency in circulation so rapidly that Argentina lopped off 13 zeros since 1950. 
  • Zimbabwe printed so many trillions of Z-dollars that inflation, according to Wikipedia, exceeded 200 million percent in 2008.

In the above hyperinflations purchasing power would have been protected with gold, and to some extent, by the local stock markets.  The financial and political elite partially protected themselves from the predations of governments and central banks, while the middle and lower classes were crushed.  Consider the modern day parallels with Europe, Japan, and the US.

Current Craziness

Japan has created a national debt that exceeds 1,000 Trillion yen, about 250% of their GDP.  According to the IMF, Japan’s debt is “unsustainable.” Japan appears to be floundering in a Keynesian sea of economic craziness and exponential debt increases.  Gold looks like a financial lifeboat.

The US national debt (official only) currently exceeds $19 Trillion, up from $398 Billion in 1971, $5.6 Trillion in 2000, and $10.1 Trillion in October 2008.  The national debt has increased at a compounded (exponential) annual rate of about 9% per year since 1971.  Gold sold for about $42 per ounce in 1971 and has increased nearly 8% annually, on average, since 1971.  See graphs since 1970.

Central Bank Craziness

Exponential debt increases are normal in a central bank controlled financial world that benefits the political and financial elite at the expense of the middle and lower classes.  QE, ZIRP, and NIRP are recent examples of central bank responses to their self-created problems of debt based fiat currencies, exponential increases in debt, and uncontrolled deficit spending by governments.

Ambrose Evans-Pritchard on the DANGERS of negative interest rates:

“Huw Van Seenis, from Morgan Stanley, calls negative rates (NIRP) a “dangerous experiment” that undermines the mechanism of quantitative easing rather than enforcing it…”

“Narayana Kocherlakota, ex-head of the Minneapolis federal Reserve, reluctantly backs NIRP as deep as -3% but calls it a “gigantic fiscal policy failure” that central banks must resort to such absurdities.”

“Morgan Stanley said that once negative rates fall below 0.2%, the damage to bank earnings goes “exponential” and ultimately endangers the whole system of free banking in Europe that we take for granted.”

“All debt accumulated by central banks under QE should be converted to perpetual non-interest bearing debt, and preferably burned on a pyre in public squares …”

“Any New Deal should be funded in the same way – partly or in whole – with the same vow that the debt will never be repaid.  The money creating should continue at the therapeutic dose until the objective is achieved.”

My comment:  The financial world is falling into an abyss of exponential craziness as indicated by:

  • negative interest rates;
  • “gigantic fiscal policy failure;”
  • “damage to bank earnings goes exponential;”
  • “all debt accumulated by central banks under QE should be converted to perpetual non-interest bearing debt;”
  • “the debt will never be repaid;”
  • “helicopter money;”
  • and so much more.

Global Currencies Craziness

When central banks and politicians manage global currencies, we can expect:

  • Exponentially increasing debt. 
  • Booms and busts.
  • Massive inflations and deflationary crashes.
  • Transfer of wealth from the many to the few. 
  • The derivative craziness of $1,000 Trillion and eventually a crash. 
  • A mathematically inevitable financial collapse. 
  • Much higher gold and silver prices.

Political Craziness

Can we reasonably expect that any Presidential candidate who accepts $20 Million from Wall Street and financial firms will lead a government that protects the financial future of the American people?  Of course not – Wall Street will direct the show and manage the payoffs.  It is crazy to think otherwise, regardless of what the politicians promise.


  • A world of fiat currencies managed by central banks descends into exponentially increasing debt that leads, slowly or rapidly, toward craziness and collapse. Train wreck ahead!
  • The craziness of QE has morphed into $7 Trillion of global sovereign debt “paying” negative interest rates.  “Gigantic fiscal policy failure.”
  • Bail-ins from private accounts, the war on cash, and exponentially increasing debt that grows far more rapidly than the underlying economy that must support the debt … are crazy.  Global trauma approaching!
  • Gold and silver are better solutions and are antidotes to central bank devaluations.  One might object to gold for many reasons but those reasons seem minor or irrelevant in the face of exponentially increasing (unpayable) debt, negative interest rates, and financial and political craziness.

We have been warned!

GE ChristensonGary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, Gold Value and Gold Prices 1971 – 2021. He is a retired accountant and business manager, with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy, and central banking.