Wednesday, March 25, 2015

The Illusion of Prosperity Special Hyperinflation Report for 2015

Let's see. Where to start?

March 25, 2015
The 20 Million Barrels of Pure Profit Sitting in U.S. Oil Tanks

Traders’ attempts to use every cubic inch of storage underscores how desperate the market has become to stow oil.

Oh, crap. This is not at all how I wanted to start my first ever special hyperinflation report. That's okay though. I'll just have to make the best of it with smoke, mirrors, dogs, ponies, and just a smidge of Peter Schiff style alarmist propaganda.

1. All hyperinflations start with an oil supply glut. There's no reason to link to studies backing this claim. It's a self evident truth. Don't believe me? Let's say there was 5' of standing oil on all of our highways. Traffic would cease. Goods would not be delivered. This would lead to a shortage of goods and a hoarding of goods. That's right. Hyperinflation. Prices of goods would skyrocket.

2. Traders are desperate to store oil. Why would they do this if the currency wasn't about to collapse completely and utterly? Short term profits you say? A dangerous game if storage runs out? That's just crazy talk. Traders are in it for the long haul. The term trader is actually just a euphemism for long-term buy and hold hoarder. Everyone knows this. Once a trader buys something, you can bet your life savings that it will be off the market permanently.

3. Oil is predicted to go to $200 within two years. Oh, wait. That's from 2008, which was during the Great Recession. Let me find you a better prediction from this year.

January 26, 2015
OPEC’s El-Badri: $200 Oil Possible If No One Invests

Prices as high as $200 probably won’t happen because “a move back above $100 will bring the shale oil drillers out in force as they can relatively quickly react to rising prices.”

You heard it here first folks. $200 oil is possible if nobody invests! And that's just a drop in the bucket if nobody invests when it hits $200. $500? $1000? $5000? There's no telling how high oil could go if nobody invests! Just like there was no telling how high oil could go during the Great Recession!

The key to hyperinflation going forward will be to drive the price of oil up without anyone actually realizing that we're already in a recession. You know, like last time, only without people ever figuring it out. And how do we do this? As jobs are lost as the price of oil rises, we convince the unemployed to keep driving to work anyway. You know, to keep the oil demand high.

This concludes the first ever Special Hyperinflation report on this blog. Invest accordingly! And as you do that I'll be watching the 30 year treasury yield meander around the 2.5% level, just for kicks and giggles.


dearieme said...

When the great financial crisis blew up, I opined that the result would be deflation followed by inflation. The inflation may be a good while longer in coming. Anyway we insured against it with index-linked gilts. I only wish we'd bought ones with longer maturities.

Stagflationary Mark said...


I sure am thankful that I ignored Jeremy Siegel's silly advice about the risks of long-term TIPS in 2011. The vast majority of my individual retirement account sits in one long-term inflation protected treasury bond. I'll be darned if it doesn't pay almost as much interest as today's nominal 30 year treasury *and* it grows with inflation.

So much advice is and has been given about the risks of rising interest rates over the last decade and almost nothing mentioned about the risk that rates could actually just continue to fall.

It makes me believe that much of economics is just junk science. And when I say science, I may be a bit too generous. Tarot card reading couldn't be any less accurate than most economists' interest rate predictions, lol. Sigh.

Rob Dawg said...

Oil remember you in all the familiar places...

Stagflationary Mark said...

Gonna fill you up with my gas
Spill over, spill over
Gonna fill you up with my gas
Spill over car's body

Oops. Had a Madonna moment.

dearieme said...

"The only function of economic forecasting is to make astrology look respectable."
John Kenneth Galbraith.

Stagflationary Mark said...


Yeah, I've heard that quote before. Love it!!